What artificial intelligence means for homebuyers, real estate market
Brick-and-mortar real estate may seem like the only tangible thing left in an increasingly virtual world, but it too is being taken over by artificial intelligence.
Some of the biggest names in the business, such as Compass, Zillow and LoanSnap, are now employing AI to help find buyers the perfect mortgage and the perfect home. It could be an exciting time for agents in real estate.
The vast majority of real estate information is available to the public. This includes title documents and purchase prices, as well as mortgage liens. It used to be difficult to get all of the necessary information from local offices. But that is not the case anymore. The computer algorithm can scan through thousands of documents within seconds. It will look through home values, property valuations, homeowner information, as well as debt levels.
LoanSnap in San Francisco, an AI-based mortgage lender uses AI to assist with various aspects of the mortgage process. From finding the ideal loan type for a borrower, to finding the right investors for the loan,
First, the borrower’s financial data is entered. Karl Jacob (CEO of LoanSnap) said, “The system takes all that information and forecasts into the future and views thousands, thousands, or thousands of options.” The system can offer different methods of repaying debts, or different loans options. It is the first instance of AI being used to help consumers, rather than harm them.
For refinances he stated, “We are building a financial plan for someone. We show them what money they are losing monthly or yearly, then we suggest how they can fix this issue. In seconds.
Jacob admitted that AI has been used by most companies in the past, however, he said not every company is using AI to its fullest potential.
It’s rhetorical, you say? It’s an extremely popular term. These things are so popular that people often say they use AI. He explained that AI actually refers to machines thinking about and/or exploring possibilities not previously considered.
Although AI may be beneficial to borrowers, it is also a great tool for real estate agents who are looking for listings on today’s highly-competitive market. The supply of homes for sale has hit several record lows since the start of the pandemic, when buyer demand suddenly took off. AI has opened up new avenues for agents looking to locate new listings.
Traditional agents would walk up to many homes and knock on doors. AI now helps you identify the most desirable homes to sell within the next twelve months. It does this by triangulating all data about the property, such as when it was last sold and how long the homeowner has lived there. Also, the AI calculates the market rate for that area. Joseph Sirosh is chief technology officer of Compass, which is a real-estate brokerage.
AI “triangulates all this information to predict the most popular home for sale. The agent is now able to contact that homeowner and offer his/her services.
Sirosh indicated that Compass agents with AI have 94% greater chances of winning potential listings than those who don’t target AI. The agents can price the property more precisely and target their marketing efforts more effectively.
All the information available to buyers looking to purchase a house can help them find what they are searching for.
Compass’s AI can help them evaluate their property against other homes, locate specific kinds of properties in very particular locations, and even input square footage. Then they will be notified when something is on the market.
Zillow recently upgraded its popular home price “Zestimate,” claiming it now uses neural networks, or machine learning comparable to how the brain works.
The neural network model in the Zestimate algorithm correlates home facts and location with housing market trends. It also predicts home values. As a result of this update, the Zestimate can now react more quickly to dynamic market conditions, providing homeowners with a more accurate estimate [prediction] of a home’s current value,” according to a Zillow release.
This new information is being integrated into Zillow Offers, a direct cash homebuying company.
Zestimate currently offers an initial cash offer to approximately 900,000 homes in 23 cities.
The release states that “with this new update and an increased Zestimate accuracy,” the number eligible for cash offers will probably increase by 30%.
Although AI can’t perform any tasks that traditional research could not, AI does speed up the process which, in a highly competitive market like this, is critical for these companies.
AI lets you go into the “self-driving” dimension. AI helps outsource the complicated data and compliance required for a real estate transaction. This includes the searching of the property, negotiations, offers, as well as the documentation. It makes transactions go much quicker, I believe. Sirosh stated that it is easier and often more affordable.
He said that artificial intelligence could conquer stress, the human element of real estate transactions, with this speed.