
Startups Are Making Real Estate Businesses More Efficient - prostoalex
http://techcrunch.com/2015/12/11/how-startups-are-making-real-estate-businesses-more-efficient/?ncid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29
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cryoshon
I have some experience with this that I figured is worth sharing, though it's
not directly related to the article. Recently, I developed a quick tool that
checks the demand for a given type of property in a given geographical area
and compares it with the demand for a single listing in question in order to
find discrepancies. The discrepancies are typically asking prices that are
either far lower or far higher than the demand for that kind of property in
that area. I marketed this to a number of brokers as a way of calibrating how
quickly they wanted to have a listing turn over, and offered a few price
adjustment suggestions to their listings.

I failed for a few reasons, and I think it's worth outlining them here so that
other people don't fall into the same traps if they decide to make tools for
the real estate industry. YMMV, and take what I say with a grain of salt.

1\. Real estate isn't as quantitative as I wanted it to be in my mind.
Emotional "pulling out of their ass" price assignment was the rule, with no
exceptions. Most of this works to the advantage of the people handling real
estate, as it prevents them from being held accountable for judgment mistakes
(as decisions are completely and purposefully subjective) within their own
organizations.

2\. Real estate folks aren't tech-savvy. Not even a little, and not even the
ones that claim to be. Even getting the full functionality out of Zillow was
beyond most of the folks I talked to. The best I saw any of them do was a
table that calculated averages in Excel. This fact means that any product you
deliver or show them has to be non-beta, completely polished, functioning
flawlessly. They are used to selling people on existing features, and analyze
products as such.

3\. Honesty in business practices isn't considered desirable. Point blank, one
of my early clients told me that they'd have their representatives at the open
house try to screen out people who didn't appear wealthy enough to purchase
the property at the high-end cost estimate they had agreed on internally. I
was trying to sell him a way of justifying different price points
quantitatively rather than qualitatively, but I'd completely missed that such
justifications aren't wanted because having a formal structure prevents casual
exclusion of the "wrong" type of people.

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miscellaneous
Thank you for the detailed post - very helpful for me. If I may ask, what were
some of the factors that you used to determine the demand for a property in a
given area?

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cryoshon
Median turnover time, price shift from month to month,
demographic/socioeconomic data on prospective buyers. It's all quite simple,
and behaves exactly as you would expect within urban areas-- as skeptical as
the brokers were, their narrative to justify prices almost always ended up
very close to the quantitative estimate. Suburbs and commercial real estate
are much harder to nail down correctly.

