WHAT IS AI?
You’ve undoubtedly heard about it; Artificial Intelligence, commonly shortened to AI, is a hot topic in the news. Essentially, it is the simulation of human intelligence by software, which allows it to. . .
- Complete tasks
- Create content
- Drive cars,
- Play chess
- Comb through data
- Analyze information and much more!
HOW WILL THE USE OF AI IN REAL ESTATE BE?
AI is impacting every industry; real estate is no exception – experts expect to see notable impact. They expect it to alter various areas of real estate, from transactions, to property management, to home ownership.
However, AI is already present in the industry
, with data analysis programs providing information to agents, buyers, and sellers. It is a different market than it was around thirty years ago; when realtors were knocking on doors to obtain this information, they can now get it in a few clicks.
Current AI tools are things like Zillow’s Zestimate, tracking home values/sales to calculate an estimated value. As to the accuracy, Zillow states they are always trying to improve it through updates.
Although AI is already present in the realty industry, experts expect further advancements to make some significant changes.
HOW WILL IT AFFECT TRANSACTIONS?
The changes to AI will continue to affect buyers, sellers, and agents in a transaction.
Buyers will benefit from AI due to the increased amount of data and personalization
offered to them. For example, AI Learning models will be able to create incredibly personalized searches. It will allow for more natural language searches, like “homes with water feature” rather than using a sqft. It will also promote other homes that buyers are most likely to want based on previous interactions. This will be similar to a website like Amazon, offering other homes based on an original search.
AI will impact sellers by allowing them to consider more data when pricing. They will also benefit from optimized listings, more marketing features like digital tours, and more predictability in decision-making regarding their home sale.
Some agents have already begun utilizing the new AI
methods available – the most recognizable being ChatGTP. They use it to write home descriptions, create social media posts, automate responses, calculate numbers, and tweak emails. However, other agents see ChatGTP as a way to lose credibility or an agent’s voice in an industry primarily formed on personal relationships.
Some agents are excited about future AI developments that aid their clients in making more personalized decisions
, but that technology is still not here as of today. Other agents are apprehensive about this change. In the past, the real estate industry has been slow in accepting new technologies. So, to what extent or the speed at which the industry will adopt AI is still up-in-the-air.
WHAT OTHER AREAS OF REAL ESTATE WILL IT IMPACT?
Besides transactions, AI will impact countless other areas of the industry, like:
- Property Maintenance & Management: AI can be used to plan better when properties will need maintenance based on running data and respond to maintenance requests from tenants
- Property Valuation: AI is useful in valuing a property by compiling all relevant information on a site
- Customer Service: Some agencies will use AI chatbots and response services for replying to common inquiries
- Marketing & Lead Generation: Many will turn to AI for graphic design or content creation and chatbots for interacting with potential clients
- Using AI to Build a Dream Home: Use it to visualize a space before actually building it.
ARE THERE PROBLEMS WITH ITS USE IN REAL ESTATE?
There could be. AI has the potential to be useful and good, but it can be an evil force in the hands of unscrupulous or even unsuspecting individuals.
In the past, AI has been accused of discriminatory hiring and lending practices. In 2014, Amazon began to build an AI
meant to review applications and help in hiring. The project was scrapped after a year, as the results showed that women applying for more technical jobs were discriminated against. They built the program with resumes of current employees, who were overwhelmingly male, so it searched for resumes that matched their current workforce. Luckily, they caught the discriminatory nature of it before using it on actual applicants. It found three areas as discriminatory:
- Any candidate who went to a women’s college
- Downgraded resumes that contained the word women’s
- Privileged resumes that used more verbs that men tend to use
APPLICATION TO REAL ESTATE: MORTGAGE LENDING
Mortgage lenders already use software to run applications for a mortgage – called Classic FICO to determine whether an applicant meets the standards to be considered for a conventional loan. This algorithm was created 15 years ago with data from the 90’s and many consider it to be harmful to people of color. This is because it relies heavily on traditional credit, which statistically they have less access to. It also doesn’t consider on-time payments, but late payments will be regarded as harmful and punish people for previous medical debt even after it has been paid. Besides this standard, institutions may also run applicants through their own programs, which are often considered secret and the specific algorithm not public information.
In October 2022, the Federal Housing Finance Authority (FHFA) announced some changes
to the Classic FICO to reduce any discrimination [even though it has previously been denied that any prejudice was occurring]. They expect the changes to be fully in place by the end of 2025.
As AI becomes more used in real estate, transparency is critical to show that it is not unfairly discriminating against a protected class. In addition, the algorithm must be constructed in a way that will be fair and not lead to one population getting unfair treatment, either good or bad.
WILL IT REPLACE REAL ESTATE AGENTS?
The answer to this question depends on who you ask. Some believe that AI can absolutely take over for real estate agents, with automated drones taking photos, ChatGPT (or the like) writing descriptions, and self-tours by way of automatic codes.
Others believe that while AI can undoubtedly take over the tasks of real estate agents, it will never completely replace agents – for the following reasons
- The process of buying a home is a complex and emotional process
- Personalized service is an aspect of the industry
- Humans are adaptable
- There is value beyond transactions, like advice on property investment or assistance with property management
Meanwhile, others believe that there can be a happy middle ground, where qualified agents utilize AI tools to better assist their clients in their real estate purchase, sales, and searches.
If you’re looking to see why a good real estate agent is irreplaceable, reach out to one of our qualified agents who can get you started on your own real estate journey!