7 Ways AI Will Reshape Real Estate in 2023
Real estate is in a state of flux, evolving at a pace previously unknown to an industry considered relatively conservative and slow-moving.
The pandemic forced the digital hand of traditional real-estate companies to experiment with proptech solutions in an effort to steady their ships as they navigated the choppy waters of an unprecedented crisis.
Now that the industry acquired a taste for the outsized business impact proptech solutions can offer, property management companies of all sizes are locked in an arms race for the best real estate tech solutions on the market.
Unsurprisingly, given a news cycle dominated by advancements in the field, Artificial Intelligence (AI) technology is poised to attract the most attention, capital, and interest from property management companies aiming to outperform their competitors in 2023.
With the mass media attention AI has been garnering as of late, there’s naturally a lot of noise out there. So to help you sift through the hype and headlines, here are seven tangible ways AI will reshape real estate in 2023:
1. Streamlining Mortgages and Refinancing through Data Analysis
Mortgages and refinancing applications are bureaucratic nightmares. To initiate either one, publicly available real estate data—such as title documents, land records, purchase prices, and liens—must be tracked down and sourced from multiple local offices.
But not anymore.
AI algorithms can search through millions of documents in seconds, analyzing everything from credit scores and debt levels to property values and renovations.
Tools like LoanSnap perform AI analysis of data throughout the mortgage process, from finding the best loan type for a borrower to identifying an ideal investor. Upon entering basic information, LoanSnap's AI system scans the borrower’s finances and recommends a "smart" loan for mortgages, refinancing, and home equity lines of credit.
In 2021, the average time to close a mortgage loan hovered at around 49 days. In 2023—and thanks to AI—loans can close in 15 days or less.
2. Leveraging Market Data to Determine Rental Pricing
The success of real estate operations and investment is often hinged on the ability to leverage data to your advantage.
AI real estate technology can be utilized to determine the potential for rental growth and how and when to adjust rental prices for tenants. AI can be used to assess which commercial property will generate the highest ROI, assisting with strategic decision-making in a tough economy.
RealPage’s Revenue Management software harnesses AI to consistently reduce vacancies and maximize rents. Accurate supply and demand algorithms and optimized amenity pricing help increase revenues and reliably outperform the market.
3. Automating the Leasing Funnel
Leasing teams are overburdened and understaffed, leading to missed calls, lost opportunities, poor resource allocation, and an exceptionally high employee attrition rate. Annual employee turnover in multifamily is a whopping 33%, far exceeding the national average of 22%.
Hyro’s AI leasing assistants serve as a 24/7 forever-open leasing office, capturing inbound calls and messages, deflecting low-quality leads, and instantly pushing warm leads down the leasing funnel based on customized parameters and lead scoring. As a result, leasing office representatives are less overwhelmed and can focus their efforts on more complex issues that require their expertise, bringing about the added benefit of decreased agent turnover.
But deflecting and alleviating the pressure of overextended leasing teams is just one piece of the puzzle. Hyro’s digital workforce can perform a wide range of AI-enabled skills covering every stage of the leasing funnel.
Prospects can converse naturally with Hyro’s AI assistants via voice or text to filter through all available apartments by multiple attributes, book in-person and virtual property tours, and quickly receive answers to complex questions that extend to pricing, availability, pet policies, the community, and sister communities.
4. Identifying Likely-to-Sell Opportunities
In today’s ultra-competitive housing market, real estate agents are invariably on the hunt for lucrative new property listings.
AI algorithms, such as the one developed by Compass, analyze prospective home prices, cross-referencing them with local market conditions to build an in-depth profile of likely-to-sell homes in any given region.
Armed with this information, agents can approach homeowners with compelling data points to encourage and expedite deals and opportunities.
5. Enabling AI-Generated Smart Contracts
Blockchain technology has recently attracted some negative press, but its ability to drive smart contracts is a trend gradually gaining traction and credibility in real estate.
In short, a smart contract is a self-executing contract with the terms of the agreement written directly into lines of code. The code and agreements exist over a decentralized network and execute automatically with AI.
The terms of these smart contracts can be securely stored on the blockchain and cannot be altered, ensuring that real estate transactions are indisputable and legitimate.
Smart contracts delivered on the blockchain are a significant stepping stone to a future in which real estate transactions will be as seamless, safe, and intuitive as purchasing a product on Amazon.
6. Verifying Identities to Prevent Fraud
In all real estate transactions, primarily commercial real estate, parties are required to verify the identity of the individuals and organizations involved. In 2021 alone, more than 11,578 victims reported instances of real estate or rental fraud.
AI-based real estate identity verification tools can automate the process prior to entering into any agreement with another party. AI tools such as Fully-Verified perform comprehensive scans reading and extracting data encrypted on the Machine Readable Zone (MRZ) of official identification documents and validate that information with the information provided by the interested parties, flagging any discrepancies or forgeries.
7. Bolstering Your Marketing Output Without Increasing Budget
We’d be remiss not to mention ChatGPT in an article dedicated to how AI will transform real estate this year. But besides the brouhaha characterizing the current conversation around ChatGPT, it’s crucial to highlight its immediate utility in a real estate marketing context.
ChatGPT can be employed to formulate new content ideas, produce social media prompts, and aid in writing and polishing marketing copy. The opportunity here is particularly compelling given that the real estate sector spends less on marketing on average compared to its size than other predominant US markets. A Statista survey of US real estate agents and managers found that in 2021 the sector spent over $661 million on advertising. For comparison’s sake, the banking sector spent no less than $11.6 billion on advertising that same year (a 178% difference).
With ChatGPT as an AI-powered digital marketer on your side, you can easily bolster your marketing output without increasing your budget. As Jessica Fiur aptly put it in one of her latest blog posts: “Why not let AI automate some of the more tedious parts of the job, freeing up your time and your team’s time to be creative with new types of campaigns, work on resident retention strategies, develop your company’s brand, drink pina coladas and all the other million things you need to do?”
Taking Your First Steps with AI
AI technology in 2023 is so extensive and far-reaching that it may feel overwhelming to try and parse its seemingly endless array of uses for real estate and property management.
In this AI gold rush birthing thousands of new companies and vendors every day, it’s never been as essential to conduct exhaustive due diligence to identify fully-vetted and proven solutions.
Zero in on your most glaring performance gaps, evaluate and shop for a substantiated AI tool, and use this as your opportunity to educate yourself about this field and discover other areas in your business that could be markedly improved with AI.