We are awash today in a sea of information readily available at a moment’s notice. It almost feels like information is stalking us as we move from the laptop in our office to our smartphone on the road to the tablet by our bedside. The velocity of information around us creates enormous challenges in terms of consuming, analyzing and understanding information. Perhaps no one understands this challenge better than real estate professionals and property owners who must quickly make decisions based on the credibility of information in the marketplace.
I can distinctly recall a time when information moved at a significantly slower pace. I bought my first modem in the mid-1980’s, a Hayes Smartmodem 300, for my Apple IIe computer. The modem operated at 300 baud – that’s 300 bits per second. Put five average keyboard typists in a room and you’ll basically get an equivalent information transfer speed. The web page you are currently viewing would take over 4 hours to download using my old modem.
While that modem was incredibly slow by today’s standards, it opened up a whole new world of information to me. I could access and consume information faster than ever before. I could communicate with people all over the world using information relay services like FidoNet. Information was available faster, but was it necessarily better?
Over the past two decades we’ve had to learn how to adapt to the increasing velocity of information. Humans are social animals, but our communication patterns have evolved over thousands of years. These communication patterns involve both verbal and nonverbal cues. We use these cues to make judgments regarding the credibility of information. Technology hides many of these cues while accelerating the pace at which we must analyze information.
I used to participate on Internet discussion groups using the popular UUNet platform. You could find thousands of topics of interest on UUNet. If you had a hobby, chances are you could find a discussion group for it. We used to describe the credibility of information in a discussion group as the “signal-to-noise ratio” of the group. In other words, how much of the information discussed in the group was credible versus how much of the information was simply a distraction.
We live in a low signal-to-noise ratio ratio world. Credible information is out there, but it’s hard to pick out from the constant din of background noise. The source of information is oftentimes obscured in the marketplace. Sometimes the source of the information is transitive in nature – someone heard it from someone else. Sometimes we don’t even know the source of the information, but it resonates with certain biases or misperceptions we have regarding the marketplace.
Real Estate professionals, lenders and property owners need credible information in order to make better decisions. Nothing highlights that point better than the mountains of mispriced assets that were discovered during our recent economic recession. Lenders and investors had access to the latest tools and technologies, yet the increased velocity of information didn’t lead to improved decision-making. Technology can help us consume and analyze real estate information, but to really understand the credibility of that information requires a social component.
Nothing replaces the confidence inspired by a credible source of information. Is the building size information more credible if it is communicated by some random website or directly from a lender-contracted appraiser? Obviously the latter. Simply knowing the information today isn’t enough; our tools and technologies need to help us understand the source of that information. Technology needs to help us diminish the noise in the marketplace.
The velocity of information will continue to increase rapidly in the foreseeable future while human beings will continue to evolve slowly. Real estate technologists are faced with the challenging task of connecting information and people in a world where the two seem to be diverging. Fortunately, a new generation of real estate technologies and platforms are helping to make this connection possible. Better information supported by credible people will significantly change the way the real estate marketplace operates in the future.
Do you have something awesome to say and need a platform to say it? Asset Record is looking for a few good contributors. We want to showcase movers, shakers, leaders and innovators of the real estate industry. Whether you’re an owner, manager, appraiser, lender, broker, investor… we want to hear from you.