Artificial intelligence (AI) will change the way the real estate industry operates. Some in the residential real estate industry have already adopted AI. Early adoption of AI will be a key differentiator for those who lead in the years ahead.
Early AI adoption is crucial for big players to stay relevant
Adoption of AI will be crucial for big real estate companies. AI and other technology will alter the real estate industry. Currently, AI does not make work practices obsolete. But it will do.
Adoption now is critical. People underestimate the time required to integrate new technology. The bigger the organisation the more complex, expensive and time consuming it is. Most large property agencies already exaggerate their use of existing technology.
Organisations which do not begin this transition now will not be able to keep up.
AI won’t make agents obsolete – it will change the nature of what they do
Many people assume that AI will make property agents obsolete. AI will make administrative and operational roles obsolete. But it won’t remove the need of an agent completely. It will change the nature of what those in the industry do.
Agents won’t need to prepare and analyse information to form an opinion. AI will take that work away. Real estate data will become more transparent, more accurate and more available. AI will be able to analyse this data and make forecasts quicker and more accurately than people.
The agent will then become:
- Editor of the data to confirm its real-life application
- Client adviser to explain what the data shows
- Executor of client instruction based on their decision
AI will level the playing field for smaller companies
Large property agencies are cumbersome. They have huge workforces with bureaucratic management teams. Management roles aren’t allocated to the most appropriate person to fulfil the role.
Many decisions appease a small but vocal minority of top billers. Not to serve the best interests of the company. This is a dangerous decision making style. Especially for an industry set to experience radical change.
AI will allow small, lean, and focused businesses to take market share. The largest players in the industry in 10 years time may not yet exist.
Risks for property agencies with AI
Large agencies will need to find new ways to stay relevant. The industry relies on hoarding data. Agents limit access to data to stay relevant. AI and more mainstream technologies will remove this advantage.
Agents must invest capital to develop and improve brand position and market reach. In an industry not accustomed to spending big on marketing, many will find it difficult. The combination of technology integration may be too much change.
Applications of AI in real estate
Not convinced on AI? Here are some of the traditional real estate operations which could shift to AI within the next 5 years.
Research
Most agents have large research teams compiling and analysing data. They produce generic public reports and bespoke client commissioned reports.
Technology will allow agents to analyse market trends and use predictive analysis. People will still need to check and edit reports. But the number of people required will be reduced.
Office relocation
AI will be able to compare many office options. It will be able to prepare a report of alternative locations. This will include analysis of each floor plate to determine likely cost of the fitout. It will also cover travel times for all staff members using public transport.
Comp reports
AI will be able to analyse a series of data points in a market. It will forecast the prevailing rate on a £/$ per ft/m² of new residential property. The model could account for new and past planning applications. It could also account for new amenities and changes in local traffic and environmental issues.
Valuation and appraisal
AI algorithms will be able to provide more accurate property valuations in seconds. AI will be able to produce DCF, comparison and regression models. This will be based on datasets to forecast the likely market value of a property.
Marketing and audience creation
AI is already used by many industries for this. Large agencies already leverage their logo’s. But many don’t spend money on promoting their brand and audience reach. A physical presence won’t be necessary to have influence in a market.
Small technology firms will have an advantage in this space. They have a technology first approach to client/customer data collection. It gives the ability to provide relevant real-time content based on need. Not perceived need. Large agents find it difficult to integrate databases and collect client data. Because most staff are reluctant to share all data it gives them internal value.
Chatbots
Chatbots will be able to engage with potential buyers. They can provide them with information about available properties. This will make it easier for agents to reach a wider audience and attract more leads.
Benefits of AI
By adopting new technologies or techniques early on, Agents will gain the advantage over their competitors. AI will create cost savings, improved efficiency and increased productivity.
Agents will be able to better serve their clients. The process of buying and selling property will be streamlined. There will be challenges as the industry adapts to new technology. But the benefits of AI will outweigh any potential drawbacks.
This article was written with AI.A.
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You may also be interested to read our article How AI and PropTech will turn small investors into super-investors.
