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When you think of artificial intelligence (AI), you probably don’t think of AI in real estate. After all, real estate has traditionally been a slow industry to innovate as most transactions are still done through traditional brokers and independent landlords, even as real estate investment trusts (REITs) are the big players. However, like much of the rest of the business world, the real estate industry is embracing the power of artificial intelligence (AI), which holds implications for commercial and residential real estate. An infographic showing five examples of how artificial intelligence could be used in the real estate industry. Any business that involves data is a good target for artificial intelligence, and there’s plenty of data in real estate. Appraisals and estimates have traditionally been based on neighborhood comparisons and human opinion, but AI-based algorithms are increasingly used to generate these estimates. Even generative AI now plays a role in creating three-dimensional models of properties so that potential buyers can use any connected device, such as a smartphone or tablet, to get a sense of how they look. The technology took off during the pandemic when sellers were reluctant to have buyers in their homes, and it has continued to grow. Finally, AI also plays a role in smart home devices like thermostats, lighting, cameras, and monitoring devices to inform landlords of any problems that need attention, such as a plumbing leak. In this look at AI in real estate, we’ll explore how the new technology is changing the real estate industry and some examples of AI in the real estate industry.
Understanding artificial intelligence is generally understood as the ability of computers and machines to handle tasks that require human intelligence. Machine learning, one of AI’s most common applications, involves training machines with large amounts of data to recognize patterns, analyze data, and run forecasts and algorithms. Supervised Machine Learning: A subset of machine learning where algorithms learn from a preexisting labeled data set where both the input and desired output are provided. These applications are typical in real estate. More broadly, artificial intelligence technology includes computer vision in industries like autonomous vehicles and robotics, neural networks, voice recognition, and natural language processing.
AI is used in real estate. Five uses of AI in real estate:
1. Predictive analytics Perhaps the most common and practical usage of AI in real estate is in predictive analytics. When you see an estimate on the value of a property, it’s generally based on predictive analytics from artificial intelligence. Zillow (Z -0.19%) (ZG -0.16%), the leading online real estate marketplace, uses AI for its “Zestimates,” or the proprietary valuation estimates it provides, as well as personalized recommendations, floor plans, and photos. Rival Redfin (RDFN 0.0%) also uses AI for similar estimates and has partnered with ChatGPT creator OpenAI with a chat-based search plugin that can help searchers find the right home for them. Forecasting is essential, primarily when investing in commercial real estate. Investors, agencies, and economists use AI to predict where the real estate market is headed, hoping to get an edge on the competition and buy at the right price.
2. 3D modeling Visual representations have become increasingly important in real estate, and it’s one of several industries that are taking advantage of “digital twins,” or AI-based computer images that allow users to explore a space digitally. Matterport (MTTR -0.82%) is among the leaders in the technology. It creates 3D virtual tours of properties that allow potential buyers to explore a property using augmented reality and other features before visiting in person. The technology helps increase the pool of potential buyers since anyone with a connected device can get a good look at the property. It also saves buyers, sellers, and agents money since it screens potential buyers to ensure they’re interested. Startups are building similar technologies that show renderings of properties that don’t exist yet. Some focus on assisting architects and offer tools to estimate costs based on different designs.
3. Smart home devices Real estate is a massive industry, and property tech might be overlooked next to REITs worth tens or hundreds of billions of dollars. However, property tech, or proptech, represents a fast-growing niche in the real estate industry. It focuses on devices that help landlords and homeowners remotely monitor properties. These include smart doorbells, smart locks, smart thermostats, cameras, and other smart home devices that help notify people of any problems that might occur inside the property. AI helps devices learn user preferences and adjust settings as needed. They can help save money on utilities, improve tenant satisfaction, and help the landlord stay up to date and avoid major repairs. 4. AI in property management Property management is another critical real estate subsector. Artificial intelligence also plays a role in helping managers screen tenants, collect rent, and schedule maintenance. AI chatbots can play a role in tenant screening, much like their uses for customer service in other industries. They can answer questions about rental rates and availability and guide customers through the application process, alleviating some of the work required of human agents. Automation through AI can also help with payment processing, managing workflows, doing market analytics, and managing collections. Assistants also generate reports to track leasing performance to help improve occupancy and operational efficiency.
5. Mortgages Artificial intelligence is also gaining increasing adoption in financing, including mortgages. In underwriting, AI analyzes borrower information such as credit scores, income, and employment history to evaluate the borrower’s risk profile and find the best rate to charge. Artificial intelligence tools help detect and prevent fraud and automate loan servicing tasks such as payment processing and customer communication. Some mortgage lenders like Rocket Companies (RKT -0.4%) use AI to deliver near-instant decisions on mortgage applications. For instance, the company offers mortgage approvals in as little as eight minutes. Related investing topics How Artificial Intelligence is Used in Customer Service AI will almost certainly see rapid growth over the coming years as it continues to disrupt customer service. How AI Is Used in Healthcare AI is changing healthcare. Learn about the implications for the industry and investors below. Investing in Quantum Computing Stocks: An in-depth look at the best quantum computing stocks in the U.S. stock market this year. What is ChatGPT and How to Invest in It? Learn about the new AI chatbot dominating the internet. Will AI change the world of real estate? Real estate is a massive, fragmented industry that is typically slow to change. However, the examples above show that AI already impacts areas like predictive analytics, property estimates, smart home devices, mortgages, etc. As artificial intelligence improves, it’s likely to become a significant part of the real estate industry. If you’re an investor looking for exposure to AI, consider looking at AI stocks or AI ETFs, or you can learn more about real estate investing to investigate more opportunities with AI in real estate. Keep your eye out as more real estate companies are set to embrace AI in the future.
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When you think of artificial intelligence (AI), AI in real estate rarely springs to mind. Traditional real estate practices, usually involving brokers and independent landlords, need to be faster to innovate. Yet, even with the dominance of real estate investment trusts (REITs), AI is making headway in the industry.
Like many other sectors, the real estate industry recognizes AI’s potential. This has vast implications for both commercial and residential real estate. An infographic provides a snapshot of how AI integrates into real estate.
Real estate is data-driven, making it ripe for AI applications. Instead of relying solely on neighborhood comparisons and human perspectives for appraisals, AI algorithms are now pivotal in making these estimations.
Generative AI has also ventured into crafting three-dimensional models of properties, allowing potential buyers to get a virtual feel of a place using their connected gadgets. This technology gained traction during the pandemic, as many homeowners hesitated about in-house viewings.
Moreover, AI is integral to smart home devices such as thermostats, lights, cameras, and monitoring tools. These notify landlords about issues that may arise, like a plumbing malfunction.
Delving deeper into AI in real estate reveals its transformative impact on the sector. Some applications include:
Understanding artificial intelligence
At its core, AI enables computers and machines to perform tasks that typically need human intelligence.
A widely-used AI application, machine learning, trains machines to discern patterns, analyze data, and employ vast data algorithms. A prime example is Supervised Machine Learning, where algorithms learn from labeled data sets.
Such techniques are standard in real estate. However, AI also spans other realms, such as computer vision in industries like autonomous driving and robotics, neural networks, voice recognition, and natural language processing.
Let’s explore five AI applications in real estate:
- Predictive analytics
- AI excels in predictive analytics within real estate. When property value estimates pop up, they often rely on AI-driven predictive analytics.
- Zillow, a central online real estate marketplace, uses AI for its Zestimates and personalized suggestions. On the other hand, Redfin has aligned with ChatGPT creator OpenAI, offering a chat-based plugin to guide home seekers.
- Investors and economists lean on AI to purchase at optimal prices for market forecasts.
- 3D modeling
- Digital twins are AI-generated images that allow users to navigate spaces digitally. Matterport leads the way with 3D virtual property tours.
- Smart home devices
- Real estate’s property tech, or proptech, is a rapidly expanding niche. It revolves around remote monitoring tools like smart locks and thermostats. AI enhances these devices by learning user preferences and auto-adjusting.
- AI in property management
- AI aids property managers in tenant screening, rent collection, and maintenance scheduling. AI-driven chatbots and assistants streamline these processes, boosting efficiency.
- Mortgages
- Financing and mortgages also leverage AI. For instance, it aids in underwriting and analyzing borrower data to determine risk profiles. Lenders like Rocket Companies use AI to speed up mortgage approvals.
Real estate may traditionally resist change, but AI is undeniably reshaping the landscape. AI’s footprint in the sector is growing from predictive analytics to smart homes. Investors keen on AI might explore AI stocks or AI ETFs. Stay tuned, as more real estate entities are bound to adopt AI.
