Hacking Real Estate June 6, 2023

AI Making Waves Among Real Estate Nerds

It’s difficult to go anywhere online now without hearing about AI, ChatGPT, or some dire warnings about the advancement of these advanced algorithm machines. I’ve been keenly interested in the stories about intellectual rights challenges, the impact on the art world, the future of education, and the massive number of AI-based apps being produced. However, the use of AI apps in real estate has been, so far, rather mundane, but there is a lot of talk in the more nerdy circles about where we are heading.

The Beginning of AI in Real Estate

If a recent conference I attended which had a packed room for a lecture on AI for real estate was any indication, our industry is highly interested in the newest flashy thing.

Currently, AI is being used by Realtors mostly as glorified copywriters – that you don’t have to pay. It would seem like that job is the first casualty of the AI era. A Realtor can copy and paste some input data and out comes a robot-written property description. Others are using ChatGPT for larger projects such as writing generic Buyers and Sellers Guide content.

See: How artificial intelligence is changing the real estate game (CBC, April 19, 2023)

Some more creative agents are building marketing plans and shortcutting research using the same software. I used ChatGPT to find some old building permit and population numbers for a research paper I am doing.

I wouldn’t say any of theses uses are too spectacular or beneficial to the consumer at this point in time. I compare the evolution a bit like the upgrade from dial up to cable internet back in the late 90s. It might help your professional cut down on some work, but it’s doubtful that the “spare time” generated is actually spare time: we will just find more work for the machine!

The Next Step

What will really separate the innovative technophiles from those stuck with fleshy limitations will be in how they generate business. We’ve already seen the power of social media algorithms, but that has mostly just been leveraged by big tech companies, with some minor benefits provided to savvy advertisers and social media managers. However, these algorithms are about to receive a scarily significant upgrade thanks to AI.

I’m the first one to admit that the real estate industry is generally pretty far behind in technology. I would say about a decade in some cases. This is what allows tech-based companies to get into real estate and attempt to replace a professional service with technology services. However, the limitations of technology are readily apparent considering that business model still hasn’t fundamentally changed that much in decades. Most successful “disrupters” are not due to any change in the business practice, but rather their ability to generate online leads (or recruit more agents to do more of the same). The power of tech-based companies has been in capturing “leads”, not in improvements to servicing the client/consumer.

Once the real estate transaction begins, technology hasn’t radically altered much. Yes, we can search for listings faster online, give a whole lot more information to the consumer, and we don’t even have to meet our clients for signatures. In a similar fashion, I foresee the next step for AI to be a lead-capturing device on steroids. Will this actually help the consumer? Personally, I’m doubtful. The big issue, however, is that we don’t know what you don’t know. ChatGPT and other AI apps are only as good as the input it is given.

I think that the new future will bring significantly improved conveniences in online home searching and market evaluations. Right now, our home search capabilities are stuck in the 1990s. You plunk in some basic criteria, save a search, and check the results. You might even use a map to draw your favourite area. While this works for some basic searches, it really doesn’t handle the complexities of many buyers needs. What I foresee is a much more powerful learning capability that is more than a flashy gimmick.

One company I used in the past for my website was Boomtown ROI. This platform probably had the most advanced algorithm on any real estate website and customer relationship management (CRM) software (also the most expensive). The algorithm would “learn” what types of homes and prices that clients wanted to see and over time curate a more defined set of criteria for their home alerts. However, it was still relatively dumb compared to a human. A client couldn’t tell the platform to override something they’ve searched and they were still reliant on the limited number of criteria provided by the MLS. If you wanted a home that had a certain zoning, backs on a greenbelt, or is an ideal investment property – all common desires for buyers – it still can’t help you with that.

This, I believe, will all change. It will be companies like Boomtown ROI (no, they are not sponsoring this article), KV CORE or other competitors that will infuse the latest in AI into their website systems with better integration into various social media platforms.

So what will this look like?

  1. The website/media company will generate a multitude of highly targeted ads that will have millions of dollars or research behind it, for the preferred social media platform, for free.
  2. A consumer that clicks on the ad will be redirected to the company website which will be a landing page that asks you to provide you real estate “must haves/needs” first. Then it will ask for your “wants”. The AI might ask for more specifics, no different than an experienced, engaged, and informed real estate agent might ask you during a consultation.
  3. The software will provide a first batch of properties. It’ll ask questions. It’ll learn. It’ll ask why you don’t like a property. It keeps learning. Unlike your Realtor with faulty memory or incomplete notes… it’ll always remember.
  4. The AI will not be limited to any one MLS. It won’t be limited to the data input from the agents. It can scan google maps, crime reports, schools, zoning bylaws, tax documents, and analyze street images within seconds. It will be the idyllic neighbourhood expert – everywhere.

Do you think this is that far off?

I don’t think so. Based on the explosion of AI based software now available, I think we could see a rudimentary version of this within the next 24 months. Within 3 years, our current MLS programs will be completely obsolete. Within 5 years, it’ll likely be so ubiquitous that we will laugh at how we use to search for properties.

See: The machines are home: Will AI transform residential real estate tech? (TheRealDeal, Feb. 22, 2023)

The Real Estate Revolution…

What I described above, I believe, are the baby steps. I predict that as advances in AI exponentially increase, there will be much more fundamental change to the industry. The legalities of agency and the common brokerage models will likely require complete overhauls. The lawyers will be happy – or at least the AI that replaces lawyers will be… if it could feel happiness, that is.

Joking aside, I don’t plan on physically writing a real estate contract by 2028.

This isn’t actually shocking. I have a templated version of a standard contract that I write, which I tweak based on individual circumstances. In the past, I would call my licensed assistant and have her do it, send me the contract for review, then send to my client. There is no reason that I can’t be on the road and instruct my AI to do this.

So AI will be able to do my client’s research. It will be able to write a contract. It’ll definitely be able to securely open a door and monitor home activity for showings.

I think I might need a new job soon.