Welcome to a new feature here at Get REALty. On a periodical basis, we will write a post on how an emerging technology will affect the real estate industry. You might not think technology has much to do with real estate, or affect how you buy, sell or invest in real estate. As you will learn, however, technology does have a direct impact on the real estate market in a number of different ways.
Topic: Artificial Intelligence
When it comes to the emerging technology affecting real estate, nothing has a bigger impact thus far than artificial intelligence. Some might even say that artificial intelligence is less of a emerging tech versus an established one that has finally started to find its footing in various industries. If you take a look at the startup companies highlighted in this article from Nanalyze, you quickly realize that real estate is one of these industries. The listed companies offer a wide variety of services to many of the industry players including consumers, real estate investors and professionals such as agents and mortgage officers.
Here is a brief outline of what each company in the post does for real estate.
Skyline – This company uses AI to evaluate data from a 130 sources to tell real estate investors what the best investment in New York.
Proportunity – This company uses its algorithms to predict which neighborhoods, and even individual properties, will experience the greatest sales price appreciation.
Enodo – This company does for multifamily properties what Skyline does for New York properties, but with an interesting twist. It also advises investors on how to rehab fixer uppers for the best ROI.
Rex Real Estate – A real estate brokerage that lets its AI find buyers for sellers by using an algorithm that analyzes ad performance to further customize its marketing campaign to buyers. Because of the cost savings, Los Angeles sellers can get by with selling their homes for a 2% fee.
Blok – This startup uses AI to help sell apartments in Finland. Its AI does everything from pricing the apartment to taking photos.
BeyondPricing – If you think Kayak for short term rental properties…you have just hit on what this startup does for its users. It searches the net far and wide for rentals and tells you the best deal. It even indexes Airbnb properties.
Ojolabs – Chatbox company in Austin, Texas. The AI’s ability to handle natural language conversations is its claim to fame, helping real estate agents all over handle their workload.
roof.ai – This is another chatbox company that will guide buyers through a Q&A and give them suggestions on homes to buy.
first.io – This startup’s AI helps real estate agents by predicting which of their many contacts will be the next one to sell their home. It has details on 214 million people.
As you can see, there are companies working on AI solutions to help with every facet of the real estate process. What does this mean specifically for the real estate industry. Here are three ways that AI will change real estate.
1. AI will work in conjunction with real estate agents – AI does not have to be a direct competitor to real estate agents. In fact, it will probably be a while before AI has reached the evolutionary stage where they will be able to out think and out perform us. However, AI does exist today that can provide value to real estate agents in ways to make them more efficient and customer focused. In this INC article, the author goes over several ways AI is assisting real estate agents today. First, agents will have a better idea on how to help buyers find their perfect property, which helps agent by freeing up their time to assist with the other stages of the process like writing up contracts and showing properties. In essence, AI can look over the interactions agents make with buyers over a period of time and provide recommendations to buyers on specific properties based on the buyer type, which is learned from interactions with buyers with commons traits.
This will be particularly important when it comes to searching and browsing websites. If an AI-based algorithm can help to surface the perfect properties for each different viewer, you’ll quickly become the go-to realtor in your area and beyond. It’s all about finding smart ways to help AI to help you to do what you’re already doing – but at a much more effective level.
The post goes over the chatbot tool that many agents are employing today (see above for some examples of companies doing this) to help them service customers 24/7. According to the article, many of these chatbots have become so good that you won’t be able to tell the difference between the AI or a real person. The final item mentioned in the post is about long term relationships between the real estate agent and clients. AI can help build client trust by allowing the real estate agent to better forecast life changes so the real estate agent can be there in a timely manner to help the client. For example, many customer relationship management systems today can accurately forecast when a client is about to default on a loan or fail a credit check. Many of the systems will also alert an agent when a property is “hot” and will likely sell within 3 months.
2. AI is helping real estate investors to make better choices – When it comes to investments, many will tell you that there is not a better one than real estate. However, it can also be one of the more challenging ways to invest your funds as you have to analyze several data points to correctly predict the possible ROI on the property. In fact, it can be even difficult to find certain data for this analysis. Many companies are using AI to make this process easier for real estate investors. AI can even assist with construction and property management. In this article from becominghuman.com, we are introduced to proptech, which is AI that helps builders and investors make better material purchases, which are also lower in price. With property management, landlords can be alerted when a capital expense is upcoming, like the AC needs to be replaced in the next two years. As with the AI helping real estate agents, there are ones geared towards real estate investors to help them finds deals and predict default events like foreclosures. Investors can also use Artificial Intelligence to set up bots that will help them know when certain properties matching their investment goals become available.
3. AI will replace many of the industry professions – There are many articles outlining, at least, in part that the rise of AI will have a major impact on the real estate profession as a whole. This article from Designing Buildings Wiki outlines some very concrete ways the real estate profession will be changed by artificial intelligence. Robots, programmed with AI, will have a major role in the automated routine tasks many in the profession do today. With AI on the horizon, many in the profession will be forced to create new entrepreneurial ways to bring value to clients. The typical tasks we see today will no longer be done by humans. Artificial Intelligence will even change the workplace dynamics and economics as professions will have to find ways to be flexible, agile, networked and connected in order to remain relevant. There are still many that believe the AI threat is overblown and that real estate professions add an authentic intelligence to the process that robots and AI will never be able to duplicate. This Forbes article introduces the concept nicely.
What agents understand perhaps better than anyone is that there’s a disconnect in the discussion over robots and artificial intelligence. We have an innate need to humanize them when, let’s face it, they’re not human. What agents bring to every transaction is a better kind of AI — authentic intelligence — that does everything a robot or artificial intelligence can’t…
The author goes on to write that robots cannot leverage instinct like a human, nor can act as a counselor or confidante. Humans are also better at distilling the data and keeping the process transparent and local. Clients will not like or appreciate a black box approach to making one of the largest investments in their lifetimes.