Essay on Geographic Technology in Real Estate

2326 Words10 Pages
Geographic Technology in Real Estate:
A Technology Assessment Report


Real estate is defined by the Barron’s Dictionary of Real Estate Terms as the “land and everything more or less attached to it. Ownership below to the center of the earth and above to the heavens.” This definition clearly conveys the geographically fixed nature of real estate and the inherent risk associated with this characteristic that is not found in other financial assets such as stocks and bonds. It is the identification and quantification of these risks that dominates the real estate decision. Regardless of whether a large insurance company is determining if it will insure a “trophy” office property in New York City or Starbucks debating the
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The lender is also concerned with the strength of the particular market where a prospective borrower is located when underwriting a loan. Markets with declining economic health can lead to a situation where the borrower is no longer capable of paying the monthly mortgage payment. Under this scenario, a lender will likely acquire the property through foreclosure and subsequently sell it for an amount that is hopefully equal to the outstanding loan balance. Should the sale price be less than the outstanding loan balance due to weakening market fundamentals, the lender again suffers a loss.

The scenarios presented above suggest that commercial lending institutions have a need for GIS as a risk management tool during the underwriting process as well as after a loan has been originated. An analysis of ESRI and MapInfo GIS risk management products was conducted as these two vendors have the most advanced GIS software geared toward the business community. Care has been taken not to include substantial discussion of each vendor’s market analysis software (which is used extensively in the mortgage underwriting process) in the commercial lending section as this will be the focus of the site selection component of the paper.

From a pure risk management perspective, MapInfo is more advanced than ESRI. Currently, MapInfo has three products that focus on the analysis of risk from the perspective of property insurance providers. Although
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