In the past, realtors’ jobs involved a lot of legwork—both literally and figuratively. In addition to the hard work of calling a great number of prospective clients and getting to know each of their unique preferences, they would also have to physically go to the properties being bought or sold. Even beyond that, they would need to flip through a myriad of documents trying to get a handle on things like a buyer’s debt levels, a home’s history of renovations, property values, etc.
Tech has been changing the face of real estate for a long time now, but, with the recent explosion of artificial intelligence (AI) technology, we can expect these changes to accelerate. AI has revolutionized a great many industries such as law, finance, medicine and art, to name just a few. “Going forward, it is undoubtedly that AI is going to have a profound impact on proptech,” says Zain Jaffer, CEO of Zain Ventures, an investment firm with a focus on real estate and proptech. “This effect will not be limited to affecting how people buy and sell their homes. AI is also poised to change how we live in and interact with our everyday environments.”
Take a short way home
Now, AI is being used in nearly every part of the real estate process. It can find buyers homes that meet their needs and financial situation, for instance, while realtors help them navigate the process of buying. It can also help realtors collect and organize the necessary documents for the purchase or sale of a home. Some companies like Zillow and Compass even help people find ideal mortgages for their situations
Indeed, technology can actually reduce the amount of money that goes to transaction costs in the process of buying/selling homes. At the same time, AI-enabled algorithms cause homes to sell faster, making the entire process smoother and more efficient.
Tech is also enabling the tokenization of real estate. “Functionally, tokenization ‘breaks down’ real estate into smaller units than, say, a house or a condo,” says Jaffer. “Because of this, people can purchase 1,000 out of 5,000 tokens of a property such as a condo building. This allows people with less capital to invest in the property and reap some of the benefits when it sells.”
Fractionalization is similar, though it involves a group of like-minded investors all investing in a commercial property together. Much like cryptocurrency and non-fungible tokens, the idea of tokenization is enabled by the blockchain digital decentralized ledger, and the blockchain could also make the process of fractionalization easier. AI could also be used to instantaneously connect people with tokenized or fractionalized investments that are appropriate for their situation.
The nitty gritty
AI has several other ways it can make the real estate market more accessible. For one, it can be used to scour large data sets to provide deeper insights into homes or neighborhoods. This could include scanning crime data in a neighborhood to provide a profile that realtors can use to help buyers see if any given part of a city fits with the lifestyle they’re looking for.
As another example, AI could be used to predict the future value of a home. This is no easy feat, considering myriad factors go into a home’s value, including things like macroeconomic changes and shifting tastes. However, some companies have begun to make strides in this area.
AI can even be used to help power a home. Right now, there are a few companies that use AI and data to pinpoint ways that governments and businesses can save energy when powering their structures. This could, in the future, also be used for domestic buildings. Other firms make use of AI to, among other things, identify ways in which a home’s energy efficiency can be improved, such as by installing smart thermostats or even purchasing high-quality insulation.
A bright tomorrow
For realtors and home buyers and sellers, AI has already represented a sea of change. The ability to automate or enhance many parts of the real estate process with AI allows realtors to focus on what they do best: the human element of real estate. Meanwhile, the powerful AI tools currently available can help their clients better understand what goes into buying or selling a home and give them a deeper understanding of their community through the listings that algorithms provide them.
“There’s a bright future ahead for AI in the world of real estate,” says Jaffer. “Each year, AI tech gets more and more advanced thanks to better data and an increase in computing capacity—and, of course, the hard work of various computer scientists in the field. For that reason, anyone interested in real estate should stay on top of further developments in the AI space.”
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