Artificial Intelligence and the Future of Real Estate

Artificial Intelligence and the Future of Real Estate

Recent advances in technology have affected many facets of the real estate industry, including digitizing documents, automating property management functions and extending consumer access to listing information. Despite these technological advances, today’s real estate business continues to be both relationship-based and labor intensive.

However, new advances in Artificial Intelligence (AI) are prompting questions about the ability of new technology to substitute the human component and disrupt how the industry operates. Basically, can AI replace brokers, appraisers and property managers?


Broker of the future?


What is AI?

For all intents and purposes, AI refers to the ability of computers to intelligently interact with humans and “learn” from trends, patterns and experiences. Basically, AI is meant to mirror the human decision making and thought processes. By some estimates , AI will reach the level of human intelligence by 2030!

Current, examples of AI include:

  • Driverless cars;
  • Online translation services such as Google translate;
  • Voice-activated personal assistants, such as Siri, Cortana and Alexa;
  • Predictive technology based on historical selections, similar to that employed by Netflix and Pandora; and
  • Chatbots, which enable computers to interact with consumers using messaging apps.

AI and Real Estate

At the present time, AI in real estate is limited to some predictive technology and chatbots.

-Predictive Technology: When you search for a property on Zillow, Trulia or Homefinder, the website will display information about a subject property as well as other similar properties that closely match your search criteria. Basically, the website understands your search parameters and “suggests” other similar properties.

-Chatbots: Visitors to some real estate websites will encounter pop-up boxes that will initiate an online exchange between the visitor and the chatbot, where the computer performs the role of  a customer service representative. Chatbots collect information on behalf of a broker and provide answers to simple inquiries. This helps reduce the need for cold calls and personal phone conversations. Basically, chatbots help automate the most basic of customer service functions.

Can AI Technology Eliminate the Need for Real Estate Professionals?

Brokers/Realtors:  Brokers and realtors are the most visible face of real estate. Clients rely on brokers not only to help them identify an ideal property, but to also negotiate the terms of a transaction and protect their overall bundle of rights. AI is envisioned to help streamline the business prospecting process, reduce the need for cold calls, answer questions and provide listing updates. However, real estate brokerage is not limited to order-taking. Successful brokers are often tasked with continuously engaging their clients to better understand their evolving needs, which do not always match their expressed wishes. Good brokers often need to develop an “emotional intelligence” to understand the subtle needs that their clients may not be able to articulate. An experienced and innovative broker will sometimes need to present buyers with something different than what is requested. Until technology can mimic this emotional intelligence and provide insight, brokers will continue to play the central role in real estate practices. In the foreseeable future, AI might help brokers with some of their work functions and empower clients to better make informed decisions, but will not be a substitute for the advice and insight of experienced realtors.

Appraisers:  Of all real estate specializations, AI is most likely to reduce/substitute the human component of real estate appraisers. Appraisals and valuations are very technical and data-driven, making them a prime target for automation. While physical inspections and visual assessments will continue to be an integral part of real estate appraisals, look for AI to play an increasingly important role in generating value estimates. This will be driven not only by advances in AI, but also out of necessity due to the dwindling number of qualified and licensed real estate appraisers nationwide, which is already staring to slow down many real estate transactions.

Property Managers:  New technology now sends notices alerting property managers that a certain equipment maybe due for maintenance, or a lease is about to expire  Additionally, many services such as Appfolio now automate property management functions such as rent collections, vendor payments and work orders. However, given the need for physical inspections and for complex problem solving skills, AI isn’t likely to substitute the need for skilled property managers. AI may automate some property management functions and help reduce repetitive human tasks, but not substitute the need for persuasive property managers, who need to navigate the differing interests of competing parties (tenants, landlords, vendors, regulators, etc.) and resolve tenant-landlord conflicts, which are inevitable in the normal course of business. In addition to “intelligence” this requires negotiating skills, persuasion and tact, which is difficult to imagine being done by a computer.

New Players in Real Estate AI

Zenplace:  Helps landlords optimize rents
Keep Eye On Ball:  Virtual property tours of commercial properties
Deep Blocks:  Utilizing AI in real estate development
Truss:  AI for office space
Automabots:  AI lead-generation and customer service
Apartment Ocean:  Real estate chatbots

Summary

Proponents of AI often paint a picture of super intelligent computers that is difficult to fathom. Often it sound like science fiction. That said, driverless cars and voice-activated assistants were difficult to imagine not too long ago. However, whereas driverless cars and voice activated assistants are substituting tangible functions, the jury is still out on the ability of AI to substitute traits based on unique personal experiences and a diversity of backgrounds that differentiate service providers (the intangibles). Additionally, while online sites such as Amazon are disrupting the way we shop for clothes and gifts, real estate is a bigger-ticket item with greater implications. When selecting real estate, buyers/renters will want to listen to differing opinions and perform physical inspections and due diligence before proceeding. This requires much more than data-crunching and measurable criteria. It requires comfort on a visceral level, the kind of comfort built on trust, credibility, experience, persuasion and personal chemistry.