How Real Estate Uses Big Data to Track Clients
Source: Stefanos Chen
Consulting group Wealth-X was enlisted to find prospective buyers for this penthouse, which is asking $9 million in Washington, D.C. Photo: Sean Shanahan
Sitting in bed at 1:40 a.m. one morning last November, Jon Hoefling was thinking about selling his 4,300-square-foot home in Morgan Hill, Calif. While browsing Facebook on his phone, he clicked on a real-estate ad offering to estimate his home’s value. His future listing agent, who paid for the ad, was waiting.
Mr. Hoefling, the 50-year-old owner of an office-furniture resale company, had been targeted for the ad―along with 1,500 others in California’s Silicon Valley area―by an algorithm that identified him as a likely home seller. The telltale signs: Mr. Hoefling has lived in the home for more than 15 years, and his home’s market value is high for the area. Most important, his youngest son will soon leave for college. Empty nesters might as well wear a bull’s-eye.
To target prospective clients in competitive markets, tech-savvy agents are buying data subscriptions and teaming up with firms that identify potential buyers using increasingly precise metrics. Exotic-car owners can be courted to buy a car-collector’s mansion. Equestrians are rounded up for ranch homes
Last year, Sotheby’s International Realty announced a partnership with Wealth-X, a consulting group that uses public records and research staff to manually track the habits of “ultrahigh-net-worth individuals.” There are about 211,000 people world-wide valued at more than $30 million, according to the company’s president and co-founder, David Friedman―and the firm’s goal is to write a detailed dossier on each one of them.
These reports may contain everything from an individual’s net worth and social circles to even more personal details. For example, the dossier for one Australian multimillionaire notes that he is likely fond of topiary, because he proposed to his wife in front of a massive topiary created by artist Jeff Koons.
Mark Lowham, managing partner at TTR Sotheby’s in Washington, D.C., enlisted Wealth-X to help find a buyer for a penthouse apartment listed at $9 million in the Georgetown neighborhood. His team first established a basic description of the people they were looking for: Homeowners with a combined income of $2 million who have lived in a house assessed at more than $4 million for at least five years.
Then, they got more specific: Art collectors, because the condo has ample wall space. Empty nesters, because they prefer single-floor living. Private-aircraft users, because the area attracts jet-setters.
Using a combination of data from Wealth-X and their client contact base of about 700,000, they might be left with 400 targeted leads, Mr. Lowham says. The listing isn’t public yet, but the next step is to launch a mail campaign to their targeted list of prospects.
Sophisticated data collection has been crucial to the growth of the Agency, says Billy Rose, co-founder of the Beverly Hills, Calif.-based real-estate firm. His company, which launched in 2011, closed on 12 transactions of $20 million or more last year. He says the Agency so far has spent about $800,000 to create a database of people with high-net worth. “When I have a house coming up for sale with a garage for six cars, I’ll reach out to my Lamborghini owners,” he says.
Mr. Rose declined to describe the sources that make up the database, but says they have 100,000 individuals in their direct network and another half-million through partnerships. People familiar with the system say it incorporates data from credit-card companies, as well as sales information from luxury brands.
Scanning obituaries for leads has long been a tactic of up-and-coming real-estate agents looking for new business. Today, the practice is getting a 21st-century makeover. Tracking major life events―marriage, divorce, death, all of which frequently entail a home purchase or sale―is big business for a number of new firms.
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