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Real Estate and Retirement

Sep 25, 2017 by

A retirement plan that works well for real estate agents is the Solo 401(k), which allows you to save up to $ 54,000 ($ 60,000 for agents over 50) per year and deduct it from your taxes.

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Big Data, Big Opportunities: How Predictive Analytics Is Changing the Business of Real Estate

Sep 24, 2017 by

“This year the human race is producing more data than the previous 5,000 years combined. Data is so powerful that in the future, nation states will fight over it for power.”

This thought-provoking statistic set the stage for a much-anticipated panel discussion at RISMedia’s 2017 Real Estate CEO Exchange in New York on how brokers are leveraging the application of predictive analytics and big data in their businesses to better serve consumers’ real estate needs.

The opening remarks, presented by panel moderator Dave Garland, partner, Second Century Ventures and director of Strategic Investments for the National Association of REALTORS®, led the way for an engaging discussion with several industry leaders on the forefront of using predictive analytics and big data in real estate to change the way their business is being conducted now and into the future.

So what is predictive analytics, and why is it so important to the real estate industry? Simply put, “Predictive analytics is analyzing extracted data, using old data to predict the future,” Garland explained. “The big difference now is we have new data points that we can apply to our industry. We’re moving from the idea of hindsight to insight to foresight.”

The idea of using data in real estate isn’t new—think tax records, comps, valuations, or even local school, business and crime statistics. But with consumers demanding more and more information, and more data being available on consumer behavior than ever before, the use of predictive analytics—being able to accurately show buyers and sellers what their home will be worth in the future, backed up by data science—is the game-changer.

“‘Big data’ sounds like it’s really far out there, but earlier today I had a meeting downtown and on my phone, it said it’s going to take me 28 minutes to get to the next place I was going, and here’s an Uber so you can get there,” said Jeremy Sicklick, co-founder and CEO of HouseCanary. “The fact that it knew where I was, where my next meeting was and what the traffic was, and linked to an Uber to get me there—that is predictive analytics. So what does that look like in real estate over time?”

HouseCanary CEO and Co-Founder Jeremy Sicklick discusses predictive analytics during RISMedia's 2017 CEO Exchange session "A Better Crystal Ball: How to Leverage Predictive Analytics."

HouseCanary CEO and Co-Founder Jeremy Sicklick discusses predictive analytics during RISMedia’s 2017 CEO Exchange session “A Better Crystal Ball: How to Leverage Predictive Analytics.”

San Francisco-based HouseCanary is a real estate analytics company using data science to accurately value and forecast over 18,000 U.S. zip codes, 3 million blocks and 100 million properties.

Sicklick said one of the key opportunities predictive analytics provides in real estate is having the ability to know the property value of a home, and knowing where the value is going to go, to help consumers make better home-buying and -selling decisions. HouseCanary’s home value reports also allow users to add or remove properties or property details to instantly adjust a home’s comparable value, for example, or add a bathroom or remodel the kitchen and see how that affects the home’s value.

Arming the agent with that kind of statistic-based data science is key in working with today’s real estate consumers, he said.

“When is the right time to sell my home?” Sicklick said. “We said, ‘Let’s look at the data and see what’s really happening here.’ We now have enough information to help them make those decisions. Should I improve my home, sell my home or refinance? Being able to quantify and visualize it is where big data is going. Being able to show people and arm people with the ‘why’ it’s occurring and explain it to someone who is trying to make a decision—and putting brokers and agents at the center of those decisions to help [buyers and sellers] see their options—that’s the opportunity.”

Mark Choey, co-founder and CTO of the innovative boutique firm Climb Real Estate in San Francisco, emphasized the importance to brokerages of collecting data on buyers and sellers, noting the many tools available now to help the effort. “I wouldn’t recommend hiring a data scientist,” he said. “There are a lot of tools out there to help you get started.”

One of those that he uses is the Gmail extension Crystal, which uses personality detection technology to predict behavior and help businesses communicate with their clients in a more customized way, based on their personalities. Their tools use the DISC assessment, which uses four primary personality types to determine behavior: dominant, influential, steady, and calculating.

“I used the system before sending an email to someone I didn’t know, and it showed that the person likes their time respected and speaks in short, concise statements and bold language,” he said. “I wrote my email like that and got a very positive response. That’s one example of a great tool you can use to increase sales conversion.”

He also noted, “The No. 1 question people ask is, ‘Should I buy now?’ or ‘Should I sell now?’ so arming agents with data and historical context is important. When we get leads, the No. 1 thing an agent asks is, ‘Who is this lead?’ These types of new tools out there can help figure out who these people are.”

With technology innovation at his company’s core, Choey said Climb also utilizes social media data to better understand clients, and is constantly testing different tech platforms to achieve higher conversions.

“Most everyone here represents a brokerage that has been using lists for a long time,” he said. “Now we have much easier automation, more refined information, combined with good valuations. We can see if offers are coming in above or below where they should be. We can inform [buyers] and say take it and run or hold off for a better offer. At any one time we’re testing out 10-15 different technologies for widgets, apps, CRMs, landing pages, different listing sources. We look at lists from CoreLogic and constantly benchmark it against our own data. Our goal is to constantly improve sales conversions and we work on it all the time.”

From L to R: Key Realty Managing Broker/President John Murray; RE/MAX Gateway Broker/Owner/President Scott MacDonald

From L to R: Key Realty Managing Broker/President John Murray; RE/MAX Gateway Broker/Owner/President Scott MacDonald

John Murray, managing broker and president of Rockford, Ill.-based Key Realty, echoed Choey’s support for brokerages utilizing data tools available, rather than hiring a data scientist.

“One of the core competencies of our brokerage is to help improve conversion to do more sales,” Murray said. “We have leads coming out of our eyeballs, but what do we do with them? Companies providing predictive analytics are emerging and some are better than others. If you don’t have the expertise, you can work with these companies. Some bigger shops are hiring data scientists, but the majority of brokerages should focus on how to use the data and work with these companies to improve their data—then everyone wins.”

He added, “Data is great, but it’s all about how you use that data to find out what’s important to your clients.”

Scott MacDonald, broker/owner and president of RE/MAX Gateway in Chantilly, Va., agreed, explaining the use of data in real estate, like social media data, can be effective, but only if it’s used in the right ways.

“We look at where buyers come from; we look at their profiles and know where to target our marketing,” MacDonald said. “But it’s not only knowing what to look for, but how do we use it effectively?”

MacDonald said it’s all about giving agents the best tools to use, especially given the competitive complexity of the industry today. “You have the discounters, the disruptors and the DIYers,” he said. “The more you can arm your agents with information about what happened in the past and what’s coming in the future, the better able they will be to serve their clients.”

In an industry where valuations have been called into question, Murray also commented that while the accuracy of data is paramount, so is the industry’s ability to interpret it for real estate consumers.

“It’s the utilization and interpretation of the information that we can all do in our businesses to restore some credibility to the industry—we’ve lost some of that,” Murray said. “Data is readily available and we have to be better at interpreting what it means. If we stick to being brokers and focus on customer service and restore our credibility with knowledge, it will help us recapture some of the credibility we’ve lost.”

Choey added, “There is a lot of talk about Zestimates, Redfin and realtor.com®. What we train our agents to do is take those three and bring them to a listing appointment as the basis for discussion. The challenge is consumers have all the data in the world and know everything you’re doing as an agent. Everything is out in the open. So we really try to advise agents to use the data, and help sellers and buyers analyze the data.”

Big Data Lightning Round Q&A

To close the session, Garland proposed a “lightning round” of big data questions to the panel.

What data is concealed today but will be revealed tomorrow?

Murray: Offer data
MacDonald: Instant offers
Choey: Pre-MLS, off-market data—knowing when a seller is going to sell before they sign a listing agreement
Sicklick: Really understanding days on market

What is the most important dataset for a thriving brokerage of the future?

Choey: Our agents’ happiness
MacDonald: Agent engagement. Their level of engagement is critical.
Murray: Buyer-seller propensity
Sicklick: Understanding current and past customer equity. In knowing how much equity they have, you can help them figure out what to do next.

What is the most important buyer data?

MacDonald: It goes back to price.
Murray: Buyers are looking for deals.
Sicklick: Price of property today and price at highest and best use so they understand what they are buying and what the opportunity is
Choey: Buyers want to know what the seller is going to accept.

What will be the most indispensable tool five years from now?

MacDonald: Tools that help agents communicate on a deeper level with clients about property condition. To know the value if they improve the kitchen by $ 50,000 or finish their basement. Tools that will help the buyer know more at a deeper level.
Murray: Workflow and tasking software that allows agents to scale in a more automated fashion.
Choey: Happiness customer score—what button can I push to make the customer happy
Sicklick: Doing our job

Sicklick offered some closing thoughts to industry leaders about the importance, and the future, of big data, not only in real estate, but in so many aspects of our daily lives.

“I get to see it through the eyes of my kids every day and how they learn. If they have a question they look it up on their iPad. They’re learning in a different way. It’s at their fingertips to search; they teach themselves. We have the first generation of people coming of age who don’t remember AOL or Prodigy. They grew up with everything at their fingertips. The way they research, buy things, get a loan, engage with people, is all really different from even 10-20 years ago. They are just going to expect it.

“How do we bring that data and capability to the next generation? This is how they want to do business. It’s just a different world now. Data is the first part of that that enables people to streamline transactions in ways we haven’t seen yet.”

Stay tuned to RISMedia for continuing coverage of this year’s CEO Exchange sessions:

Beth McGuire is RISMedia’s online managing editor. Email her your real estate news ideas at beth@rismedia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

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Real Estate Trade Shows – Why They’re Important to Your Business

Sep 21, 2017 by

Trade shows are a great opportunity to hear from industry thought leaders and experts offering valuable business planning strategies and new ways to help stay ahead of competitors. These events also provide real estate agents with an opportunity to engage with other agents and build relationships that can be mutually beneficial. Workshops and lectures help educate and inspire real estate agents to review and understand what’s working, identify areas for improvement in their business and discuss new ideas to help them stand out in the industry.

PNC invites you to attend these upcoming trade events to learn how PNC Bank is a key partner for your business. Meet face to face with PNC Mortgage Loan Officers and discover how PNC Home Insight® can help your clients see home buying in a whole new way.

Northern Virginia Association of Realtors (NVAR) Convention & Trade Show
October 10 in Annandale, VA

Akron Cleveland Association of Realtors (ACAR) Expo
October 13 in Cleveland, OH

Women’s Council of Realtors (WCR) Conference & Expo
November 1 – November 5 in Chicago, IL

National Association of Realtors (NAR) Conference & Expo
November 3 – November 6 in Chicago, IL

Triple Play Realtor Convention & Trade Expo
December 4 – 7 in Atlantic City, NJ

equal-housing-lender-iconThe views and opinions expressed in this presentation are those of the speaker’s and do not necessarily reflect the policy or position of PNC Bank, N.A. and should not be construed as legal or professional advice.

PNC, PNC HomeHQ, PNC Home Insight and Home Insight are registered service marks of The PNC Financial Services Group, Inc. (“PNC”). PNC has a pending patent application directed at various features and functions of Home Insight® Tracker and Home Insight® Planner. All loans are provided by PNC Bank, National Association, a subsidiary of PNC, and are subject to credit approval and property appraisal. This information is provided for business and professional uses only and is not to be provided to a consumer or the public. This information is provided to assist real estate professionals and is not an advertisement to extend consumer credit as defined by Section 226.2 of Regulation Z. Programs, interest rates, and fees are subject to change without notice.

©2017 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association.

 

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The State of Real Estate: ‘The Good, the Bad and the Ugly’

Sep 17, 2017 by

CEO_2017_Ron_Peltier_Opening

HomeServices Chairman and CEO Ron Peltier gives opening remarks on the The State of the Real Estate Union at RISMedia’s 2017 CEO Exchange.

HomeServices Chairman Kicks Off RISMedia CEO Exchange With Candid Look at Industry

Set within the hallowed halls of the Harvard Club of New York City, RISMedia’s 2017 Real Estate CEO Exchange opened last week with a candid look at the state of the real estate union from HomeServices of America Chairman and CEO Ron Peltier.

Peltier’s address on Sept. 12 came after RISMedia President & CEO John Featherston welcomed the crowd of more than 230 real estate brokerage leaders and C-level executives, pausing to honor the victims of the 9/11 terrorist attacks as well as those suffering from Hurricanes Harvey and Irma.

Featherston then turned his attention to the state of the real estate industry. “We live in an era where the consumer has become more sophisticated than ever before,” he said. “Our value proposition as real estate professionals is under constant attack.”

To address this concern for the CEO Exchange audience, Featherston turned to old friend and industry icon—“someone who walks the walk”—Ron Peltier.

“One thing I can’t do is tell this group how to get another listing or sale,” said Peltier to the crowd. “But we’re all in the same business and at the end of the day, the ultimate achievement is superior customer experience in the homeownership space.”

When it comes to the state of the housing economy, Peltier said it’s a “tale of the good, the bad and the ugly.”

Giving his perspective on the national market, Peltier referred to the first 8.5 months of 2017 as a “Goldilocks” market. “It’s not too hot, it’s not too cold…it’s just right,” he explained. “Although it’s very hot in unit-driven markets or entry-level markets where there is no inventory.” In fact, keeping with his movie-title theme, Peltier referred to the entry-level homebuyer market as “gone in 30 seconds. Conversely, we’re seeing a very slow marketplace in the luxury market as it relates to units,” he added.

CEO_2017_JEF_Ron

HomeServices Chairman and CEO Ron Peltier and RISMedia President and CEO John Featherston during the CEO Exchange opening session.

Peltier believes we will end the year at 5.5 million home sales and experience a slight increase next year to 5.6 million. “It’s a Goldilocks market—it’s okay, it’s normal. It’s not perfect and it’s not great, but it’s one we can navigate in. We can plan and predict and build a budget. Pricing is continuing to move up, but affordability is still good, although it’s starting to get challenged on the lower end.”

Problems dot the economic landscape, however, including a very little wage growth and “not a lot of fire” in the marketplace. GDP is growing but is probably not going to be robust, said Peltier, but the good news is there is no recession on the horizon and inflation is low. “I think we’ve got a good run ahead of us.”

That said, there are several concerns that keep Peltier “up at night,” one of them being the tremendous lag in new construction, especially given the continued inventory shortage. “New construction is still woefully underserving the entire country.”

Cyber security is also high on Peltier’s list of concerns, citing the recent Equifax breach to support his point. “Virtually half of America just had their credit compromised,” he said. “We can be of help to our clients by being good stewards and encouraging them to freeze their credit. This is going to be a major challenge for people who want to secure credit for auto, housing or home improvement loans.”

Peltier is also concerned about what he refers to as a lack of velocity in the marketplace. “People are effectively buying back their houses, by choosing to remodel instead of move. We used to say that people would trade up every seven years, but now that stat would have to be adjusted to nine or maybe 11 years. The population continues to grow all the time, but we’re low in inventory—we’re going the wrong way and it’s putting a great deal of pressure on commission. Inventory is going to be a problem for the next several years and I’m not sure how we’re going to deal with that.”

Peltier mused whether the current shifts we’re seeing in the housing market are fall-out from the Great Recession, similar to the way our parents were shaped by the Great Depression. “We don’t fully understand yet how the recession has shaped housing,” he said. “There is delayed housing formation—millennials have delayed home purchases, delayed having children, and all of this is impacting the first-time homebuyer trend. Are millennials reshaping the way people think about houses?”

On the flip side, baby boomers are influencing the market in different ways. “They’re staying in their homes,” explained Peltier. “People are retiring where they live and work.”

Ultimately, the onus falls on brokers and agents. “When we look at all those changes, the question we have to ask ourselves as brokers and professionals in the business is, ‘are we continuing to adapt and coach and change and train our people?’ I believe that what we do as individuals is a very high calling. We help navigate a very complicated business.”

Peltier stressed, however, that not all real estate professionals are created equal. “We have way too many agents,” he said. “The bottom half do nothing and then we have super-talented people. Is the bar too low? Do we need to raise the standards? If we need to keep our value proposition, it’s time we start to visit those questions. We’re judged by our most common denominator.”

Peltier closed his opening address with a few words on the subject of data, a battle he reminded the audience has been going on since the late ’70s. “We’re not the first to the party, but we need to be focused on capturing and retaining data because we have a wealth of information on customers and clients.”

Stay tuned to RISMedia for continuing coverage of this year’s CEO Exchange sessions.

For the latest real estate news and trends, bookmark RISMedia.com.

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