The real estate market might feel the shifts and impacts of artificial intelligence (AI). But when it comes to making perhaps the most significant purchase of one’s life, homebuyers will want that human touch, experts told Fox News Digital.
“I don’t think it’s going to replace how we necessarily do business and automate it, but I think it’s going to enhance the amount of data that we have available,” Pierre Debbas, co-managing partner of Rommer Debbas LLP, said.
He argued it will allow Realtors to “provide the consumer with more accurate information and maybe a broader scope of data in making their decisions when buying a home.”
AI has already reshaped a number of industries, including the very industry that created it, leading to rapidly decreasing work opportunities and doomsday prophecies of no more tech jobs in five years. And real estate is no exception.
Real estate agent Shellie Young from Home and Business Realty, Inc. works on a “for sale” sign in front of a home Dec. 22, 2009, in Miami, Fla. (Joe Raedle/Getty Images)
Real estate broker eXp Realty LLC announced this month a plan to hire AI-certified agents, issuing a press release. The agents will work with AI to learn how to best optimize it to empower homebuyers and Realtors alike.
Real estate, like most industries, wants to focus on the human element in the process, and Debbas and Kirsten Jordan, a real estate adviser at Douglas Elliman, have stressed that people may not feel comfortable for many years trusting AI with such a significant lifetime purchase.
“You want to trust the $400,000 of equity that is your largest nest egg with a robot? I just don’t see people wanting to do that,” Jordan said, comparing the possible experience of an AI Realtor to dealing with Amazon or Google’s automated customer service.
“It’s just awful with no people,” she added. “For the masses, things will slightly change” with AI. But for those still seeking “luxury,” they will want to “talk to a real human being.”
Debbas discussed the benefits of AI as a data processor, the most common use among industries outside of tech, excluding the use of computer vision to create more actionable outcomes.
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In the housing industry, Realtors have to handle many homes or properties in their area. But they also have to deal with changes in market demands and government requirements and changes to interest rates and the shift in buying power among potential homeowners.
He also highlighted examples of previous companies trying to use AI in the recent past to try and automate the buying and selling of homes, only to lose money in the process.
A billboard visible near the Copley Square T station facing Columbus Avenue. (John Tlumacki/The Boston Globe via Getty Images)
“A number of companies have attempted to do this … in terms of replacing brokerages,” Debbas said. “Every time that you do it … for investors to buy thousands upon thousands of homes on an automated algorithm, and they’ve all failed.
“Zillow had a famous iBuying program that purchased God knows how many thousands of houses. And that program lost millions upon millions of dollars, and they shut it down a year or two ago. I think that’s to show you that technology can’t replace, in the residential housing market, what the human element provides. … In terms of the valuation of real estate, residential real estate valuation is very subjective.”
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The iBuy program intended to flip houses using an algorithm to make home price estimates and determine what to pay home sellers. But Zillow said it had to shut down the business because it couldn’t accurately predict future home prices and was losing too much money.
The company lost $500 million from home flipping and laid off a quarter of its staff.
The Zillow Inc. and Trulia Inc. app icons are displayed on an iPhone in Washington, D.C., July 25, 2014. (Andrew Harrer/Bloomberg via Getty Images)
“People want to have a personal connection when they purchase a home, and I believe that when people are selling expensive assets that they have put a ton of money into … I don’t know if they’re ever going to trust a robot to be able to get the highest dollar for the sale,” Jordan said.
“But that being said, all the agents and all the small firms have to learn to adapt and step up to what there is.”
The biggest changes will likely occur in cities, where the greater volume and diversity of real estate will require a faster rate of adoption to differentiate and stay ahead of the competition, both experts said.
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“Right now … interest rates have more than doubled in a year’s time, but pricing has largely come down. But in many parts of the country, it hasn’t even come down,” Debbas noted. “What does that do to the lower to the middle class?”
“Families … will remain renters the rest of their lives,” he added. “It is a problem nobody’s talking about. And if we’re going to enhance Wall Street’s ability to continue acquiring even more homes in a more efficient manner, it’s just going to really compound the problem.”
