Is AI changing your job? Probably so! In the world of real estate, we are seeing some interesting trends over the last year or two. Client after client tells us they are talking to ChatGPT and Claude to evaluate the market, help with their negotiation strategy, review their title work, HOA documents and more.
So how is AI performing so far? What can we take from our recent experiences with it? We see AI impacting our world in a few different areas. Read on for more.
Listing presentation:
One of the easiest ways to spot the AI influence is by perusing the Multiple Listing Service or Zillow. Agents are now having AI produce photos of what a home would look like after a future homeowner does some improvements to it. We see full landscaping jobs, virtual staging and decorating, AI generated photos making a home seem much brighter than it is and more. It's getting harder and harder to spot, too. We have talked to buyers and asked them what they think about it and most say they don't like the generated photos. It's hard to tell what is real from afar so once you get to a home, it can feel like a bait and switch. With AI becoming cheaper and easier to use over time, this issue will be one that sticks with us. Zillow, some cities and states are implementing guardrails requiring brokers to disclose when they have used AI to enhance photos and also present the original photos alongside the AI generated ones.
Pricing and Negotiation:
We have heard from many buyers and sellers who are using AI with negotiation help and to price their properties. ChatGPT and Claude are becoming big influencers in the way that consumers view their listing and their negotiations. We know many people who talk to their favorite LLM about all sorts of things so of course real estate will be no exception.
Certainly, AI agents can tell consumers what the historic data shows us- what home sold for and what past market conditions are like. Anything written online could be useful data that an AI agent could use to help inform consumers. However, there is a point when online data comes up short. Each buyer and seller has unique needs and priorities, pain points and things they need from a transaction, things they would negotiate on and things they won't. Also, the market conditions of "right now" and the market vibe aren't things that will be able to be captured by AI. In the same market we can have homes in which sellers are needing to reduce their list prices by a whole lot and also instances in which some homes are getting multiple offers and are getting bid up in heated, competitive situations. In these instances, an AI agent sourcing online data and advising on the averages probably won't be all that useful.
We know sellers and buyers are double checking our advice to them online- and that's perfectly fine with us! We now know that the use of AI agents is ubiquitous enough that we look into what AI is advising as far as pricing strategy prior to going into our listing appointments. We know our clients are looking at it so we want to know what it is saying! At this point, AI is helpful in some regards, however, I have reservations about it at times. My experience with it up to this point is it has been too malleable and agreeable. When we've asked it for pricing advice and strategy, it has made some large mistakes and when challenged has retreated almost entirely. At this point, it seems too malleable and reliant on user input to be a reliable, independent data point.
In addition to pricing and negotiation advice, folks have been running their title work and HOA documents through AI and reviewing them that way and I can understand why. Title and HOA documents are lengthy and full of legalese. We have seen some of the analysis and it's been impressive. However, I wonder how much AI is missing and what happens when it makes a mistake and misses something big that impacts a buyer's or seller's situation.
General info about expertise and experience:
One interesting experience we had this summer is we got a listing appointment from ChatGPT. Ken and I work almost exclusively by referral so this is quite unusual for us. In this instance, we had a family reach out to us and ask for us to come by to talk with them about listing their home. We had no connection to them and so when we met with them, we asked them how they got our information. They said ChatGPT told them we had expertise in their neighborhood. While it was true we had just sold a home in their neighborhood, that was the only home we'd ever worked on there. While I don't think this was a grave error by any means, it is one in which the limitations of the LLMs were apparent.
Scams and Malware
Real estate has always been a target of scammers as there are many parties to a transaction and large sums of money are being transferred. Ken and I have both expressed that it seems like the number of scam and phishing emails have increased over the last year or two and they are getting ever more hard to detect. First American Title put out some information on the role of AI in real estate and they mention how AI could be used to impersonate real estate agents, create deepfake videos, clone voices, create fake listings, and more. Industry professionals and consumers will need to stay alert, implement security measures, and double check important information to make sure they aren't taken advantage of.
What is the take-away?
Sometimes when we read news articles about real estate, we see the cracks or missing information apparent in ways in which non-industry professionals might miss. I am sure this happens in your businesses, too. This is how we feel about AI now. While in many cases it seems to be on the right path, it could be missing nuances and missing things that only those that are in the day-to-day, real world flow of business might pick up on. After all, ChatGPT and Claude can only source material from what is written online and there is much more to real estate than that. A useful tool for sure- a purely independent and trustworthy source of real-time information and market data- not yet.
How is AI impacting your world? We'd love to hear about it.
Until next time!
Allison and Ken
