Many industries have already jumped on the artificial intelligence (AI) bandwagon with relative speed and had exciting results. Sectors such as FinTech, manufacturing, online learning, and more have embraced AI. Real estate is coming around a little slower to the idea of AI having a permanent place within this industry.
AI has already changed the real estate industry in several ways and seems poised to continue to do so in the future. Only 28% of decision-makers in real estate believe the use of AI in the industry will increase. 36% believe that AI has the potential for significant cost savings, according to the CRE Innovation Report 2019. While these percentages aren’t exactly high, it does show a trend toward accepting that there are big benefits and cost savings to be seen in the real estate industry with the adoption of AI. In this blog article, we’ll examine a few ways in which AI is changing the experience of buying, selling, and managing real estate.
Expedited Error-free Services
One of the primary ways that AI is being leveraged in real estate is through custom software that uses Machine Learning to read contracts and market conditions. This type of software can help all parties involved in real estate transactions; sellers, brokers, asset managers and investors to work more efficiently. The need for manual input is greatly reduced. Trained software can also spot errors or abnormalities in contracts. Moreover, it allows the flow of information to move more quickly between buying and selling parties.
AI Chat Services
AI tools like chatbots can be implemented to communicate with clients immediately, answering questions and giving accurate information about properties and markets. This feature is important because it allows real estate agents to continue focusing on existing clients, marketing, management and all the other tasks necessary to run a thriving brokerage— without distractions from non-serious buyers or sellers. The chatbots help determine the quality of leads. Once the chatbot has answered questions, the agent can follow up and the client can be put in touch with the agent, but by this point, the likelihood that a buyer or seller is serious is higher, which results in less time wasted on the agent’s end.
But chat services are just the tip of the iceberg when it comes to what AI and real estate can accomplish together.
Appraisals and Trends
It’s common knowledge that AI excels at managing and using data to help businesses make decisions. AI’s ability to process vast amounts of data far surpasses human capabilities. It’s the ability to process this level of data that makes AI exciting real estate transactions.
Traditionally home appraisals are based on data from an area as well as on the condition of the home/building. AI models are now able to aggregate far greater amounts of data at great speeds than previously possible. This can result in even more accurate appraisal valuations.
Taking this one step further, Machine Learning algorithms can collate information that data scientists can use to discover trends within geographic areas. These trends can not only impact a property’s appraisal value at the current moment but also make a prediction about its future worth. Predictive analysis can be used to reveal how much an area is expected to grow in the future based on past data and relevant information. This predictive quality can be used to make savvy investment decisions.
In 2018, the Israeli company Skyline AI made history in the real estate industry by executing the first completely human-free real estate transaction purchasing two residential properties in Philadelphia. The technology recognized that the properties were having management issues and that the owner would sell. A deal was made that resulted in a sale price that was 12% less than its estimated value, according to Jewish Business News.
Better Property Management
On the management side of the real estate industry, AI tools can carry out functional analysis of a building in the areas of energy, fire protection, and security and can be used to automate building facilities. “Smart” lighting and heating systems can be implemented to save energy. AI and data can be used to show the value savings for buildings to implement such systems.
Companies are using this technology to inform their clients about the performance of their real estate portfolios in terms of efficiency and sustainability. In an article in Medium, Vincent Bryant the co-founder & CEO at Deepki, the real estate data and sustainability firm, is quoted as saying: “The market is evolving fast! Property managers are aware of the great opportunities generated by data analysis and technologies. Using complex analysis models, we allowed a large corporation to save €4M in only six-month. It gives a great signal to the market that leveraging data and creating value from it is the new goldmine in the real estate sector.”
Artificial intelligence could automate and schedule building (or home) maintenance and repair as well as work with other smart technologies to make a building as sustainable as possible. Past information about a structure can be used to make predictions of its future needs, such as how often the elevator will need to be serviced; how large the snow removal budget should be, and so forth. While this cannot be 100% automated yet, it’s possible for the future. This type of data collection will support an emerging market for predictive analytics within real estate.
The uses of AI in real estate are clearly multifold and offer exciting prospects for the future of the industry. Not only will AI streamline and expedite contract creation and finalization, but chatbots will enhance customer service experiences related to inquiries. This will free agents up to more efficiently run their businesses.
AI will also make accurate property recommendations and appraisal values based on far greater amounts of data than past analysis could provide. There’s the further possibility of AI to accurately predict trends and future property valuations. Moreover, technologies will help manage properties more efficiently and sustainably, resulting in savings for management companies and homeowners.
Stay tuned: next up we’ll examine how AI and Virtual Reality technology in real estate is set to shape the future of the sales market.