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.
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 both commercial real estate and residential real estate.
The potential for artificial intelligence (AI) to transform businesses, industries and society has been mounting for decades. But recent advancements, have moved the science from niche to mainstream. The technology’s proficiency in writing, drawing, coding and composing has compelled corporate leaders to consider both the opportunities and threats that AI presents for their future.
For commercial real estate, it’s clear that strategically embracing AI could transform the sector.
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 keep landlords informed of any problems that need attention, such as a plumbing leak.
Understanding artificial intelligence
Artificial intelligence is generally understood as the ability of computers and machines to handle tasks that require human intelligence.
Machine learning, which is one of the most common applications of AI, involves training machines with large amounts of data to recognize patterns, analyze data, and run forecasts and algorithms.
These applications are common in real estate.
More broadly, artificial intelligence technology includes computer vision in industries like autonomous vehicles, as well as robotics, neural networks, voice recognition, and natural language processing.
5 uses of AI in real estate
- Predictive analytics
Perhaps, the most common and practical usage of AI in real estate is in predictive analytics.
- 3D modeling
Visual representations have become increasingly important in real estate, and it’s one of a number of industries that are taking advantage of “digital twins,” or AI-based computer images that allow users to explore a space digitally.
- Smart home devices
Real estate is a massive industry, and property tech might be overlooked next to REITs that are worth tens or hundreds of billions of dollars.
- AI in property management
Property management is another important subsector of real estate. Artificial intelligence also plays a role in helping managers screen tenants, collect rent, and schedule maintenance.
- Mortgages
Artificial intelligence is also gaining increasing adoption in financing, including mortgages.
In underwriting, AI is used to analyze borrower information such as credit scores, income, and employment history to evaluate the borrower’s risk profile and find the best rate to charge.
