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How Does Predictive Analysis Work?

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In the past, real estate professionals predicted market trends using historical data and their own experience in the industry. Some turned to their “gut feelings” to make key decisions. Often, they made accurate predictions about the real estate market and helped guide their clients accordingly. But even the best real estate professional could not predict all market trends. For instance, many were shocked by the housing crisis of 2008. Many others did not foresee the housing frenzy of 2021. Their traditional methods failed them.

Things have changed drastically in the last decade or so. Now those in the real estate industry have better tools, such as predictive analytics, to help them use historical and real-time data to better understand what is happening now and what will happen in six months or next year. These programs are so effective that they can significantly increase your profits while lowering your financial risk. Predictive analysis takes much of the guesswork out of the real estate industry.

Predictive Analysis Definition

Predictive analysis, or predictive analytics, studies statistics and modeling strategies to help determine future performance in a number of industries, including finance, insurance, marketing, and healthcare. These programs allow your business to complete tasks such as translating voice-to-text messages, deciding customer service requests, and constructing a profitable investment portfolio. With the right data, these programs can predict what consumers are going to do or say.

Predictive analysis looks a little different from industry to industry, but it is essentially the same process. These programs analyze past and present data to make informed predictions about what will occur in the future. It is an invaluable tool for increasing productivity and profits in almost every industry. 

Predictive analytics technology uses data mining, machine learning, statistics, modeling, and artificial intelligence to make these predictions. As an example, predictive analytics uses data mining to identify patterns in huge data sets. These programs can produce invaluable information for any type of company, especially real estate concerns. 

Predictive Analysis in Real Estate

This software is a gamechanger, and as a real estate professional, you should already be using predictive analysis. If you are not, it is time to start. This technique works in multiple ways to maximize the profitability of your purchases and sales by making accurate market predictions. It takes much of the guesswork out of your marketing efforts and helps you streamline your entire workflow. 


What are the three most important factors in real estate? The old saying goes, “Location, location, location.” The best house in the world is not desirable if it’s next to an 8-lane highway. A business located far from its customer base is bound to fail. Finding the right location for your home or business is essential to a successful real estate decision. When learning how predictive analysis does work, you need to pay attention to multiple methods. 

First, it offers special tools such as heatmap analysis that give investors vital information on a location. This method can predict which spots will be best for investments such as rental properties. Heatmap analysis can locate desirable properties by using metrics like rental income, property value, and occupancy rates. It can also be used to determine which home features are the most valuable in a specific neighborhood, such as the number of bedrooms and bathrooms. Instead of needing days of research, you can have answers in minutes.

Predictive analysis also uses GIS (Geographic Information System Mapping) to determine what access a certain property has to retail shops, public transportation, and healthcare. All of these data points help real estate agents and brokers find the next residential and commercial hot spots and invest in them early, either by buying properties or by creating a customized marketing plan. 

Property Valuation Models

Property owners want to know what upgrades they should make to their buildings. Predictive analytics allows realtors to tell homeowners and commercial property owners what upgrades will add to the value of their properties and make them easier to sell in the future. These software programs can determine what properties buyers want, what they will pay more for, and what home condition they expect at a certain price. Agents can help prospective sellers decide where to put remodeling money, guiding them toward remodeling a kitchen, adding a bathroom, or re-siding their home. 

When asking yourself, “How does predictive analysis work?,” remember that no two neighborhoods or cities are alike. Different communities prize different features in a home. Predictive analytics allows real estate professionals to know what buyers are looking for in a new home or commercial property, allowing them to customize their marketing efforts for a particular property. These programs allow real estate professionals to make more sales and receive higher profits while working less. 

Enhanced Customer Portal Information

Consumers often turn to the internet for their home search long before they speak to a realtor. They use websites to get a sense of what properties are available and at what price. They try to determine what features they really need: three or four bedrooms, a deluxe kitchen, or a big yard. With the internet, everyone can do their preliminary research. 

How does predictive analysis work? It lets you use data from these portal searches to identify people who are serious about buying a home or business property. In fact, some predictive analytics programs can identify with 70% accuracyhomes that will sell in the next 18 months, making this software an invaluable tool for those in the real estate industry. 

Consumer behavior on a portal can also reveal if they are first-time buyers, real estate investors, or DIYers. Analyzing this data allows you to aim your marketing directly at consumers, resulting in better communication and more sales. As a bonus, you will also reduce your marketing costs since you are narrowing your focus to quality prospects instead of blasting ad dollars at a broad audience and achieving a much lower conversion rate. 

You will still need to rely on your years of experience and own deep knowledge of the industry to be successful, but by also using predictive analysis, you will enhance your success rate. In fact, excellent real estate professionals are nearly unbeatable when they use this advanced technology. 

How Does Predictive Analysis Work and ProspectNow 

ProspectNow is a leading real estate listings platform that allows real estate professionals to benefit from predictive analytics. Our machine learning models accurately predict which properties are most likely to sell or refinance in the next 12 months, allowing you to create a highly effective marketing plan for specific neighborhoods or motivated individuals. With ProspectNow, you are harnessing the power of advanced technology to improve your sales numbers. 

Plus, our database is extensive and includes 100 million residential and 42 million commercial listings. We’ve been around for well over a decade, so we have the experience and insight to help realtors achieve their sales goals. In addition to predictive analytics, we offer information such as the age of buildings, listing status, zoning designations, sales history, taxable value, and property owner contact information. 

Stop wondering “How does predictive analysis work?” Put its power to work for you today. Visit our website and sign up for our free trial. While you are there, run our free demo to learn how ProspectNow can work for you. The real estate industry is undergoing great change, and you will need to embrace predictive analysis to keep up. 

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