UNDERSTANDING THE REAL ESTATE MARKETPLACE

By W H Inmon

Even rookie investors know that the key to making money is understanding the market. Stated differently, you can start to make Warren Buffet like decisions if you can truly understand the market. But when you are flying blind, it is only an accident when you make money.

This simple truism holds for every kind of marketplace out there, and certainly includes the real estate marketplace.

So exactly how can you understand the real estate marketplace? One approach would be to go to the different counties where real estate transactions are recorded and to capture each real estate transaction and create a data base from what you find. There is a wealth of information that is captured in each real estate transaction that passes through the county. Once you have captured each real estate transaction that passes through the county, you can create a data base that will tell you endless amounts of information about the real estate marketplace.

But there are some problems in creating such a comprehensive and homogenous data base. The first problem is that all the real estate transactions are in text. And text is free form. One county records one transaction one way. Another county records the same transaction another way. And even in the same county, one recording refers to item abc as “abc” and the next recording refers to abc as “cba”. And in reality “abc” is the same thing as “cba”.

One real estate transaction has date recorded at “Jan 1, 2000” and the next transaction has date recorded as “1/1/2000”. They are – logically – the same date but they are very different from each other in the literal sense.

Across the many real estate transactions there are many different interpretations of the same data.

To create a truly homogenous data base, there is a lot of behind the scenes translation and interpretation that needs to take place even after the transaction captured and read.

Another issue in the creation of a real estate data base is the number and diversity of the types of documents that are recorded in the county clerk’s office. In reality, there are a LOT of different kinds of transactions that are recorded by the county. If life were as simple as recording only deeds of trust, then the task would not be so daunting. But the reality is that there are MANY different kinds of real estate transactions that are recorded other than deeds of trust.

One way to accomplish this task of creating a real estate data base is to hire a bunch of people and teach the people how to make these translations and interpretations manually. Certainly, people can be taught to do such mundane tasks. But there are some basic problems with trying to create such a data base manually. These problems include –

    The expense of doing this task manually is daunting. In the best of circumstances, it is not cheap to do a lot of real estate transactions this way,

   The rote activity of reading the same material over and over leads to mistakes. After a while the human brain wears out and starts to make mistakes. A “fatigue factor” starts to manifest itself. The amount of errors that occur start to mount in the face of a lot of real estate transactions.

So, looking at the long term a manual approach is an expensive, error prone way to proceed when it comes to trying to create a data base of a lot of real estate transactions. If all you have is a few transactions, then a manual approach may be a good way to proceed. But if you have a lot of real estate transactions, trying to create a comprehensive data base manually is not advised.     

Today there is technology that can read, interpret, and record real estate transactions in an automated manner. That technology is textual ETL, by Forest Rim Technology (FRT). FRT uses a variety of techniques to read and interpret real estate transactions in order to create an accurate, comprehensive and homogenous data base of real estate transactions.

FRT can go from county to county and from state to state and create a comprehensive and homogenous real estate data base. And FRT does its processing in an ENTIRELY automated manner. No human interpretation or intervention is required (or allowed). The fact that FRT can process huge amount of real estate transactions automatically means that –

    Transactions can be processed inexpensively, compared to trying to process the documents manually, and

   Real estate transactions can be processed accurately. There is no “fatigue factor” in processing large amounts of real estate transactions.

Now – for the first time – it is possible to really understand the real estate marketplace. Now you really can create an accurate, comprehensive and homogenous data base that tells you what is really going on in real estate.

    Forest Rim Technology is a Bill Inmon company located in Denver, Colorado. Forest Rim has the technology needed to build a residential real estate data base. Bill can be reached at www.whinmon@msn.com.