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How Artificial Intelligence Changes the Real Estate Industry?

Artificial intelligence (AI) is a machine’s ability to conduct cognitive functions as a human. These functions include reasoning, perceiving, learning, and solving problems. People create AI by analyzing the patterns of the human brain and the cognitive process and replicating them on a computer. People use AI in numerous applications to improve computational functions. One of the benefits of artificial intelligence and real estate is the improvement of building management.

Real estate is slowly gravitating towards a data-driven one like most other industries. Whenever people need to process large amounts of data, they often turn to AI. Even though people have joined artificial intelligence and real estate, adoption in the sector is still in its infancy.

How is Artificial Intelligence Changing the Real Estate Industry?

Artificial Intelligence can have a significant impact on the real estate industry. It can be used to improve the marketing process, simply transactions, evaluate properties, and help to find the right mortgages for homebuyers.

What is the Current Situation Regarding Artificial Intelligence and Real Estate?

AI still has significant hurdles to overcome before it reaches the level of fictional movies. In the real estate industry, the benefits of AI puzzle many CEOs and industry leaders.

Forward-looking people in the real estate industry are already using artificial intelligence and real estate to increase efficiency and profit. One good example is when an AI algorithm helped to complete the acquisition of two multi-family buildings in Philadelphia for twenty-six million dollars in 2018.

An AI algorithm uses thousands of data points to give relevant information to aid decision-making. Some of the data points include:

  • How much the property is worth?
  • Structural features of the house
  • The probability of natural disasters occurring in the area
  • How is the local market?
  • Number of houses involved

The person using the AI algorithm can add as many criteria as possible. The more information they use for artificial intelligence and real estate decision-making, the better the results.

AI and real estate are still in their infancy because people have not yet collected enough data points for algorithms to use. For starters, we do not have enough data about how various buildings work and how well the structure of a building improves its performance.

When artificial intelligence and real estate mature, they will help landowners to know where they should invest their money to reap maximum returns.

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How Are Real Estate Companies Using AI?

A deep look at artificial intelligence and real estate development can shed more light on the progress of AI in the industry. The amount of data available in the real estate sector is gradually increasing. Consequently, almost all aspects of the real estate industry have gotten influenced by AI in the last few years. The following are the ways companies are using artificial intelligence and real estate together.

1 | AI helps to boost lead generation

Computer programs leverage AI to improve business development in the eCommerce space. Several AI applications help managers to improve their marketing techniques using machine learning.

Machine learning helps real estate investors to determine the people likely to become real consumers in the future.

Some websites use Neuro-linguistic programming (NLP) to help real estate developers narrow down their eligible customer base. For instance, a high-end market expert can use it to find potential buyers for their portfolio.

2 | AI is Transforming the Process of Finding Homes

AI is helping to simplify the process consumers go through when looking for homes in online listings. Modern search algorithms that do not use AI help consumers filter properties based on criteria such as the number of bedrooms and bathrooms, square footage, floor plan, stories, etc. AI then kicks in to recommend similar properties the buyer would like, even if they do not strictly meet the person’s criteria.

A person might eventually go with a property that the default search criteria could not have provided.

3 | Simplified Transactions

Real estate managers can use AI to manage their businesses when contract periods lapse. Most systems for customer management can automatically read and report data for a real estate agent. This automation reduces the realtor’s need to use the computer for manual operations and minimizes human error due to manual data entry.

4 | AI Helps in Property Evaluations

One of the areas artificial intelligence and real estate management complement each other is in ‘predicting’ the future. Since the real estate market is frequently changing, it can be difficult for a realtor to estimate property values and rental prices without assistance.

A realtor can use an AI testing model to collect data from various sources to evaluate how much a property in a region is worth or how much rent it can generate. The agent can also analyze the investor market to decide when to add properties to their portfolio.

5 | AI Changes how Agents Deal With Loans

One of the industries heavily dependent on machine learning is the banking business. Banks collect numerous documents to determine if they can lend to potential clients. Real estate agents can use AI-powered software to analyze these documents before submitting them for loan applications. Although software cannot fully replace human analysis, it saves time.

How can Real Estate Investors use AI in Their Business?

Artificial intelligence and real estate are not exclusive to realtors and consumers. Investors can also use it in the following ways:

1. It helps in Decision-Making
AI programs can use analysis to predict the current or future value of assets. This information can help investors know if a property meets their needs and whether it offers an acceptable return on investment.

2. AI Gives Investors a Competitive Advantage
The prediction capability of an AI tool can help you save money by enabling you to choose the best deal. When the tool enables you to size a property up, you can accurately determine what to offer.

3. AI can Help in the Automation of Investment
If your investment strategy involves buying and holding, you can use an AI-assisted system to manage the assets. This is similar to the way realtors use CRM systems to reduce manual data entry and errors. Automation can help you with aspects such as data entry and optout rental.

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Drawbacks of AI in Real Estate

Artificial intelligence has many applications in the real estate industry. However, the technology in and of itself is not revolutionary but takes a supportive role. The following are the limitations of artificial intelligence and real estate.

  • Data collection difficulty: Data collection on prospective sites to invest in sometimes relies on drones and satellite data. These technologies can suffer from poor battery management, limited connectivity, and cloud cover. The data collected can thus be inaccurate.
  • Disorganized Data Pools: All AI tools rely on digitized information to make calculations. If the data pools are not transparent and organized, AI algorithms would be unable to use them, or they may provide inaccurate insights and predictions.
  • Reluctance in Technology Adoption: Some real estate agencies fear automated systems and fail to use them. This fear comes from past automatic valuation models with much higher error rates.
  • High Cost: AI and machine learning software require large data pools that are frequently updated. Companies might have to invest heavily in hardware to keep the software running optimally. Furthermore, current AI software is in its early stages and requires constant modifications and updates as it matures.
  • Replacement of Human Labor: Several manual tasks are automated when artificial intelligence and real estate converge. The human labor for checking documents, conducting research, formulating strategies, and providing home tours can be replaced by software. The adoption of AI could therefore lead to lay-offs and increased unemployment.
  • Lack of Creativity: Even though AI is fast and accurate, it cannot substitute human creativity. AI software cannot solve problems it has never encountered. Therefore, AI might not meet your needs during changing times.
  • Compliance With Regulation: AI-powered tools rely heavily on personal information. This overreliance on personal data could infringe on privacy laws and make the software illegal in some regions.

Examples of AI Technology and Real Estate

The following real estate companies use AI in creative ways. 

Zillow is a Seattle-based company that uses digital photos to estimate the value of properties (Zestimates.) It uses machine learning to guess the cost of properties within a median error rate of 2%.

Compass uses its CRM platform to alert realtors when customers are most excited to buy.

Localize is a New York company that uses AI to double-check the facts of apartment listings. It can calculate many factors such as how much light a unit gets, the proximity of parking space, snowplow efficiency, and the sound insulation of a building.

HouseCanary is a San Francisco company that uses AI to estimate the current value of a property and predict future fluctuations for up to three years. It uses forty years of house sales data from the U.S.


The real estate industry has been a late-comer to the AI scene but is using an increasing number of AI tools. The level of AI maturity can now provide data to help realtors, customers, and investors to make an ideal purchase or rental decision. Despite the challenges of artificial intelligence and real estate, more people are likely to start using AI for their decision-making.

If you want to learn more about PropTech, sustainability, smart cities, and smart buildings, feel free to take a look at our other articles.

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