Physical real estate may seem like the only tangible thing left in an increasingly virtual world, but it is also being taken over by artificial intelligence.
Some of the biggest names in the business, like Compass, Zillow and LoanSnap now use artificial intelligence to help buyers find the perfect mortgage and the perfect home. And for real estate agents, it may already be a game changer.
Most real estate data is public, from land records to title documents, purchase price, and even mortgage liens. The problem was that it was an onerous process to go to the local offices and get all the information. Not anymore. Computer algorithms can now review millions of documents in seconds, reviewing property values, debt levels, home renovations, and even some of the owner’s personal information.
At LoanSnap, a San Francisco-based mortgage lender, AI is used in various steps of the mortgage process, from finding the perfect loan type for a borrower to finding the right investor for the loan.
Borrower financial information is entered first. Then the system “takes all that information, forecasts it into the future, and looks at thousands and thousands and thousands of options,” said Karl Jacob, LoanSnap CEO. “There are different ways to pay off debt, different loan options, and this is one of the first times that AI has become something that helps consumers instead of hurting consumers.”
And for refinances, he said, “We are building a financial model for someone and showing them exactly how much money they are losing monthly and annually, and then showing them how they could fix that problem and save money in the future. Again, in seconds.”
Jacob admits that almost all companies now claim to use AI in some respect, but said that not all are applying it to its full potential.
“Ninety-five percent is rhetoric, right? It is a popular term. People get excited about things like that and say, ‘Oh yeah, we use AI too.’ AI is actually machines that think and / or look at possibilities that would not have been considered before, “he added.
So AI can be useful for borrowers, but it also seems like the holy grail for real estate agents looking for quotes in today’s ultra-competitive real estate market. the offer of homes for sale It has hit several all-time lows since the start of the pandemic, when buyer demand suddenly took off. Agents are desperate for new ads and the AI is providing new input.
“The traditional agent would knock on the doors of many houses. Now, AI helps you find the houses that are most likely to sell in the next 12 months, and it does this by triangulating all the data associated with the house, such as when the house was sold. last time, how long has the owner been in the house, at what rate the house is selling in that particular area, “said Joseph Sirosh, chief technology officer for Compass, a real estate broker.
AI “triangulates all of that information to predict which house is likely to go up for sale, so the agent can now approach that owner, offer their services, and have a much higher probability.”
Sirosh said Compass agents are 94% more likely to win a potential list they target with AI than not. Agents can supposedly price the home more accurately and target marketing more specifically.
For those looking to buy a home, all the available data can also help them find exactly what they are looking for, rather than pacing house after house.
Using Compass AI, they can evaluate the price of their property compared to other properties on the market, search for specific types of homes in ultra-specific locations, enter the desired square footage of indoor and outdoor spaces, and then receive immediate alerts when something arrives. to the market.
Zillow recently updated its popular house price “Zestimate, “stating that it now uses neural networks or machine learning comparable to how the brain works.
“In the case of the Zestimate algorithm, the neural network model correlates the facts of the house, the location, the trends of the real estate market and the value of the house. As a result of this update, Zestimate can now react more quickly to conditions market dynamics, providing owners with a more accurate estimate [prediction] of the current value of a home, “according to a statement from Zillow.
The company is now incorporating this new learning into its direct cash offer home buying business, Zillow offers.
So far, the Zestimate is an initial cash offering in approximately 900,000 eligible households in 23 markets.
“With this latest update and greater precision from Zestimate, the number of households eligible for a cash offer will likely increase by 30%,” according to the statement.
AI isn’t doing anything traditional research can’t do, but it speeds the process dramatically, which in an ultra-competitive and fast-moving market is crucial for these companies.
“AI allows you to move to the autonomous driving dimension, which is AI outsourcing the heavy lifting that is associated with a real estate transaction: the complex data, the compliance, the paperwork, the house finding, the negotiation, the deals. I think that really makes a transaction much faster. It’s simpler and often cheaper, “Sirosh said.
With this speed, he said, artificial intelligence can conquer the most human component of any real estate transaction: stress.