Real estate data industry insights from Pat O’Connor
The next game changer that Finance Monthly spoke with is Pat O’Connor who has been a leader in the real estate data business since 1988. He has expanded the real estate data business from a two-page monthly newsletter on Houston apartment trends into a national database for both commercial and residential real estate.
What inspired you to start Enriched Data?
The data quality from existing national data providers simply did not have either the breadth or depth of quality required for us or other real estate professionals we met. A second factor was the existing commercial real estate data sources had either limited or inaccurate contact data for the owners. In many cases, the owner contact data was simply the name of an entity. Many real estate professionals need to be able to contact the owners of real estate to transact business. It is incredibly time consuming to start with the name of an entity and have to research to find the name of the owner. The need for accurate owner contact data is a recurring theme we have heard from real estate professionals. They do not want to spend their time researching phone numbers on the internet; they want to spend their time doing deals.
What solutions does Enriched Data provide?
Enriched Data helps companies to increase their revenue by 30 to 100% through a focused effort that includes excellent data, intelligent marketing and real estate professionals. Our efforts are currently focused on mortgage bankers and real estate investment sales professionals. We expect our clientele to expand to include real estate leasing and management professionals, as well as vendors to the real estate industry. Our core purpose is to increase our clients’ revenue.
How are you accommodating small and large companies?
We serve hundreds of clients, including seven of the ten largest real estate service providers in the USA. We also serve one man companies. Our data is accurate and vast enough to supply the big companies. For those same reasons, we help to make the smaller companies more efficient and able to compete with their larger competitors. Our customer service team is pleased to work with companies regardless of size.
What are your biggest pitfalls and how have you overcome them?
Accurate real estate data has been the greatest challenge. We have built proprietary software to facilitate the research process and built in validation criteria to identify anomalies. Training researchers has been a key step in the process. When we started, researchers were only finding email addresses for about 15% of the property owners. They are now finding email addresses, Linked-In accounts and company websites for about 70% of the real estate owners. Quality control is also a vital part of the process. We call the phone numbers to verify their accuracy.
What do you see as the most important challenges that Enriched Data faces? What specific strategies are you implementing to overcome them?
The most important challenges facing Enriched Data are understanding what specific information clients want and how they want it delivered. While it is helpful to meet with clients and prospective clients to discuss their plans and needs, the extreme pace of change in information technology and marketing generates a dilemma where many people don’t really know what they want. In many cases, real estate professionals are attempting to generate sales, whether in building sales, loans, leasing, or as vendors to buildings. The changes in digital marketing and psychographics have not been inculcated by the leadership of many real estate organizations. Having raw real estate data can move you part way to maximizing sales. However, knowing how to use the data effectively is essential. In many cases we are working with clients to help them develop a marketing and sales strategy, and then introducing them to the marketing professionals who can best use real estate data.
How can someone use your data for predictive analytics?
We have a large number of predictive analytics for clients. The simplest for commercial mortgage bankers is providing them with information on maturity dates for loans with large prepayment penalties. Slightly less direct is providing mortgage bankers with information on buildings with construction loans that are prime for long-term debt. The analytics are more complicated for single family. The first step is to understand the target market. The second step is to evaluate people who have used the product, for example, a home equity loan. If the client does not have such clients, it is possible to identify them from the public records. The next step is to use psychographics to identify the types of people who are the most likely to purchase. The next step is to identify a universe of possible borrowers. For example, if the product is home equity loans, you identify property with the requisite amount of equity. The final step is to overlay the psychographics over the universe of possible borrowers to identify those most likely to purchase. Psychographics can often identify people who are four to ten times more likely to purchase.
You have been CEO of Enriched Data since March 2015. What have been or are your priorities in your role?
There have been three priorities. The first priority has been meeting with clients to understand their needs, how they use data and their data requirements which are not being met. Second, we have been building a research team and electronic research tools to facilitate research of real estate sales and mortgages. The third priority has been acquiring tax rolls for 97% of the United States and deeds and deeds of trust to cover the same area. The raw base real estate data from tax rolls, deeds and deeds of trust is merged and then enhanced with detailed contact information on the owners, lenders, and borrowers.
What have you most enjoyed about operating within the sector over the past decade?
Working with clients to understand their needs and then working to fulfill those needs as information technology is changing, has been fascinating. Being part of the generation that has moved real estate from hard copy books to the Internet has been gratifying. It has also been a pleasure to integrate expertise in IT, real estate data and determining how to locate and integrate multiple sources of data. While the term big data is often used, we are spending more and more time seeking and integrating additional fields of data to enrich the data and provide clients with the data they need.
What are the main drivers for the development of the real estate industry in the US in the near future?
There are at least three important trends affecting real estate in the US. Retailers are seeing more and more retail spending moving to the Internet. We will continue to see entire categories of retail businesses, such as movie rentals and book stores that are largely replaced by internet sales. There are trends in office space use however they are not as clear. There are factors tending to reduce the amount of space a company needs, departments working from home. For example, many appraisal firms are sharply shrinking their office space requirements by having team members work from home. The other trend in office is for micro spaces with companies such as WeWork providing office space options from as low as $45 per month. There are a number of competing companies and is likely to be consolidation in the micro-office market. Finally, the number of households living in apartments has been increasing due to: 1) higher home prices, 2) reluctance to commit to a mortgage and a fixed location, and 3) people are waiting longer to get married and have children.
What are Enriched Data’s goals moving forward? What does 2017 hold for the company?
Enriched Data’s goal is to have the best quality residential and commercial databases available, merged with the teams and technology to allow clients to effectively use data. We have forty software engineers, which is more than any of our clients to my knowledge. Providing both the data and the information technology and marketing resources to allow clients to effectively use data is our long-term goal. During 2017 we will be working on completing our inventory of accurate contact data for all real estate owners of any commercial property worth over $2 million across the US.