Brick and mortar real estate may seem like the only tangible thing left in an increasingly virtual world, but it’s also being supported by artificial intelligence.
Some of the biggest names in the business, such as Compass, Zillow, and LoanSnap, are now using AI to help buyers find the perfect mortgage and home. And for real estate agents, this can already be a game-changer.
Most real estate data is public, from land records to title deeds, purchase price and even mortgage liens. The problem was, it was an expensive process to go to the local offices and get all the information. Not anymore. Computer algorithms can now scan millions of documents in seconds, browsing property values, debt levels, home renovations and even some of a homeowner’s personal information.
At LoanSnap, a San Francisco-based mortgage lender, AI is used at various stages of the mortgage process, from finding the perfect loan type for a borrower to finding the right investor for the loan.
First, the borrower’s financial information is entered. Then the system “takes all that information, predicts it into the future, and examines thousands and thousands and thousands of options,” said Karl Jacob, CEO of LoanSnap. “It’s different ways of paying off debt, different lending options, and it’s one of the first times that AI has been turned into something that helps consumers instead of hurting consumers.”
And for refinances, he said, âWe build a financial model for someone, and show them exactly how much money they’re losing on a monthly and yearly basis, and then show them how they could potentially solve that problem. and save money in the future, again in seconds.
Jacob admits that virtually all companies now claim to use AI in some way, but said not all of them are really applying it to its full potential.
âThat’s 95% rhetoric, isn’t it? That’s a popular term. People look to things like that and say, ‘Oh yeah, we use AI too.’ AI is actually machines that think and / or study possibilities that would not have been considered before, âhe added.
AI can therefore be useful for borrowers, but it also appears to be the holy grail for real estate agents looking for listings in today’s ultra-competitive housing market. The supply of homes for sale has reached several record highs since the start of the pandemic, when demand from buyers suddenly took off. Agents are desperate for new announcements, and AI offers a new entry.
âThe traditional agent would go knocking on the doors of a lot of houses. Now the AI ââis helping you find the houses most likely to sell in the next 12 months, and it does so by triangulating all the data associated with the house, like when the house was last sold, how long the owner occupied the house, what price is the house selling for in that particular area, âsaid Joseph Sirosh, CTO at Compass, a real estate brokerage firm.
The AI ââ”triangulates all of this information to predict which home is likely to be up for sale, so the agent can now approach that owner, offer their services, and have a much higher probability.”
Sirosh said Compass Agents have a 94% chance of winning a potential roster that they target with AI. Agents can supposedly price the house more precisely and target marketing more specifically.
For those looking to buy a home, all the data available can also help them find exactly what they’re looking for, rather than visiting house after house.
Using Compass AI, they can price their property against other properties on the market, search for specific house types in ultra-specific locations, enter the desired square footage of interior spaces, and exteriors, then receive immediate alerts when something hits the market.
Zillow recently improved the price of its popular home “Zestimate, “saying it now uses neural networks or machine learning comparable to how the brain works.
âIn the case of the Zestimate algorithm, the neural network model correlates facts, location, housing market trends and home values. With this update, Zestimate can now respond more quickly to dynamic market conditions, giving owners a better and accurate estimate [prediction] of a home’s current value, “according to a Zillow statement.
The company is now incorporating this new learning into its direct cash home buying business, Zillow Offers.
So far, Zestimate is an initial cash offering on approximately 900,000 eligible homes in 23 markets.
“With this latest update and the increased accuracy of Zestimate, the number of homes eligible for a cash offer will likely increase by 30%,” the statement said.
AI doesn’t do anything traditional research can’t, but it dramatically speeds up the process, which in a rapidly changing and ultra-competitive marketplace is crucial for these companies.
“The AI ââmakes it possible to move to the dimension of self-driving, that is to say that the AI ââsubcontracts the bulk of the work associated with a real estate transaction: complex data, compliance, paperwork , finding housing, negotiating, offering. I think it really speeds up the transaction. It’s simpler and often less expensive, “said Sirosh.
With this speed, he said, artificial intelligence can overcome the most human component of any real estate transaction: stress.