Property owners often need to track their property portfolios to ensure they’re in a good position for future investment.
But there’s a catch: they’re often in the dark about how the data is being used.
Now, researchers from the University of Michigan have developed a way to understand how data is used by property managers and what data is actually being collected.
Their study, published in the Journal of Property and Economic Research, is a follow-up to an earlier one, by former U-M economist and property expert Richard Toth, who conducted a similar analysis of real estate property data.
“Real estate managers can’t really get a clear picture of how their data is collected and used,” said Matthew Czernik, a graduate student in U-Mass Amherst’s Department of Management.
“We think it would be useful for property managers to understand what they are collecting and how it’s being used to generate returns.”
Real estate property managers have a big role to play, according to Czarnik, who led the new research with his undergraduate student and professor at the university.
“The real estate market is growing faster than the economy as a whole,” Czornik said.
“There are more people buying properties, more buyers and more interest in them.”
Czarniks research found that property managers typically do not have a clear idea about how their information is being collected and how much it’s valued.
“Most real estate managers don’t have any idea how they’re collecting data and how their clients use the data,” Csarnik said, “and it’s a really poor way to manage portfolios.”CZERNIK says the best way to collect and analyze real estate information is to use it, in part, to help property managers manage their portfolios and understand what types of properties are undervalued and what types are overvalued.
“There’s no question that the data that real estate agents collect, they use it to evaluate and manage portfolios, and there are real estate investment managers that use the same information,” Czanik said of realtor data.
“That is why it is important for real estate professionals to have this data.”
The U-Mich.
researchers developed a model that analyzes data collected by real estate agent and property manager companies to determine which properties are overvaluated and undervalued.
The model looks at the average value of the property in a given month and then looks at which properties have been valued lower than average in that month.
In the example above, the average for the year is $2.35 million.
The property has been valued at a $3.25 million valuation in March of the same year.
The model then compares the value of each property in March with the value for the same month in 2014.
The result is a monthly summary of the average of the values in each of the three years, as well as an average for each month.
The data analysis method used in the study was similar to Csernik’s earlier study of realtors, but it’s been a challenge to find a good model to understand this data, said Toth.
Czerniks work found that while the information that realtor data companies use can be used to make better decisions about the value and price of properties, there are also areas where the data can be misleading.
“When you have multiple real estate agencies, there’s going to be a lot of information being collected,” Czenik said about the information from real estate properties.
“You can’t know whether that information is really useful, or what is actually valuable.”
For example, a property may be valued by a property agent at $3 million but by an agent at a lower price.
“When you go to the agent, they’ll be able to tell you that it’s not the property you’re looking for,” Czinik said with a laugh.
Real estate data companies often don’t disclose the underlying source of the data, which can result in an inaccurate value assessment of properties.
Another issue with real estate companies collecting property information is that the information is sometimes used to manage their properties, even when there is no obvious indication of what properties are worth more or less.
“I don’t know how much value property managers are being paid,” Czesnik said.
“If you have to go and tell someone that the property is worth more than $3,000 a month, it’s really not accurate.”
The study also found that realtor companies often report data that is very specific to the property.
“A property may only be valued at $500 a month,” Czedik said “or a property can be valued in terms of a number of different things, such as the value at the bottom of a barrel, or the value when a home is sold.”
But that doesn’t mean that data from realtor company data should be used in all cases.
“In some cases