Search engine giant Google is partnering with Auction.com to create Nowcast, a product to rival home-selling software created by the National Association of Realtors. Nowcast claims it can predict home sales nearly one month ahead of the NAR's data mining capabilities. The usefulness of this data, if it bears fruit, can be a massive boom to the real estate industry.
Nowcast works by layering home sales data gathered from Auction.com over the massive data mine that Google gathers from maps, addresses, home sales and home prices. Each Nowcast release is at the first of the month, nearly three weeks ahead of the NAR's official report on existing home sales.
Auction.com's prediction models normally come in higher than the NAR's monthly numbers for 2014, with two exceptions through September 2014. Nowcast predicts home sales of approximately $5.18 million for October 2014, with a range of $4.97 million to $5.38 million for existing houses. Ranges of numbers for Nowcast models missed the mark with NAR official numbers for the first four months of 2014 before getting better from May to September. The next NAR release is on Nov. 20.
The widest margin of error since May 2014 for Auction.com's predictive models was $182,000, or 3.6 percent, in August 2014. That margin of error is phenomenal, considering that opinion polls and surveys often have wider margins of error of 4 or 5 percent when gauging political outcomes for elections.
Combining home sales data with a Google search means big things for the real estate industry. If Google and Auction.com convince real estate agents, banks, mortgage lenders, developers, brokers and government agencies that Nowcast can accurately predict home sales, the proprietary software alone could be worth billions of dollars. Clients no longer have to rely on NAR numbers to assess how well the real estate market is doing on a monthly basis.
Nowcast combines what Auction.com and Google do best. Auction.com sells real estate with its online marketplace, and Google collects data from myriad sources, including a simple Google search. The ability to predict home sales is a first-of-its-kind endeavor, and it can take Auction.com to new levels of profitably while giving Google a share of a market it has yet to embrace. It marks a win-win situation for both companies, while Nowcast may leave traditional real estate firms such as the NAR in the dust.
Nowcast has several applications. It can predict home sales in areas before a housing boom or bust. Real estate professionals and banks can shift their focal points before the housing market tumbles as it did in 2007. When conflicting reports about increases in consumer confidence and decreases in home prices leave the real estate industry in limbo, Nowcast can help clear up what is really going on with the housing industry. Auction.com claims it can tailor data reports for companies based on location, types of real estate and price fluctuations.
Google Capital invested $50 million in Auction.com, so it has a vested interest in the outcome of Nowcast. When the software becomes more accurate each month, the ability to predict home sales may become the premiere marketing tool for Auction.com to grab larger shares of the real estate industry moving forward.
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