Since the 2008 financial collapse, real estate agents around the country have discovered that the housing market is considerably less predictable than it used to be. They have started investing in digital technology to overcome some of the most pressing challenges they face. How has new technology helped them boost profitability and what role will it play in helping them stave off the next economic downturn?
Real estate professionals are desperately in need of new solutions to protect against another major financial fallout
The consensus among most economists is that the economy will grow tepidly for the next year or two. However, a recession is probable in 2020. A recent statement from the Vanguard group clarified their prediction in detail.
The implications of another recession for the housing market are still unclear. The last recession was actually triggered by the housing market collapse, rather than the other way around. However, the recession still deepened the housing crisis and likely caused it to drag on for another three or four years.
If economists are correct and a new recession is on the horizon, then the housing market will inevitably suffer as a result. The first question is whether the next economic downturn will have a minor or severe impact on housing demand. An even more important question is what steps real estate professionals can take to survive another downturn.
How will big data alleviate the severity of another downturn in the housing market?
Real estate agents are becoming more tech-savvy than ever before. They have found that artificial intelligence, predictive analytics and other data-driven technology can significantly improve their productivity and profit margins. In the short term, investing in this new technology is a viable way to improve margins. During a major economic recession, developing a technology-driven real estate logistics system is going to be more important than ever. It could make the difference between survival and insolvency for hundreds of real estate agencies across the United States.
Here are some ways that big data can help real estate agents persevere in the face of the next economic recession.
Predictive analytics is improving the effectiveness of lead scoring models
Lead scoring is the process of assigning weighted values to rank the estimated value of new leads. A number of assumptions go into lead scoring models. Unfortunately, many of these assumptions are built on faulty logic. When you take a hard look at the data, you will see that there is often a very high discrepancy between the estimated value of a given lead and the actual payoff from it.
One of the problems is that the real estate market is very dynamic. New trends are constantly influencing the direction of the market. Some of the demographics that used to be most lucrative are no longer the highest quality leads. During the aftermath of the last recession, millennials were not very profitable prospects for real estate agents. These young adults were saddled with massive amounts of student loans and were unable to get decent jobs due to the sluggish economy. Today, the same demographic is buying homes in larger numbers as they have acclimated to the professional world and found better employment opportunities.
Predictive analytics algorithms are constantly collecting real-time data to get a better sense of the profitability of different leads. These models are able to account for a host of different trends that could be impacting the economy.
This is going to be vital for real estate professionals during the next recession. They might have difficulty finding sufficient buyers to generate stable cash flow. They are going to need to focus their efforts on working with potential buyers that are going to be most likely to make a purchase and pay the best commissions.
Using automation to improve lead engagement
Every seasoned real estate professional understands the importance of engaging with leads. They recognize that prospective buyers will take their money elsewhere if the agent doesn’t put in the effort to maintain a relationship.
The problem is that many real estate agents let clients fall through the cracks. They have so many things on their plate that they forget to reach out to customers on a regular basis.
CRM tools make engagement easier than ever. They rely on sophisticated marketing automation technology to help real estate professionals stay engaged with their customers. These tools rely on big data to assimilate large user databases to streamline this process.
Developing more holistic strategies to help boost long-term market value
Real estate agents recognize the importance of helping customers boost market value. They offer feedback to improve curb appeal and take other steps to increase property values. They also take even more drastic steps when necessary to lift the average property value in a given region if prices are starting to be depressed.
This is another area where predictive analytics models can be very useful. They can help real estate agents assess the impact that different strategies will have on housing prices in their area.
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