AI and its role in the home buying process.
“You must assume I have already read the listing, visited the virtual tour, know the comps (comparables), previous sell prices and median values of similar homes in the area. All I really need you to do is submit the offer.”
This is a quote I recently heard from an old friend and good ‘food for thought.’
Quotes like this are not uncommon to hear for many practicing Realtors® in today’s market where technology places real-time information in the hands of many potential buyers. Much of this information is AI (artificial intelligence) and machine learning driven.
AI is at its core is essentially technology that allows a machine to simulate human behaviour (‘Robot’). That machine/Robot essentially learns from past behaviour without being explicitly programmed.
The goal of AI is to make a smart computer system like humans to solve complex problems.
Have I lost you yet?
If you are confused, you are not alone. Read on, good friend.
As a practicing Realtor® with RE/MAX Grey Bruce it is important for me to be familiar with AI and other types of technology people are using in the home buying process.
Let me preface by stating, this isn’t a negative article about ‘technology taking over our lives’, but a point of view at the pros and cons of using AI technologies at this point in time.
I embrace technology and built a career working alongside or directly with technology companies for over 15 years prior to practicing real estate.
Pros of AI
- AI technology can place powerful data and information in your hands, real time. This information, if accurate, can help make the buy decision easier by aggregating and presenting data in an easy-to-understand way.
- AI allows you to gain a ‘feel’ for a home using features like interactive 3D tours and AI generated floor plans that help you see what a home potentially looks like before you buy. This is especially great for new construction, modular or building design plans for homes not built.
- AI makes the home buying process fun. You can gain a better sense of the relation between traditional still photos and the layout of a the home before leaving your home for a showing.
- AI can aggregate large amounts of price and valuation data to help in your search process. What traditionally would take Realtors® hours to source, can now be done in minutes or even seconds.
- The future of AI looks even more promising as new data sets get integrated, helping improve the mortgage process and get as granular as predicting the operating expenses of a home.
So, this all sounds great as a buyer, doesn’t it?
At this point, you may be asking, what is the role of your Realtor®? Or, what are the cons of using AI technology and the respective features?
- AI is only as good as the data its fed. If there is any error in the dataset, it can be replicated at scale and place you at a disadvantage or at risk. AI may also not have access to key data, including material facts not disclosed digitally, or misrepresent data, example: aggregating above and below ground square footage or have inaccurate property sizes.
- AI in its current state is good, but not great at predicting what a home will sell for. Example: check out Zillow’s recent home valuation debacle here. This is not uncommon across AI platforms.
- AI cannot replicate creativity and emotion in the home buying process. Example: understand your family and lifestyle goals, help you buy the home you grew up in, predict the impact of improvements, understand bidding in a hyper-local market, creative financing and more. Ultimately, creativity with AI is limited to the human programming it.
- Ethics. According to McKinsey Global Institute, AI is predicted to replace 30% of the world’s human labour by 2030, which could impact our economy.
- AI doesn’t give back to the Community and make deep human connections as well as humans. Many Realtors® are part of community initiatives that support critical local causes. AI has has hard time judging between what is ethical and legal because it isn’t human.
- Many of the AI platforms claiming to help you in the buying process, are also using your information as a ‘lead’ connecting you with agents that may or may not understand your market. The sole intension is to aggregate information so that you sign up and become a ‘lead’ that they can later monetize. The fancy user experience is part of the conversion tactic in many cases.
Although AI is getting better and helping you in the buying process, it is important to work with a Realtor® to verify the data you are empowered with. Always take AI produced information with a grain of salt and work with a Realtor® to help you make sense of it, married with your lifestyle, financial and personal goals. We are truly in this together.
Be completely transparent with your Realtor® about the information you have. Using it as an ‘ace’ or other manipulative/unethical ways could work against you in the buying process. Word travels quickly amongst Realtors® and can impact your ability to secure a good relationship or hurt an existing one that you have.
Remember, Realtors® also have access to AI based technologies, as well as their sellers. Your Realtor® will have the skill to also be able to evaluate the exact market conditions, why that location is better than others, improvements that have been done, have access to material facts and other critical information that the AI can’t see.
Please contact your RE/MAX Grey Bruce Realtor® if you need help in the home buying process.
Keeping you Above it all.®
Nathan
Sources:
* The Difference Between AI and Machine Learning. Visit article.
** How Is Artificial Intelligence Used in Real Estate. Visit article.
***How AI Could Change Home Buying. Visit article.
