AI in Real Estate: Key Use Cases and Innovations

Artificial intelligence is taking the world by storm. It’s already powering self-driving vehicles, pinpointing ideal retail store locations, and detecting cancer cells at an early stage. The real estate industry has not been left behind in this revolution. AI is making inroads in the industry, with realtors adding algorithms and data pipelines into their decision-making processes. To what end? Read about the AI use cases in the real estate industry.

However, before real estate companies can proceed to fully implement AI adoption, it’s important to take a step back and visualize the big picture in order to answer these important questions:

• Why is the real estate industry speeding towards AI adoption?
• Which industry processes will be significantly transformed by AI?

It will be a good starting point for today’s analysis. Read on and learn how AI consulting can change the real estate industry!

AI in Real Estate: Current Implementation and Trends

The first of the myriad uses of AI in real estate occurred back in 2018 after an [1] AI-powered real estate deal. The outcome of this transaction was the acquisition of two properties in Philadelphia valued at $26 million. The buildings were acquired using an AI algorithm called “soon to market detection”.

This came up after evaluating countless data points to establish whether the property had market potential. These included:

• Prospective financial value for the property
• The characteristics of the property and key performance indicators
• The likelihood of natural catastrophes in the region
• The supply of the soon-to-be-released units
• The status of the local property market

Today, AI in real estate has graduated from the shadows into the mainstream. According to Deloitte[2], spending on artificial intelligence will reach $97.9 billion by 2023, which marks a big leap from the previous years. Deloitte also foresees a scenario where AI technologies will in a little while become the standard. This means that those companies that have already adopted AI will enjoy a good competitive edge, while those that haven’t will make giant strides in that direction.

According to the CRE Innovation Report 2020 [3], around 49% of commercial real estate executives acknowledge the fact that AI can produce operational efficiencies and massive budget savings. On the other hand, 43% believe it can generate a hugely disruptive impact.

Among the key benefits that come with AI-driven real estate technologies include:

• Process improvements
• Fine-tuning existing products and services, and
• Gaining a competitive advantage

These benefits contribute significantly to revenue generation and overall business performance. In fact, a survey by McKinsey & Company[4], reported that 63% of companies (in whichever industry) record an increase in revenue generation from AI implementation.

Now, let’s find out which areas in real estate can benefit from AI adoption.

Applications of AI in real estate

Here are six ways in which artificial intelligence is transforming the real estate sector:

Lead generation

Real estate agents have a hard time generating potential leads for their different properties. They often end up spending several hours on engagements with unconvertible prospects. Artificial intelligence comes in to identify the best potential leads depending on the data collected from website visits, landing pages, and digital advertising.

Take Zillow [5], for example. This huge online real estate marketplace uses an AI-driven CRM that evaluates several data points to identify hot leads with a real intention of purchasing the property from its online visitors. The algorithm can also find out the type of property the prospect is searching for.

Content marketing

E-commerce companies are already reaping the benefits of AI-powered consumer apps and chatbots. Real estate companies are also making strides in this direction by using the same technology to deliver customized content directly to prospects.

The role of chatbots in content marketing is quite evident, as it influence the future of property business. According to Real Estate Trainer [6], agents should respond to inquiries from potential clients within five minutes. It also states that over 78% of potential leads stick to the realtor who answers first.

AI-powered chatbots can respond to typical client queries without any pushy sales messages or frantic efforts to get a prospect’s contact details. Chatbots can be used in real estate to put forward the following question ideas to the prospect:

• What type of home do they prefer?
• What’s their budget?
• What’s their preferred property location?

A great example of a real estate player that uses AI for content marketing is PropertySimple. This property social media advertising tool designs creative property ads across social media platforms. It then employs AI technology to display the ads to the right prospects. It also provides feedback with real-time performance data on clicks, views, and demographics.

Read more about:  Examples of artificial intelligence (AI) in construction

Property analysis and future valuation

What is the right price to buy a house today to sell it at a profit tomorrow? This is a question on the mind of every investment-centric property company. Conducting a valuation of an existing property and predicting its future market value is a tough job. The price is dependent on myriad factors and can change all at once. And thus, a realtor may not be able to keep track of all the small details. This is where AI in real estate comes in handy.

The more information property agents can avail to their prospective clients, the higher the chances of closing deals. AI technologies can help real estate companies provide correct, detailed information about a home to a client.

To profile a property listing, artificial intelligence in real estate combines existing market data as well as public information, including:

• Crime rates
• Transportation means
• Light sources
• Sound disturbance
• Schools
• Future development in the entertainment scene and dining
• Purchasing trends

AI can, for example, verify realtors’ adverts for ‘sunny’ homes by evaluating the seasonal light disparities and the time of day when the property allows in the most sunlight.

AI in real estate can also allow companies to know when’s the best time to acquire or sell a property and forecast future sale or rental prices. It can also employ a regression algorithm that considers property features like size, age, number of rooms, and home décor to arrive at a viable price range.

House search and recommendation

House searching apps use advanced search filters such as location, price, number of bedrooms, and size, among others. But it’s still hard to find a house because of the many unsuitable filters.

AI in real estate can help prospects make suitable choices by narrowing down their search to fewer and key criteria. This is because AI real estate suggestion engines work in the same way as other product suggestion engines such as the recently launched Amazon Personalize [8]. They evaluate your property preferences and offer the best available options.

An online property marketplace called Trulia [9] employs AI-driven personalization to offer property recommendations. The website assesses the prospect’s preferences and other related information to make suggestions. It can show the right property based on a specific search term like “properties with a garage or backyard” or ‘homes with a swimming pool”. By collecting data and matching it against popular property search phrases, AI speeds up your property search with the best suitable recommendations.

Watch how the Trulia app works:

Property management

Rental property management is a demanding task. There’s a lot involved in the process, including rental applications and transactions, generating lease agreements, and disclosure statements. AI technologies can help streamline property management in various ways.

These include:

• Creating documents automatically, hence allowing realtors to focus on other tasks. AI may also scan property documents for mistakes like empty fields, missing signatures, and so on.
• The application of AI assistants and chatbots can boost communication between landlords, renters, and property managers. The chatbots can respond appropriately to common queries from renters and also automatically send utility bills and notices.
• AI can take care of the accounting task. It can keep records of rental transactions, payables, and receivables. It can also update tax payments.

Virtual tours

The covid-19 pandemic curtailed movement across the globe, and the real estate industry was hugely affected. As such, it was forced to adopt AI technology to stay in business. Virtual tours are a new technological development in the real estate industry.

The AI-powered technology allows clients to enjoy 3D views of properties without stepping foot in the property location. It features capabilities such as zoom-in, spoken notes, and panorama view. This comes in handy, especially for properties located abroad or those still being constructed. Landlords and tenants can also conduct regular meetings without meeting in person.

It might be interesting for you: Using Artificial Intelligence (AI) for Image Recognition

Take a look at one of such applications in action:

Final thoughts on AI in real estate

It’s evident that the adoption of AI in real estate is picking pace every single day. Realtors can now use AI algorithms to identify better leads and close deals. And for investors, AI can help determine the right time to buy or sell a property.

If you operate in the real estate sector and you want to up your game with AI-driven solutions, see our AI consulting services and contact us today!

AI in Real Estate: FAQ

Why is the real estate industry speeding towards AI adoption?

The real estate industry is rapidly adopting AI to improve operational efficiencies, achieve significant budget savings, and gain a competitive advantage. AI-driven technologies offer solutions for better lead generation, content marketing, property analysis, house searching, property management, and virtual tours, enhancing both the customer experience and business performance.

Which industry processes will be significantly transformed by AI?

AI will significantly transform processes such as lead generation, content marketing, property analysis and valuation, house search and recommendation, property management, and virtual tours. These transformations are expected to bring about more precise targeting, efficient operations, and enhanced user engagement.

What was the first notable use of AI in real estate?

The first significant AI use in real estate occurred in 2018 with an AI-powered deal that led to the acquisition of two properties in Philadelphia for $26 million. This deal utilized an AI algorithm for “soon to market detection,” analyzing multiple data points to assess a property’s market potential.

How do AI technologies contribute to the real estate industry?

AI technologies contribute by improving process efficiencies, fine-tuning products and services, and providing companies with a competitive edge. These advancements are crucial for revenue generation and overall business performance, with many companies reporting increased revenue from AI implementation.

This article in an updated version of the publication from Feb 15, 2022.

References

[1] Medium.com. Ways AI is Changing the Real Estate Sector. URL: https://medium.com/axeleo/5-ways-ai-is-changing-the-real-estate-sector-a726bf600a83. Accessed February 9, 2022
[2]Deloitte. com. Cognitive Technologies State of AI and Intelligent Automation in Business Survey. URL: https://bit.ly/34IdkVc. Accessed January 9, 2022
[3]Altusgroup.com. CRE Innovation Report-2020. URL: https://www.altusgroup.com/argus/insights/cre-innovation-report-2020, Accessed February 9,2022
[4] Mckinsey.com. Global AI Survey: AI proves its worth, but few scale impact. URL: https://www.mckinsey.com/featured-insights/artificial-intelligence/global-ai-survey-ai-proves-its-worth-but-few-scale-impact. Accessed February 9, 2022
[5] Zillow.com. URL: https://www.zillow.com/. Accessed February 9, 2022
[6] The realestatetrainer.com. URL: https://therealestatetrainer.com/. Accessed February 9, 2022
[7] Venturebeat.com. Amazon Launches Personalize a fully managed AI-powered Recommendation Service. URL: https://venturebeat.com/2019/06/10/amazon-launches-personalize-a-fully-managed-ai-powered-recommendation-service/. Accessed February 9, 2022
[8] Techcrunch.com. Trulia Suggest. URL: https://techcrunch.com/2013/03/06/trulia-suggest/. Accessed February 9, 2022