Real Estate Predictive Analysis: How Real Estate Agents Can Increase Their ROI

In the business world, knowing where you’ve been is just as important as where you’re going. That’s why it’s always important to review past performance and use that knowledge to inform decisions going forward. One form of examining past trends to forecast future ones is known as real estate predictive analysis, and in the real estate sector, it can be incredibly beneficial for agents looking to increase their ROI. Here’s what you need to know about what predictive analysis is, what its benefits are, and how it works in a real estate environment.

What is predictive analysis?

First, let’s begin at the very beginning by defining what predictive analytics is, what it entails, and how it works. Predictive analysis, sometimes referred to as market analysis or predictive analytics, is a business forecasting approach that leverages past statistical data, using it to identify trends and patterns, and then uses those findings to predict how likely it will be for those patterns to continue. 

Predictive analysis has become increasingly popular in the 21st century thanks to advances in computing tied to the development of artificial intelligence algorithms that can look through very high volumes of data quickly, identifying trends and patterns much more rapidly than human analysts could ever do. As a result, market analysis approaches have been adopted in various business fields, including customer service, weather forecasting, voice-to-text technologies, video game development, and – you guessed it -the real estate market.

What are the benefits of predictive analysis?

The first benefit of predictive analysis is something we’ve already touched upon – the sheer speed that AI algorithms can parse data to identify trends and patterns. Market analysis is still possible without these advanced machine learning tools, but the length of time it would take to process this data increases exponentially – and the possibility of missing crucial data trends are much higher when done by hand.

More direct benefits tied to predictive analysis include how using these tools to aid in reducing risk, especially in highly competitive business markets. Investors, for example, can use predictive analysis on prospective borrowers, examining all the financial data available to them to produce statistical models on which borrowers will be the most likely to successfully repay their loans on time and identify those who would be poor candidates. Other benefits include reducing costs in the manufacturing sector by using predictive analysis on the likelihood of a new product succeeding or failing before investing in resources to launch the product.

What is real estate predictive analysis?

Any market sector can benefit from the use of predictive analysis, and the world of real estate is no exception to this. There are dozens of different types of data sets that can be combined with a predictive analysis modeling platform to be analyzed with as much, or as little, granularity as you can imagine. In fact, the more data you can provide these platforms, the more accurate the predictions are likely to be – large real estate websites like Zillow and Realtor.com already use predictive analysis, to great effect, in their own business ventures.

Want to investigate the sale and ownership patterns for a single property at a single location? That’s an easy task for many real estate market analysis platforms. There are commercially available market analysis services that boast of being able to predict whether a home will sell in the next 18 months as accurately as 70 percent. Want to determine how the properties will perform on a specific street, in a specific neighborhood, or anything else? Real estate predictive analysis can do that, too.

What are the benefits of real estate predictive analysis?

Now we come to the good part – how predictive analysis methods can benefit the work you do as a real estate professional. Real estate market analysis is something you likely already do by hand; as a real estate agent, you spend plenty of time and resources researching your chosen housing market, searching for properties that are likely to go up for sale soon, and sourcing new prospective buyers and sellers so you can conduct marketing campaigns to funnel leads into your pipeline.

All of these activities require you to look at the data you have available and then make educated guesses, based on your own analysis of that data. Meanwhile, using real estate predictive analysis allows you to access larger data sets as well as process those data sets faster and more comprehensively than you would be able to do by hand. The results are that your targeted marketing efforts, based on this highly accurate data, will yield better results, leading to a better ROI for your marketing budget. Considering how much many real estate agents spend on marketing, this is a major boon. 

Conclusion

Thanks to how quickly researchers are developing new and more complex approaches to machine learning and AI-based analysis methods, predictive analytics is only going to become smarter, more accurate, and capable of parsing larger volumes of data even more quickly in the future. It’s already had a major impact on not just the real estate sector but many others, and there are no indications that this will change any time soon – in fact, it’s much more likely that this trend will continue.

A real estate professional needs the biggest competitive edge they can get if they wish to remain successful. Having an inside edge on how markets are going to perform is just the advantage you need, allowing you to leverage that information into making informed decisions about how much time and resources you invest in marketing efforts that are as targeted as specifically as possible, increasing your chances of success. If you’re looking for the best way to grow your own real estate business, real estate predictive analysis is one method that’s sure to yield results.

Ben Shepardson

Ben Shepardson is a Realty Biz News Contributing Writer and has a long track record of success in online marketing and web development. While pursuing a bachelor’s degree in Computer Information Systems, he worked doing enterprise-level SEO and started an online business offering web development services to small business customers.

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