Real Estate: The Value of Curb Appeal in Prospect Research

real-estate-opt

“You can tell a lot about a person from the shoes they wear.”

You should never judge a book by its cover, but all of us offer clues about our individual personalities in what we wear, say, and do.  Here at iWave and across the industry, we also believe you can learn a lot about a person from where they live.  In fact, real estate is often the only asset fundraisers and researchers can find on their prospects.  “Home sweet home” just took on a new meaning.

Last year alone, PRO users made over 1.7 million searches on our real estate data set, and we expect that number to shoot up in 2016.  Our users know that real estate information is critical for nonprofits looking to identify wealthy individuals and understand their capacity to give.

The Problem

Let’s say you’re searching for more information on Joanne, an executive from Palo Alto.  Unfortunately for you, clues about Joanne’s propensity, affinity, and capacity to give are few and far between.  You sit back, unsure where to go next.  You remember overhearing your colleagues talk about real estate searches.  Well, let’s give it a shot.

Location, Location, Location

You complete a high-level real estate search for Joanne.  As it turns out, she lives in a single family residence in Palo Alto held jointly with her husband.  The current value of Joanne’s house is just shy of one million dollars.  Now your mind races with questions: Who is Joanne’s husband, and what does he do?  What’s the value of other properties in their neighborhood?  Who lives nearby?  The answers to your questions are only a step away in your research tool.

Just like buying a home, real estate research on your prospects is all about location.  After more sifting, you realize that a one million dollar home in Palo Alto is well below the median house price.  Time to move on, right?  Hold it.  First, let’s dig a little deeper.

Does Joanne own other properties?  Sometimes, just knowing your prospect’s name is not enough.  Individuals who own several properties often link them under a single mailing address for convenient record-keeping.  If you know Joanne’s mailing address, enter that information into your prospect research tool.  Now you see a cottage in Lake Tahoe held in trust for her grown children.  And how about that “modest” Palo Alto home?  A quick review of the property information indicates that property is “free and clear”, meaning Joanne and her husband are mortgage free on their home.

Helen Brown confirms that real estate is an excellent indicator of wealth.  Consider it a green flag to keep searching.  Just like her shoes may shed light on Joanne’s personality, her real estate holdings provide opportunities to learn about Joanne and her world.  Her mortgage is complete – how does she spend that extra money?  She holds a lake cottage for her children and grandchildren – what might that say about her commitment to family?  What do these factors suggest about her personality as a businesswoman, investor, and potential donor?

Formula  

So here’s the real question: how do we calculate a giving capacity based on real estate information?  Luckily, there is an industry standard formula you can use to help get a big picture idea of who Joanne is and how your organization can establish a relationship with her as a donor.  This table was taken from our tool, Prospect Research Online.

Current/Assessed
Property Values
Primary Residence Multiplier Additional Property Multiplier
< $500,000 5% 7.5%
$500,000 – $999,999 7.5% 10%
$1,000,000 + 10% 15%

Capacity based on Real Estate = Value of Primary Residence + Value of Additional Property

Palo Alto Home                 950,000 x 0.075 = 71,250
Lake Tahoe Cottage        700,000 x 0.10 = 70,000

Capacity                               71,250 + 70,000 = $141,250

This formula calculates a conservative giving capacity.  Now you have better insight on Joanne’s personality based on her real estate holdings, and an industry standard estimate to use as a starting point for further research and relationship-building.

What About Canada?

Finding US real estate information, while tricky, is certainly more straightforward than researching the Canadian marketplace.  One recommendation for Canadians, from Tracey Church and Celeste Bannon Waterman, is to use the MLS.com website to search listings in your prospect’s neighborhood.  There are also companies like Manifold Data Systems that analyze census information to provide accurate real estate estimates based on postal codes.  Oh, and did we mention PRO now gives you access to Manifold data to estimate values for Canadian real estate?

Bringing It All Together

Prospect research is all about gathering relevant information to make an informed ask.  Whether you have a paid subscription to a prospect research tool, or are using websites such as Zillow online, real estate information can play an integral role in your prospect research.  Real estate provides insightful information regarding an individual’s personality, net worth, debt, and other factors affecting your prospect’s willingness to give to your cause.

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