Chat GPT, AI AND Real Estate PropTech
WILL ARTIFICIAL INTELLIGENCE TRANSFORM THE REAL ESTATE INDUSTRY?
IS ARTIFICIAL INTELLIGENCE THE NEXT HOT PROPTECH?
Will all the recent talk about ChatGPT and AI in the news, it was inevitable that real estate coaches and brokerages would start jumping on the bandwagon too and touting it as the latest and greatest trend that will transform the real estate industry. I do think there’s an application and I’ll share my million dollar idea on that a little further along. But first….
All the talk about AI and real estate got me thinking about the history of “PropTech”, or as I like to say, the answer to the question no one asked.
That niche has taken a major hit since the market slowed after mortgage rates went up starting last year. But when you have companies already churning through their burn rate in the best of times, it doesn’t take much to see their fortunes tumble in tougher times. The iBuyers in particular may not be coming back from this downturn. Or at least in their previous incarnation.
But I’m getting ahead of myself.
Let’s start with what is PropTech?
PropTech or Property Technology, has been defined as:
The application of information technology and platform economics to real estate markets. Some goals of real estate technology include reducing paperwork or making transactions quicker and more efficient, it is often thought of as overlapping with financial technology.
One part of a wider digital transformation in the property industry. It considers both the technological and mentality change of the real estate industry, and consumers to our attitudes, movements and transactions.
The usage of digital innovation and technologies in all the processes related to property search, buying/selling and managing.
Sounds kind of vague and ambiguous, right?
That’s because it is a fairly artificial construct created by VCs looking for the next unicorn. Or more specifically, the VCs looking to “disrupt” the Real Estate industry based on the self serving false assumption that there is some way to dis-intermediate agency and grab a piece of the commissions.
This is predicated on Real Estate agents ultimately having the same fate as travel agents, stockbrokers, and retail stores in general. There’s a lot to unpack in that but let’s hold that thought for a few more paragraphs and first look at who are the main players in PropTech.
The PropTech Market
Let’s start with Zillow, arguably the first PropTech company. While many consumers don’t remember the pre Zillow world, once upon a time (2005) you weren’t able to go to a website and get an automated value of your home. But as Zillow’s very lucrative ad business hit its ceiling, the firm branched off into iBuying - aka buying homes to flip. Other players in this space include Offerpad and Opendoor. And then the brokerages such as Redfin and Keller Williams also jumped in.
As of this writing, Zillow and the brokerages have left the market. The pure plays like Offerpad have stayed in.
Speaking of brokerages, all those firms who were running around the last few years saying they are really tech companies - and I’m not just referring to Compass, well how’s that working out for you now that the real estate market has slowed down? Probably not too well because as it turns out they really need their cut of the commissions to make money. If they were truly tech companies they would have some technology they were selling. Whoops.
Now don't get me wrong. If you know me, you know I love tech and am kind of a geek (or nerd in a good way). And there is no question that my tech stack today contains lots of products and apps that I didn’t use and probably didn’t exist 10 years ago.
Some examples are:
DocuSign - where would the industry be without this great tool. It has saved countless hours and moved the transactions along at a lightening speed that just didn’t exist when we had to get wet signatures on everything.
Matterport - I love 3D walkthroughs. I use them when I market my listings and also to preview homes. I wish more agents posted 3D walkthroughs.
SkySlope - While not a customer facing application (it is used for real estate back room processing), it is a great product and a huge advance over the not so great old days when we had to stuff our paperwork into a folder to have ti reviewed and filed by an admin in the office.
Supra lockboxes - These are those blue boxes you see hanging on doors and holding the keys to properties so we can do showings. They are opened by an app on an agent’s phone.
HOW DOES AI PLAY INTO ALL THIS?
True confession. As soon as I heard about it I signed up for a ChatGPT account. And as soon as M’Soft rolled out the new Edge browser and incorporated Chat into Bing, yup, I went for that too. Personally I like using Chat more on Bing that in the OpenAI app. But that’s just me. I have friends who are already paying for the enhanced version of ChatGPT.
I’ve tried having Chat “write” a few real estate related articles for me. (No, what you are reading here was not generated by a bot, I’m writing this as I always have.). I found that about 80% of what ChatGPT is accurate and could be used as far as facts go. I’m sure it will get much better over time. As for tone and interpretation, kind of lacking.
Which brings me to what a lot of coaches and other industry luminaries are touting - that Chat will be able to write your property descriptions for you. And I’m sure it will. That most likely will create a real opportunity for those of us who can write with humor, pathis, sarcasm and authenticity.
What I found when I played around with Chat writing property descriptions is that the tool tends to repeat itself after a while. Probably because it is still new. But what that means is that let’s say you and you use it to write descriptions for similar homes - we might get a lot of overlap and look alike text. The implication is that for those buyers who actually read the descriptions, they may confuse the listings.
Yes, I get it if you say that agents already use the same typical and tired phrases, “entertainer’s delight”, “gourmet kitchen”, “executive home”, “boasts…”, etc. Hey, I thought tech is supposed to improve. things. And, at least for now, Chat does not know all the local stuff that we as “neighborhood experts” do.
“Expect to see every company in the real estate space now position themselves as not just a tech company but an Ai company.
And also expect that very few of them really have an AI implementation of any value.”
THE MILLION DOLLAR CHAT AI IDEA
Well at least for real estate. And I should probably say “billion dollar” with inflation as high as it is.
Here’s how I see this as transformative: SEARCH.
For years we have been living with either pre-populated search results typically sorted with the newest listings first. Cute but reaching its expiration date.
If searchers don’t see what they want in the results, they can go to the “advanced” or custom search options which are pull down menus. You know how that works - fill in the number of bedrooms, bathrooms, Sq Ft etc.
But how about - using AI, if buyers could search based on plain language? You know, the same way they talk to us as agents. Something like “I want a 3 bedroom with 2 baths but would consider a detached townhome if it is a rear unit. I want a south facing back yard and in the Jefferson School neighborhood but not a reverse floor plan. I’m okay with light cosmetic updates but don’t want to move any walls or do a bathroom remodel.”
To make that kind of search work, agent property descriptions would have to be a lot more, how should I say this, descriptive, lol. So instead of the usual “executive home”, which means nothing or “gourmet kitchen”, or other usual puff we all do, the descriptions will have to be more useful for plain language search which would incorporate the text plus the other fields we currently search on. And AI can help write those descriptions if someone comes up with the write format / program to take the typical agent babbling and transform it into something useful.
LET’S GET PAST THE AI REAL ESTATE HYPE
This is actually a quote that a CEO of a Real Estate AI company said. I’m x-ing out the name of the company to avoid conflict.
“Artificial intelligence powers conversations in a way that’s never been seen before for real estate. Not designed to replace the agent, ‘XXXX’ AI delivers efficiency for the agent and a more meaningful experience to the client. That means more leads close in less time.
Instead of burdening the agent with follow-up reminders and figuring out how to establish complicated CRM workflows, our technology does the heavy lifting of reaching out, creating a unique client profile, qualifying, and nurturing disengaged buyers while sending them ultra-personalized listings and communications. This enables agents to focus on what matters most: prioritizing relationships with buyers who are ready to work with an agent to support them in one of their most important and largest monetary decisions.”
Do you know WTF this fool is talking about because I don’t. He’s going to use AI to reach out to clients (and I assume prospects) so that agents can better build relationships (?). With a bot instead of human interaction. Huh.
Hey, I’m a techie and all for AI, ChatGPT, and everything coming down the pike but let’s get real.
And as I said earlier, expect to see every company in the space now position themselves as not just a tech company but an Ai company.
God save us!