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Dream House Calculator Helping people find the house they need, love and can afford MIT Media Lab Center for Future Banking UROPs: Ana Chen, Mary Hong.

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Presentation on theme: "Dream House Calculator Helping people find the house they need, love and can afford MIT Media Lab Center for Future Banking UROPs: Ana Chen, Mary Hong."— Presentation transcript:

1 Dream House Calculator Helping people find the house they need, love and can afford MIT Media Lab Center for Future Banking UROPs: Ana Chen, Mary Hong Advisors: Dan Ariely, Marko Popovic

2 Have you ever… Thought you needed a house with 6 bedrooms, 3 guest rooms and a huge living room …then discovered you really didnt? Bought a cozy cottage that seemed perfect at the time …only to get married a few years later. With elderly in-laws moving in and children on the way, suddenly the perfect home seemed way too small

3 At Thanksgiving dinner, your obnoxious cousin constantly brags about his new 3-story colonial in the suburbs with French doors and that amazing spiral staircase Next time, you find yourself sinking money into a house even bigger and fancier than his, but completely unaffordable …before you know it, you are mortgaged for all your worth

4 Defining the Problem

5 Current Resources (1) Real Estate Search Tools: Checklist questionnaire - criteria by physical attributes Filter approach Examples: Coldwell Banker, Prudential, Zillow (2) Mortgage Calculators: Calculate maximum mortgage buyer can pay Problem: Doesnt help user decide what is necessary – or not Filter too general or too absolute Problem: Doesnt calculate what buyers should borrow

6 Many people dont: Plan adequately for the future Make a distinction between what they need and what they want Consider how circumstances change over the time span that they plan to live in the house Result

7 Mortgage Crisis In 2007, delinquency and foreclosure rate for all mortgages was 7.3% 5.7% of home equity lines of credit were delinquent or in default at the same time

8 Take-away Buying a house is one of the biggest financial decisions in a persons life It is a complex, highly personalized process, in which it is easy to make mistakes When people make the wrong choices, it causes problems for them and the bank

9 Solution: a new kind of Real Estate and Mortgage Application

10 Strategy Guide -lifestyle -wants/needs -dreams -future -priorities Quantitative -statistics -algorithms -hedonic pricing model (economics) -searching & sorting

11 Concept: process in 8 parts

12 Hopes, dreams and the future Family Career Education Most important Neighborhood Health Very Important Lifestyle Aesthetics Leisure etc. Not so important 3 kids Modern Garden Eat out Dog Entertain guests Golf Hiking Husband Work (artisan) Comfort Lots of light Priorities Backyard Study Good school district No lead paint Dining room Bar Patio Studio Tool shed Garage Foyer

13 Financial Boundaries Hopes, dreams and the future Family Career Education Most important Neighborhood Health Very Important Lifestyle Aesthetics Leisure etc. Not so important 2 car garage Pool Many windows Good school district Finished basement Shed Eat-in kitchen Single level … … … …

14 Round peg, square hole problem… Financial constraints Hopes, dreams, future

15 Trade-offs: - Deform circle - Cut the circle Solutions * Greater financial risk Change size of square* Financial constraints Hopes, dreams, future Financial constraints Hopes, dreams, future Hopes, dreams, future Hopes, dreams, future

16 Comparison New metrics for comparing houses ABC Financial constraints Hopes, dreams, future Financial constraints Hopes, dreams, future Hopes, dreams, future Financial constraints House X is 80% like A at 110% of projected price House Y is 60% like A at 80% of projected price

17 Demo Design Screen Shots Prioritization Financial interview Attributes Association Trade-offs Library / Basket Search Results Interview

18 Prioritization Continue

19 Association

20 Trade-offs

21 Basket Urban Cape My House Kellys House Small yard house House 2 Add Delete Library House 1 June_30_08 Urban Cape Dream home 1 My House Kellys House Small yard house House 2 Fill Your Basket Continue

22 Search Results

23 Recap: Information Flow

24 Guides buyer through the process of finding the right house –realistically and financially, in a way that is logical, but natural Considers buyers present situation and future plans Helps buyer compare houses that may be very different – in features and price Allows buyer to accurately evaluate trade-offs between what he wants and how much hes willing to pay Makes sure buyer doesnt spend more than he can afford Recap: Whats New

25 Hoped for Results More happy and financially stable buyers Decreased risk for mortgage provider Overall healthier real estate and mortgage system

26 Completed Work - Running Interview user interface - Suggested attributes for various lifestyles - Design of rest of application

27 Future Challenges Statistical analysis to build realistic hedonic model of projected prices Working prototype for Boston area listings => eventually expand to entire US Cognitive system that learns from user responses to give improved attribute suggestions Redesign questions and relevant attributes based on user feedback

28 For Bank of America Differentiate from other mortgage businesses Not just a customer-conscious financial product, but comprehensive and useful tool Perfect part of the suite of other financial and life planning tools in development at BoA, CFB Reinforce message as a bank that helps plan your life and your future -- worthy of lifetime of trust

29 Thank yous Dan Ariely Marko Popovic Kwan-Hong Lee Dawei Shen Shrini Deb Roy Aithne Fellow UROPs: Ryan Stephen, Oscar, Leslie (UROP) Irum, Andrew

30 Questions?


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