Artificial intelligence (AI) is a powerful tool that will complement the real estate industry’s best talent.
AI, which has been around for decades, comes in many shapes and sizes. As defined by the National Apartment Association, AI “refers to systems that imitate human intelligence to perform tasks and can improve themselves through constant repetition of those tasks and based on the information they gather.”
It appears the real estate industry is just seeing its earliest uses of AI as the field rapidly develops. Real estate managers and operators are continuously exploring where and how they can implement AI in their businesses.1
The types of AI used today are both simple and complex. Compared to a human being’s capability, AI’s great advantage is the sheer volume of data it can process and analyze quickly. This increased processing power helps real estate professionals save time and maximize the amount of raw data they can quickly convert to useful information to help make informed business decisions.
Real estate professionals probably do not even realize they use AI software and applications in their everyday lives. Here are several common types of AI used by real estate managers:
- Chatbots: Chatbots are one of the most easily identifiable forms of AI. Most websites, as soon as they’re loaded, display a small chat box somewhere along the bottom of the web page. Chatbots can respond to users’ inquiries 24/7.They’re easily created to answer FAQs or direct inquiries to the appropriate personnel, reducing the support a gatekeeper may need to provide.2
- Predictive analytics: Predictive analytics is a little more complex and includes algorithms which can more efficiently detect patterns and correlations than human analysts. This function allows algorithms to process historical information about a property or market and produce predictive information that will complement the user’s decision-making process. Real estate professionals can use this information to better develop an objective price of an asset and plan for the asset’s future.2
- Content generation: ChatGPT is one of the best-known AI content creators. AI systems like this can assist real estate professionals to draft blogs, create marketing content, draft property listings and other routine content.3
Real-life real estate uses
Many companies are already using AI in their businesses processes. Here are several real-life examples:
- Underwriting: A real estate investor, operator and syndicator uses AI and machine learning (ML) during the underwriting and asset search process. Utilizing these technologies helps this organization compare data across different markets. They use ML to compare market data that helps their decision-making process and evaluate key performance indicators. AI helps to compare sales comps and analyze leases and lease information in a timely and effective manner. AI/ML can pull and compare this data much more quickly than a person — without the biases that humans are prone to. The AI software this company uses can forecast data it has been programmed to. It’s able to provide insights about key areas the company has determined are important, such as neighborhood forecasting, tenant patterns and predictive maintenance.4
- Reading leases: A Chicago-based community association group whose typical clients are condominiums with 4-500 units uses AI/ML to help decipher its clients' leases and governance documents. The firm then uses a computer application to review the necessary documents. This software helps identify information in leases to help create lease abstracts — which in turn reduces the time an associate needs to read through leases and directs the associate to the specific area of the lease the information was extracted from. Even if a multiunit condominium property has identical leases, the software pulls the information more quickly and allows the associate to confirm the information is accurate.5
- Sale of assets: From beginning to end, AI is revolutionizing how property is sold — from the moment someone looking to sell property visits an agent’s website and engages with a chatbot that directs them to the appropriate personnel and answers any preliminary questions. On the other end, the chatbot makes sure to receive any necessary information the potential listing agent would need and forwards that along with the lead to the correct contact. Once a seller engages the agent, the agent can then utilize AI to draft a listing and edit as needed. All the information needed to create a competitive asking price and other sales data can be compiled using AI software and applications, ensuring that the listing price is a competitive market ask. All these tools will minimize an agent’s time performing research and drafting listings and will help to get the property to market faster. Once the property is listed, virtual reality tours allow potential buyers from nearly anywhere in the world to do a walk-through of the property. As mentioned previously in the underwriting process, AI can assist buyers in making a purchase decision. All these instances of AI assistance will help the buyer and seller arrive at the closing table faster.3
What’s next for AI?
It’s hard to tell exactly what the next stage of AI looks like because the dawn of generative AI is driving evolution and adoption of AI technologies at increasingly accelerating rates. It’s similarly unlikely anyone imagined cell phones would be where they are today when the telephone was invented.
But there are insights and visions for what AI could lead to:
- Artificial general intelligence (AGI): As defined by Housewiring, AGI is “AI that can learn and perform most intellectual tasks that human beings can, including AI development.” This means AI is believed to eventually be capable of reaching an intelligence level higher than humans; it could be capable of creating its own AI.3
- Smart buildings: Buildings can be equipped with technology that uses sensors and automation to create efficiencies and reduce costs or to add or reduce utilities as needed depending on occupancy or tenant preferences. The technology will provide property managers information on tenant patterns and help predict what tenants would want or need.6 This may sound like a benefit to some, but others have concerns about privacy. This use has ethical considerations and will cause debate about what should or shouldn’t be known and shared about tenants’ activities.
- Will AI replace humans? It’s too soon to say if we’ll have a world full of walking computer applications. But it’s already abundantly clear AI is a powerful technology that can assist humans in their decision-making. In its current state AI isn’t perfect and can’t perform all these tasks accurately on its own. AI’s best use, for the time being, appears to be as a tool to streamline processes and create efficiencies within the various systems of the real estate business — though even in these comparatively simple applications, usage of these emerging technologies requires education, appropriate controls and governance, and almost always some element of a “human in the loop” for oversight.
Real estate professionals who can learn to use chatbots, predictive analytics, content generators and other forms of AI effectively will outpace their competitors and be the pioneers on this new frontier. We humans shouldn’t fear AI as our replacement but instead identify ways it can help make our lives easier and free up time to focus on our next challenges.
Contact our real estate practice today.
Chris Moore, Principal
Kevin Lee, Manager
- AI Use Cases in Real Estate: Unraveling the Tech-Driven Transformation (akkio.com)
- Savvy real estate agents look beyond ChatGPT - HousingWire
- How Real Estate Investors Can Use Artificial Intelligence (forbes.com)
- How Artificial Intelligence is Being Used to Read Leases (cremodels.com)
- How AI is Revolutionizing Property Management: Opportunities and Challenges (propertymanagerinsider.com)
The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.