Geospatialtech 4 Realestatebrokerage

Geospatial Technologies for
Real Estate Brokerage

By

Julius M. Bagate
jules.bangate@gmail.com
Manila Boar of Realtors! "ept. #$! #%&'! Gran "ho(room! East(oo )ity! *ibis! +).

)ontents
Geographic ,nformation
Geographic ,nformation "ystem -G,".
Google Earth
Global /ositioning "ystems -G/".
Real Estate ,nustry0 *essons from the /ast

an 1uture 2irections

Real Estate
Real estate is "property consisting of land and

the buildings on it, along with its
natural resources such as crops, minerals, or
water; immovable property of this nature; an
interest vested in this; (also) an item of real
property; (more generally) buildings or housing
in general.
Also: the business of real estate; the profession

of buying, selling, or renting land, buildings or
housing."[1]

Real Estate an G,"
Real estate is inherently spatial in nature
G," has many applications in the real estate

inustry
G," enables real estate professionals
To measure the true impact of location
Make appropriate jugements in many areas
Resiential brokerage
3ppraisal
Market analysis

Real Estate an G,"
Real estate practitioners ha4e long 4alue the

importance of 5location! location! location6
/ractitioners are intereste in methoology that

can be applie or benefit from toay.

Real Estate an G," 7 Benefits
,ncrease proucti4ity in many inustry

operations
Greater accuracy an timeliness of information

both for professionals an the general public
Market (ill mo4e to higher le4els of efficiency
May ri4e o(n cost of real estate transactions
Reuction in traitional information arbitrage of

real estate.
,nsie information or market kno(lege historically

has allo(e for unusual large real estate returns

3rbitrage (/ rbtr /)
In economics and fi nance, the practice of taking
advantage of a price difference between two or more
markets: striking a combination of matching deals that
capitalize upon the imbalance, the profi t being the
difference between the market prices.
the possibility of a risk-free profi t after transaction costs
an arbitrage is present when there is the opportunity to
instantaneously buy low and sell high.

Residential Brokerage
Provides and interface between people who want to
sell their homes and prospective home purchasers.
Key to any successful real estate transaction is
timely information in a structured and repeatable
standardized framework about the
Property
Market conditions
Transaction terms
US Example: Multiple Listing Service DB


8" E9perience0 M*" *imitations
Provide limited information about the housing

market
Does not include the entire stock of property for
sale
Listing only from members
Properties for sale by owners are not included

Lack listings of newly built housing (large focus on
resale housing)
Geographic boundary coincides with jurisdictional
boundaries
Lead to confusion and ineffi ciencies in market transaction

for large and robust metropolitan areas

8" E9perience0 M*" *imitations
3ccess to M*" is generally restricte to its real

estate professional members
Buyers an sellers are not generally gi4en access
This may force buyer an seller to make ecision

base on imperfect information
M*" lack user frienly search! :uerying an

4isuali;ation capabilities.

8" E9perience0 M*" to G,"
G," technology is becoming influential in

leaing the market to(ars a computeri;e!
open7access resiential property atabase
)ompetiti4e (ith an impro4e upon M*" 2B.
<e( online atabases allo( real estate

professionals to access information on all types
of resiential property
<e(ly built homes
1or sale by o(ner homes
Brokerage liste

1uture atabases (oul inclue
)ommercial
,nustrial
3gricultural


Embeing G," an multimeia (oul
2isplay information in a map format
)onuct spatial searches (ith user specifie

property an neighborhoo characteristics.
2e4elopment of consumer oriente ata an

tools to facilitate home7buying on the internet.


G," is a 4isual meium.
)an help serious prospecti4e buyers to target

:uickly the right house for them
Rele4ant information is presente in
Maps
Tables
,mages


)onsumers can perform searches using criteria

along structural attributes of properties
3rchitectural style
<umber of berooms or bathrooms
3menities esire
/ool
Basement
1ireplace


G," allo(s spatial :ueries
Base on location an geographic relationships
/rospecti4e buyers place of (ork
/referre shopping
=ther estinations
/referre istance or tra4el time from home to specifie

estination.


G," has the ability to calculate in real time

specifie geographic relationships
,entify objects -eg. >ome for sale. that meet a

criteria.
This makes resiential location ecisions more

intuiti4e an enable better jugement by the
prospecti4e buyer.

*an Transaction 2ata
,nformation on legal real estate transactions is use

for property assessment.
,mplies a4ailability of accessible ata for public recors
G," technology offers spatial ata management!

e9traction! :uery an 4isuali;ation.

*an ,nformation from "atellite an 3ir /hoto

,magery
Raster images can be useful supplements to

traitional real estate information
?ector 2atasets @ points! lines! polygons
Raster 2atasets @ satellite an air photo imagery
Rooftop pictures can be useful for both irect an

subsiiary real estate analyses.
3ppraisal of large tracts of lan.
Raster images can be use to etect 4egetation an lan

slope.
,nformation can be combine (ith comparable sales by

lan type to eri4e estimate 4alue .


,magery
3ppraisal of large tracts of lan.
Raster images can be use to etect 4egetation an lan

slope.
,nformation can be combine (ith comparable sales by

lan type to eri4e estimate 4alue .


,magery
2etection of ne( roa net(orks not yet recore in

the spatial atabase.
2ocument the unerlying lanscape topography
"ho( absence of roa connecti4ity
2ocument presence of important natural features
"horelines! streams an ri4ers
"upport &
st
estimation (hether the property is in a
floo plain.


,magery
Real estate applications re:uire at least &7meter

resolution of raster imagers

3ppraisal
3 key function in the real estate inustry
Re:uire for housing transactions
*ocal go4ernments nee to assess market 4alues of

properties for resiential ta9 purposes
*eners nee to estimate the 4alue of loans in their

portfolio to assess loa loss reser4es

3ppraisal
1or real estate transactions! this is typically one on

a single7property basis by an appraiser (ho
performs a market analysis
makes an eucate guess as to the market price of the

property.
/1 for appraisers in the /hilippinesA
)ost becomes large if this in4ol4es a large 4olume

of properties.

3ppraisal
>igh cost of appraisal of large numbers of

properties le to the use of computeri;e
automate mass assessment systems -)3M3.
1or resiential ta9 assessment
/ortfolio management purposes.
)3M3 aims to
increase accuracy by reucing human error
2ecrease cost of appraising properties by increasing

proucti4ity

3ppraisal
)3M3 systems are base on statistical moels
8se information from e9isting sales to estimate market

4alue of properties not yet sol.
Manual appraisal use recent selling prices for

similar properties to estimate market 4alue.
?alue estimate from three recent nearby comparable

sales
3justment for ifferences in physical characteristics of

the property an neighbourhoo.

3ppraisal
)omparable sales approach takes into account

recent market information
/roblem (ith this metho for portfolio assessment

an ta9 purposes0
/rohibiti4e cost
=perational in7feasibility of fining comparable properties

(hen large numbers of properties are in4ol4e.

3ppraisal
"patial :uery capabilities of G," can help
Bith G,"
)an select a large number of comparable properties
)an fin properties that closely match the subject

property
<ote0 8se of more an better comparables (ill
More accurately reflect the local market conition
*ea to more accurate estimates of market 4alue


Geographic ,nformation "ystems
"patial +uery
3 statement or logical
e9pression that selects
geographic features
base on location or
spatial relationship.
1or e9ample! a spatial

:uery might fin (hich
points are containe
(ithin a polygon or set of
polygons! fin features
(ithin a specifie
istance of a feature! or
fin features that are
ajacent to each other.

Geographic ,nformation "ystems

3ppraisal
3 G," base system (oul allo( the use of

information of a propertyCs
specific to the geographic location
<eighborhoo
,nformation can inclue the follo(ing characteristics
/hysical
"ocioeconomic
2emographic
1rom "eafirst BankCs E9perience0

Results of this automate 4aluation
system is ae:uate for uner(riting
mortgage loans D%7DEF of the time

3ppraisal
"ystem informs the user
<ee for aitional re4ie(
,nspection
Reappraisal by site inspection
"ystem is e9pecte to significantly reuce re4ie(er

processing of initial 4aluation re:uest an
subse:uently reuce the cost of obtaining a
mortgage.

3ppraisal
G," (ill make commercial property estimation less

costly an more accurate.
Typically commercial property is e4aluating using

the replacement cost approach ue to less
comparable commercial properties than houses.
8se of computer assiste systems for estimation
?ariation in e9pecte cost
Market conitions
=ther
>eating an cooling systems! story heights! builing

characteristics ..

3ppraisal
Bith G,"! estimation base on re4enues generate

from location can be incorporate in the 4aluation.
Geographic analysis can be use to eri4e highly

accurate estimates of the e9pecte sales re4enues
generate from a site.
3ssess spatial e:uity of property ta9 assessments

by local go4ernments.
E9amine spatial istribution of the ration of assesse

4alues to market 4alues.

,nsurance 8ner(riting
Many real estate transactions coul not occur

(ithout the promise that the mortgage lener an
o(ner can @ an (ill @ be insure against loss.
There are G," tools for insurance uner(riters that

links specific aresses (ith risk information an
policy pricing 4ariables.
Eliminates costly an time consuming manual lookups.


This streamlines insurance uner(riting by

incorporating geographic information an G,"
technology to
1orecast losses associate (ith place7base

en4ironmental ha;ars incluing
1ile
>urricanes
1loos
Earth:uakes
"er4ices inclue etection of risk an 4erification if

the risk is appropriately charge.

Benefit in reucing cost of getting location7base

information for uner(riting an rating risk
,ncrease in uner(riting precision an efficiency.


3ccuracy
Eg. Making ecisions base on (hether a property is

insie or outsie a floo ;one re:uires geo7positional
accuracy o(n to a fool.
2ata accuracy must be at least as great as the

geographic scale.
Major limitation is the :uality of ata.


Regulatory )ompliance
Real estate transactions normally re:uire

financing.
Market conitions an regulations that affect

financial markets also affect real estate
markets.
1or the 8"0 1e re:uirements inclue

compliance (ith )ommunity Rein4estment 3ct
-)R3. an >ome Mortgage 2isclosure 3ct.
->M23.
,n the /hilippinesA

)R3 an >2M3 re:uirements are inherently

spatial
G," is an e9cellent 4ehicle for efficient reporting
>elp in creating reports an supporting ocumentation
"patial atabase management capabilities of G,"

can greatly ai mortgage atabase
=rgani;ation
Tracking
3nalysis

)R3 an >2M3 re:uirements are inherently

spatial
Translate to increases a financial institutions market

share an re4enues.
2ocumentation of ha4ing aggressi4ely pro4ie

information on the range of ser4ices or proucts
a4ailable can help financial institutions efen itself
that it is a4oiing making loans in certain census
tracts.

Market 3nalysis
Real Estate "ite 3nalysis
)ommercial site e4aluation is a key factor in

eciing (here to locate ser4ices
?alue through strategic location of agencies! branches

an hea:uarters.
"patially istributing ser4ices
Eg. Bank 3TMs
/re4iously unattracti4e formal location analysis ue

to comple9ity an cost
<o( more attracti4e because of G," an

impro4ements in computing

Market 3nalysis
Business technology focus
8se of G," to
E9amine business opportunities systematically
2e4elop locational strategies


Market 3nalysis
)ertain locations offer istinct a4antages o4er

other locations
1or retail! location contributes more to the long term success of the
retail unit than oes any other factor
>a4ing the right location for the retail or ser4ice inustry is critical
because it is a (ay of the outletCs location that customers access the
offering of the business.
*ocational a4antages are measure in increase sales an profits
*ocation of a retail or ser4ice outlet can be the characteristics that

istinguishes those outlets that can meet or e9cee sales
performance objecti4es than those that o not.

Market 3nalysis
G," pro4ies the looking glass for ifferentiating

bet(een sites before the in4estment is mae.
Enables site analyst to simultaneously analy;e
8ni:ue local market conitions
*an use patterns
2emographics
2e4elop a customi;e location strategy
Eliminate nee to follo( a highly structure

5cookie7cutter6 approach to real estate location

"ite 3nalysis
Bith G,"! the site analyst0
(ill be less likely to o4erlook goo sites
Eliminate inferior sites from consieration
"ite location :uestions in real estate are best aresse

(hen G," is combine (ith formal locational analysis.
G," (ithout formal location analysis
3 black bo9
More etrimental than beneficial
Brong methos can be easily applie at the

e9pense of ini4iual e9perience jugement

"ite 3nalysis
http0GG(((.;oeclark(est.comGe4elopment7an7
historic7preser4ation.html

"ite 3nalysis

"ite 3nalysis

"ite 3nalysis
The Beb may change site location strategy for

many institutions
>ousehols may access basic real estate!

banking! an mortgage finance ser4ices
through the (eb.

Measuring >ousing 2eman
1orecasting the eman for housing by price an

location is a necessary ingreient (hether a housing
construction loan shoul be gi4en! an at (hat rate.
Rate reflects market risk.
3utoregressi4e ,ntegrate Mo4ing 34erage -3R,M3.

moel is use to forecast housing absorption patterns.
3R,M3 moel is incapable of capturing a more

comple9 an realistic stage pattern of housing
e4elopment

Bith G," more comple9 geography can be inclue in

the moeling an statistical proceures
3llo(s e9planation to fit more closely the real (orl.
G," can facilitate the positioning of the correct

information (ithin each submarket an subse:uent
analysis of submarket ata.

E9. )alculate for a specific neighborhoo the rate of

housing absorption H years into the future.
"pace7time forecast (oul account for
>istorical gro(th
>istorical gro(th of neighborhoos surrouning the target

neighborhoo
*imitations in future gro(th attributable to ;oning anGor

en4ironmental constraints
E9pecte population increase by emographic category

for the region
"tage of e4elopment of housing submarket for housing

absorption

Moels can be e4elope for measuring housing eman (ith

G,"
>ousing gro(th an eman can be 4isuali;e (ith

G,"

Geoemographics
Geodemography includes the application of

geodemographic classifi cations for business,
social research and public policy but has a
parallel history in academic research seeking to
understand the processes by which settlements
(notably, cities) evolve and neighborhoods are
formed.
It links the sciences of demography, the study

of human population dynamics, geography, the
study of the locational and spatial variation of
both physical and human phenomena on Earth,
[2] and also sociology.

Geoemographics
In short, geodemography is the study of people based

on where they live.
Geodemographic systems estimate the most probable

characteristics of people based on the pooled profi le of
all people living in a small area near a particular
address.[3]

Geoemographics
/ro4ies sophisticate marketing tools combining G,"

(ith a 4ariety of electronic atabases0
Go4ernment census ata
8pate census7like ata
*ifestyle atabases

Geoemographics

http0GG(((.instantatlas.comGsamplesGnottinghamIoacGatlas.html

Take a(ays
)ommercial an resiential real estate! more that any

other sector of the economy are sensiti4e to location.
The ability to measure the impact of location is critical.
=nly (ith the a4ent of G," it has become possible for

real estate professionals to measure the true impact of
location an make appropriate jugements base on
the kno(lege of that impact.
3s the full potential of G," is reali;e! the real estate

market (ill mo4e to higher le4els of efficiency an
proucti4ity.

Take a(ays
>uman cost
1e(er professionals (ill be re:uire to meet the

nees of consumers
Greater market segmentation through

submarkets
,ncrease in accuracy an timeliness of

information accessible to both real estate
professionals an the general public.
G," (ill become the real estate information

management tool.

Take a(ays
,t is only (ith the use of G," that (e can

measure the impact of location in each
ecision.

References
Thrall! G.,.! G," 3pplications in Real Estate an

Relate ,nustries! Journal of >ousing
Research ?ol.J! ,ssue & K1rannie Mae
1ounation! &JJD

References

References
The Federal National Mortgage Association (FNMA),

commonly known as Fannie Mae, was founded in 1938
during the Great Depression as part of the New Deal.
It is a government-sponsored enterprise (GSE), though it

has been a publicly traded company since 1968.[2]
The corporation's purpose is to expand the

secondary mortgage market by securitizing mortgages in
the form of mortgage-backed securities (MBS),[3] allowing
lenders to reinvest their assets into more lending and in
effect increasing the number of lenders in the mortgage
market by reducing the reliance on locally-based
savings and loan associations (aka "thrifts").[4]

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Geospatial Technologies for

Real Estate Brokerage

Geographic ,nformation "ystem -G,".

Global /ositioning "ystems -G/".

Real Estate ,nustry0 *essons from the /ast

Real estate is "property consisting of land and

Also: the business of real estate; the profession

Real estate is inherently spatial in nature

G," has many applications in the real estate

G," enables real estate professionals

To measure the true impact of location

Make appropriate jugements in many areas

Real estate practitioners ha4e long 4alue the

/ractitioners are intereste in methoology that

,ncrease proucti4ity in many inustry

Greater accuracy an timeliness of information

Market (ill mo4e to higher le4els of efficiency

May ri4e o(n cost of real estate transactions

Reuction in traitional information arbitrage of

,nsie information or market kno(lege historically

US Example: Multiple Listing Service DB

Provide limited information about the housing

Properties for sale by owners are not included

Lead to confusion and ineffi ciencies in market transaction

3ccess to M*" is generally restricte to its real

Buyers an sellers are not generally gi4en access

This may force buyer an seller to make ecision

M*" lack user frienly search! :uerying an

G," technology is becoming influential in

)ompetiti4e (ith an impro4e upon M*" 2B.

<e( online atabases allo( real estate

<e(ly built homes

1or sale by o(ner homes

1uture atabases (oul inclue

Embeing G," an multimeia (oul

2isplay information in a map format

)onuct spatial searches (ith user specifie

2e4elopment of consumer oriente ata an

G," is a 4isual meium.

)an help serious prospecti4e buyers to target

Rele4ant information is presente in

)onsumers can perform searches using criteria

<umber of berooms or bathrooms

G," allo(s spatial :ueries

Base on location an geographic relationships

/rospecti4e buyers place of (ork

/referre istance or tra4el time from home to specifie

G," has the ability to calculate in real time

,entify objects -eg. >ome for sale. that meet a

This makes resiential location ecisions more

*an Transaction 2ata

,nformation on legal real estate transactions is use

,mplies a4ailability of accessible ata for public recors

G," technology offers spatial ata management!

*an ,nformation from "atellite an 3ir /hoto

Raster images can be useful supplements to

?ector 2atasets @ points! lines! polygons

Raster 2atasets @ satellite an air photo imagery

Rooftop pictures can be useful for both irect an

3ppraisal of large tracts of lan.

Raster images can be use to etect 4egetation an lan

,nformation can be combine (ith comparable sales by

*an ,nformation from "atellite an 3ir /hoto