In today’s market, you can’t run a real estate business without data. Without it, finding the best opportunities is very difficult, and even when you do locate them, evaluating their potential is even more challenging.
But when you’re working with thousands of new records every month, the cost of data quickly adds up. Naturally, it becomes one of the top places where businesses want to cut costs, so many turn to low-cost data providers. While the data isn’t reliable, at least it’s saving them money, or so they think. However, under the surface, something else is happening that’s limiting their performance and damaging their business.
While businesses are excited about saving money and maximizing their ROI, the bad data they’re working with is leading them to connect with significantly fewer prospects, focus on the wrong opportunities, and catch the attention of phone carriers. Many businesses think low-price data is economical, but it actually costs far more than it saves them.
The problem with low-cost data providers
According to IBM, low-quality data costs businesses a collective $3.1 trillion dollars every year, which is approximately $12 million dollars per business, per year. So what makes the data many businesses rely on so bad?
The first problem is that many businesses source their data from low-quality vendors. Instead of investing time and money into finding and buying from quality sources, cheap data providers usually cobble their data together from a collection of fragmented sources that only cover parts of the country. As a result, businesses get a tangled mess of data with inconsistent formatting and information that’s missing, wrong, or outdated.
Another problem that businesses experience with cheap data providers is that they don’t enrich their data. They simply buy it from their vendors, conduct a few preliminary scans to ensure that the data is passable, and then sell it to businesses. Buying this data is like buying unroasted coffee beans straight from a coffee farm. Technically they’re coffee, but they’re not the kind of coffee you can do much with. In the same way, data won’t bring much benefit to the business that buys it until it’s been enriched and improved.
Another key problem with low-cost data providers is that the data they sell is usually surface-level. It doesn’t give businesses the in-depth information they need to make strategic decisions. If you’re buying property information, you probably need it to do more than just tell you the address of a house or the phone number of the owner. While these are important pieces of information, you can’t do much with them alone. But if they’re combined with important information like the property’s age, the house’s features, and the owner’s financial status, you suddenly have enough information to identify and capitalize on opportunities.
How do these problems impact businesses?
Some of the effects of bad data are obvious and fixable, but there are other effects that aren’t as easy to spot, which means they can secretly hurt your business for years and leave lasting damage on it. For starters, bad data, especially contact data, will keep you from reaching the right people. It will reduce your revenue and turn your deal search into a desperate scramble for revenue.
But it can also create long-term breakdowns in your business as well. Not only will it cause you to lose opportunities, but it will also create employee turnover as your team members grow tired of calling wrong or disconnected numbers. It can also catch the attention of the FCC and phone carriers, which will lower your connection rates and could lead to a serious spam investigation.
Wrong numbers aren’t the only piece of bad data that can affect your business. If you don’t have a good way to identify opportunities, your pipeline will dry up or if you’re new, it may never get started at all! And if your data doesn’t help you speed to the lead, you’ll always be in second place at best. The more deals you lose to your competitors, the less revenue you make and the more potential market share you lose. Depending on the industry you’re in, this could be very difficult to reverse.
These are just a few of the consequences you can face when you run your business off of low-quality data. In the same way that you would never put E85 gasoline in a supercar, you shouldn’t run your business off of data that you can’t trust.
How to find a data provider you can trust
At this point, it may seem like there’s little hope. Everyone claims to have the best data, and yet most of it’s still very unreliable. But don’t worry; unreliable is not the industry standard. There are quality data providers, and finding them is easy if you know about the key characteristics that you can use to identify them.
The first is where they get their data from. Quality data vendors source their property data from tier one providers, which are companies that have relationships with county records offices and other data sources across the country. These relationships give providers wide coverage and from-the-source access to information.
Quality vendors also rely on in-house data science teams. If we return to the coffee bean analogy from earlier, buying data from a company that doesn’t have a data science team is like going to a cafe and being expected to find the best beans and then roast, grind, and brew your own coffee. It adds several new layers of work that you likely don’t have the expertise or time to tackle. If you’re buying data that hasn’t been enriched, you’re investing in something that isn’t actually ready for your use.
But when you have data that’s been refined and enhanced by data scientists armed with machine learning and data analytics algorithms, you’re going to connect with far more prospects, identify significantly more opportunities, and land deals at a level you’ve never experienced before.
Finally, a quality data provider will give you access to in-depth property information. One benefit that low-quality providers usually advertise is their match rate, or how often they have information for a specific contact information search. But what they won’t tell you is that while they can piece together a lot of information, they can’t find many data points for each record.
When you work with a data provider that’s worth investing in, your business will have so much data you’ll feel like you’re drowning in it. Not only will you have access to contact information, but you’ll also have:
- Relative and spouse contact information
- Line type insights
- Deliverability reports
- Federal DNC status
- Known litigator status
- Email addresses
When it comes to property data, you’ll have even more information that takes you far beyond a property’s zip code and its square foot measurements. You’ll be able to filter by property features, history, lot size, owner financial and demographic information, MLS-informed market trends, and much more. In short, you’ll have everything you need to estimate home prices and make informed decisions.
Where you get your real estate data matters more than you may initially realize. While cost-cutting always seems like a great way to boost your ROI, there are some instances where it can severely damage your business. Your real estate data is one of them.
However, the factors we explored in this guide are just the beginning. There are four even more important factors to consider when picking a data provider, and we have an illustrated guide that explains each one in-depth. There’s no reason to stay in the dark about how your data is affecting your business and what you can do about it. Click here to download your copy today.