Using property data for real estate risk management

If you’re reading this, you already know that real estate risk management is a fickle mistress. One second, you think you’ve figured out the perfect equation to ensure that the property you’re investing in is going to be a sound investment; the next, you’re crunching the numbers, finding new information, and questioning every financial decision you’ve ever made and wondering if you should actually start a career as a dog food taster. 

Put the spoon of dog food down. You’re doing just fine. 

Assessing real estate risk before purchasing a condo, apartment complex, brick and mortar location for your next retail adventure, or even when looking to insure said properties, is tricky. 

One missed calculation can result in significant losses. What if you didn’t realize how close a property is to the coast and at risk of storm surge before you buy/insure?

The secret to getting the perfect equation for accurate property risk assessment is in the data. Property risk data is only accurate if you use the full scope of enriched property data.

Fancier property data points

Common property data points that everyone knows about are square footage, number of rooms, number of bathrooms, whether or not the basement is finished, etc. Everyone uses those. Let me repeat that for the folks in the back or the skimmers out there: EVERYONE USES THOSE BASIC INFORMATION POINTS! They aren’t special. They don’t give you that bump of information you need to make accurate property risk assessments. 

We need to get bougier. 

Did you know that Smarty® provides users with over 350+ data points for your property risk data analyses? You can click on this full list to view it now, or here 4 of the more unique ones you might not know about and how they help you develop a better risk profile for purchasing or insuring properties. 

1. Structure elevation: Knowing the elevation of a structure is highly important when assessing risk. Is the building on a hill in the back of the property? Is it in a gully at the center of the property by a catch basin and at risk for flooding? Property risk data should always include the elevation for the most accurate understanding of the property.
2. Construction type: Understanding the material type can drastically change how a property should be insured, how often it should be renovated, and which types of damage to look for. Wood has a whole different set of problems and critters than steel. Accurately understanding a property's features will allow you to better see the whole picture of the property risk you may be taking on.
3. Historical market data: SmartyKey® is our persistent, unique identifier that tracks an address over time. Understanding the different renovations performed on a location over time can help you see the greater picture of what you may have to fix in the future or what DIY projects might need a second glance. Maybe you SHOULD hire a plumber to look into that extra bathroom installation. 
4. Breakfast nook status: How are you supposed to be able to enjoy “second breakfast” without a breakfast nook? This is truly the most critical question to ask yourself when assessing risk. (Ok, not really, but think about how much of a perk that will be and the value added to a property if so.)

Combining the powers that be  

Property data points combined with the winning power of geocoding just makes sense for real estate tycoons and insurance moguls alike. Like peanut butter and jelly, chips and salsa, and pineapple on pizza (we’ll die on that hill), property data is truly the most valuable when it’s combined with the power of geocoding and persistent, unique identifiers (PUIDs), helping you to win in every conceivable way.

People working in or associated with these agencies must embrace new technologies to stay ahead of the competition. Here are just a few benefits of using data from Smarty’s Address Enrichment API while conducting property risk assessments: 

Trend analysis and prediction

The overwhelming amount of property data available allows people to track property changes over time. By analyzing this data, you can identify specifics about the property. You can then make future predictions based on historical trends to gain better insights into how the property value will change in the future. 

Impacted company types: Commercial real estate firms, construction companies, mortgage companies, house-flippers, appraisers, insurance agents, re-insurers

Accurate property listings

Success in the real estate industry is directly related to quality data and credible evaluations. The more data points you can analyze, the more accurate property valuations will be. After all, if the property has a feature that isn’t described in the address data, then you can’t measure how that data point will affect the evaluation. For example, features like solar panels and pools raise the value of a property, while fire risk can lower the value of a property. Not all data sources mention this stuff, so you can include these things in your analysis when your competitors aren’t. 

Impacted company types:  Appraisers, brokers, lenders, investors, insurers

Identify potential clients

Understanding the local real estate market is essential for companies to decide which properties to target and when. Property data can provide insights into which customers are new home buyers, where higher-income properties are located, and whether a property is residential or commercial. It makes identifying potential clients easier when targeting a particular demographic.  

Impacted company types: Agents, brokerages 

Targeted marketing

Customers have come to expect targeted marketing, so they tend to overlook generalized content. Property data can provide valuable insights into your potential customers, allowing you to personalize your marketing efforts related to specific personas/groups of people.  

Impacted company examples: Property managers, real estate app developers, agents, 

Persuasive narratives

When applying for a job, you tailor your resume and interview to the specific requirements. The more requirements you meet, the better your chances are for receiving a job offer. Property data can provide you with extensive data points. When a client is interested in a property, you can use these data points to persuade them that the property meets all of their requirements and beyond. This data can also support appraisal decisions and create a “paper trail” of why certain decisions were made. 

Impacted company examples: Real estate attorneys, mortgage lenders, brokers, agents, 

A GOAT conclusion

Many use cases exist for using Smarty in your property risk assessments, but if you aren’t using it to increase your value assessments, informative buying and selling capabilities, and gain a better, more targeted approach in your marketing tactics, you’re missing out on becoming the GOAT (greatest of all time).

Use case: Accurate value assessment

Real estate agents rely on quality data to evaluate properties and understand future industry trends. However, not all data is created equal. For example, most geocodes for a parcel of land are for the center of the parcel, but this can cause problems if the building on the parcel of land is actually on the far side of the land next to a river. The primary structure is more at risk for flooding the closer in proximity to the river

Smarty gives you the exact rooftop geocode of the building and the elevation to connect with risk models and calculate flood risk, fire risk, and even historical data for past catastrophes. Smarty can also quickly provide information on neighboring parcels of land. If a neighboring parcel has been rezoned for commercial development, that will impact the property's value. This insight provides better valuation as you can understand the property's current value and somewhat predict the future value based on historical data analytics. Magical.

Use case: Buying, selling, and increasing leads made easy

Clients are more likely to work with brokers who contact them early during their decision-making process. One of the best ways to get in early is to drive traffic to your website instead of the competition. With data analytics, you can post more information about each property on your site and attract customers looking for specific features like the number of beds, size of garage, or installed solar panels. You can have cool filters that clients can use before they even talk to you to understand stuff about the property. With the abundance of data, they’ll visualize their lives in a property before speaking with a broker. They come to meetings more informed, and you can use property data to auto-fill many forms. This lets you provide your clients with information in seconds rather than days, speeding up the sale or purchasing of a property.