Artificial intelligence (AI) has taken the world by storm in the last couple years. This technology has started to disrupt and alter many industries, including real estate. Adjusting to these rapid changes may be difficult for those who feel set in their ways, but AI could be hugely beneficial for agents, buyers, and sellers when used properly.
What Is Artificial Intelligence?
Artificial intelligence as known as AI is the ability of technology to “complete tasks” that typically require human thought and problem-solving skills. Like humans, AI learns from experience and makes decisions independently.
There are many applications of AI, but two of the most common uses in real estate are machine learning and natural language processing. With machine learning, AI is fed large quantities of data to learn how to analyze information, identify patterns, and make predictions. Natural language processing is the ability of technology to understand and generate language.
The Role of AI in Real Estate
AI is fairly young technology, but it’s already making its mark on the real estate industry. Here are some of the most notable uses of AI in real estate:
Predictive Analytics
Predictive analytics allows agents, buyers, and sellers to understand and predict trends in the real estate market. Sites like Zillow and Redfin are already using AI to estimate property values, and agents can use AI to price their homes accurately but competitively. AI can also help agents identify properties that are likely to be listed soon, so they can get in touch with potential sellers.
Investors greatly benefit from using AI to find properties that are likely to increase in value or to predict how their current properties’ values will change. Similarly, AI can help investors identify which properties would be riskier to purchase.
Marketing Content
Marketing is one of the most critical aspects of a selling agent’s job, and AI can be a powerful marketing tool. Agents can use generative AI to help with crafting listings and writing appealing descriptions of their homes. Generative AI can even write customized messages to buyers based on their previous interactions. This means that agents can personalize their marketing materials much more easily, making better connections with potential buyers and showcasing their homes as effectively as possible.
3D Modeling
Visuals are always important in real estate marketing. Photos continue to be essential when marketing a home for sale, but today’s technology allows for more advanced visuals as well. 3D modeling and augmented reality are becoming very popular in real estate listings. AI can create a 3D virtual tour of a property, which lets buyers visualize the home in full without needing to see it in-person. With the use of these tools, agents and sellers can market to buyers in a much wider radius.
AI can even use blueprints to create a video tour of a property that hasn’t been built yet. This lets agents start marketing a property to buyers and investors as early as possible.
Property Search
AI doesn’t just benefit sellers and real estate agents. It also supports buyers during their home search. Real estate websites are starting to use AI to fine-tune property searches, and the technology is only becoming more advanced with time.
AI can help sites serve recommendations to buyers based on their location, budget, and past search history. It analyzes information about crime rates, schools, public resources, and other important considerations. Then, it can use all of this information to sort listings from best to worst for searchers based on their preferences. This creates a highly customized experience for potential buyers, saving them time and increasing their satisfaction.
Mortgage Lending
Mortgage lenders are starting to use AI to streamline their processes and improve customer experience. AI can analyze customer information, including income, debt, and lending history, to set individualized rates for mortgages. AI also supports with reviewing mortgage applications, which results in faster approval times. Some lenders are now able to approve applications almost instantly with the use of AI. The technology can help with customer service and payment processing, too.
Property Management
AI has enormous potential for rental property investors. For example, it can assist with tenant screening, which is one of the most time-consuming yet important aspects of property management. With support from AI, managers can quickly analyze an applicant’s income, credit, debt, and references to determine if they’d be a good tenant. AI can flag risky tenants, allowing property managers to ask for more references or conduct a more thorough screening before renting to an applicant.
Property managers can even use AI to generate recommendations for personalized services for tenants. This can increase satisfaction among residents and promote tenant retention, which is one of the best ways for investors to maximize their rental income.
Challenges of Using AI in Real Estate
Although AI has a wide variety of benefits for the real estate industry, it also has some risks and pitfalls. Any real estate professionals hoping to use AI to improve their outcomes need to account for these challenges.
The effectiveness of AI depends heavily on the amount of data used to train it as well as the quality of that data. AI needs to be fed a lot of data to properly learn and analyze new information. If not enough data is available for a specific topic, it can only offer limited insights. For example, AI may not be able to analyze trends and offer recommendations for properties in remote, rural areas as accurately as it can for homes in major cities. Another important consideration is that the real estate market is constantly changing, so we can’t always rely on old data to make new predictions.
AI can also be prone to discrimination if it learns from data that contains historical biases. This could create serious ethical problems when using AI to screen tenants or provide recommendations to buyers.
Adapting to new technology can simply be uncomfortable for some individuals, too. While many people are excited to embrace AI in their daily lives, some agents, buyers, and sellers will resist the change. Distrust of new technology is very common, and it will take time for AI to be accepted widely in the industry.
The Future of AI in Real Estate
We’re currently seeing AI used in real estate to set prices, predict trends, create marketing materials, provide personalized recommendations, and assist with loan applications. As AI continues to learn and expand, it will become even more efficient with performing these tasks. More and more agents, listing sites, mortgage lenders, and other entities will start to adopt the technology.
AI is still in its infancy and is likely to evolve rapidly over the next few years. With these changes will come new opportunities and new risks. Any real estate professionals who want to utilize AI need to stay up-to-date on the latest trends and best practices to be successful. When used carefully, this exciting new technology has a great deal of potential for agents, buyers, and sellers alike.