Too many real estate agents are watching artificial intelligence (AI) from the sidelines, assuming technology will never replace them. They repeat the mantra “Home buyers and sellers will always need a real estate agent.” Yet, even the most brilliant leaders in AI have a difficult time envisioning how AI will transform the world in five years. So how can real estate agents be so cavalier about their job?
Real estate agents who are not paying attention to AI are putting their livelihoods at risk. Powerful AI tools are already transforming residential real estate and forward-thinking agents are paying attention. The good news is that the early adopters will thrive.
In this article, I will explain the history of AI, the projected financial impact on real estate and the cutting-edge tools available today for savvy agents.
The history of AI and where it is going
The Turing Test was developed by Alan Turing in 1950. In this test a human interacted with AI and discerned if the AI was a human or a computer. Also introduced In the 1950s, was the concept of building a neural network to empower computers. However, it was deemed as too challenging technologically so it languished. It re-emerged in the AI scene in October 2012. Geoff Hinton, a professor at the University of Toronto, and two students, constructed a viable neural network.
A functioning neural network was viewed as the pathway to develop AI capable of learning anything a human could, and perhaps becoming more intelligent than humans.
ChatGPT uses neural networks to learn from experience. It is trained on text data and learns to identify patterns from that data to generate human-like text responses. These are large language models (LLMs). Creating new content, whether in the form of text, photos, videos or computer code, is referred to as generative AI.
What is next? Artificial general intelligence (AGI) is, “AI that can learn and perform most intellectual tasks that human beings can, including AI development.” Some AI researchers believe that today’s AI already has one foot in that door. Microsoft researchers wrote in a paper that OpenAI’s GPT4 has “sparks” of AGI. As AI advances, it will progressively become super intelligent and then surpass the most brilliant humans. AI knowledge is collective. It will instantly share new information with all connected AI systems, continually expanding its database and understand it in ways humans could not process. The consequences of AI reaching super-intelligence are profound.
The impact AI has on the economy and real estate industry
McKinsey recently published “The Economic Potential of Generative AI: The New Productivity Frontier.” The authors examined 63 generative AI use cases, across 16 business functions and 850 occupations. They concluded that AI has the potential to deliver an economic benefit of $6.1 trillion to $7.9 trillion.
Job functions most likely to be impacted include sales, marketing and software engineering. Given that sales and marketing are key areas for real estate agents, generative AI will increase the probability of agents winning listings. AI will:
- Provide comprehensive customer profiles from data and provide suggestions on the best times to engage with prospects
- Develop better leads by analyzing product sales data, and tying it to customer profiles and
- Develop sales scripts and automated sales follow-ups.
Marketing will be enhanced with generative AI, resulting in effective content creation, enhanced use of data and efficient SEO. McKinsey reports that the real estate industry will see a productivity gain of $110 billion to $180 billion, primarily in marketing and sales.
Which real estate functions can AI outperform humans
I asked GPT-4 about real estate valuation. It first explained how it was better than human agents. GPT-4 could quickly process massive amounts of data. This data includes comparative home sales and market trend, be unbiased, use machine learning to predict home values from historic trends and identify complex patterns like changing crime rates or school overcrowding and continuously monitor the market in real-time.
However, GPT-4 concluded that while, “AI can enhance the process of real estate valuation, it may not completely replace human judgment. AI models might not account for qualitative aspects like architectural uniqueness, interior design quality or the emotional appeal of a home. Furthermore, AI might not handle exceptions or unusual circumstances well, which a human agent with experience could navigate effectively. Combining the strengths of AI with the expertise and insights of real estate professionals could provide the best results in accurately assessing the market value of homes.”
When ChatGPT launched, real estate agents were immediately drawn to its ability to write listing descriptions and blog posts. Both are excellent uses of the technology to save time. However, agents must be diligent in checking for factual accuracy and ensuring the content complies with their licensure rules.
Also, if an agent struggles with writing, I suggest directing ChatGPT to draft their blog post at a high school level and edit the writing so that it sounds like them. If readers detect that the content wasn’t written by the agent, another impersonal blog post won’t impress them or instill confidence in the agent’s expertise. Conversely, what happens if the reader is fooled into thinking that the agent is knowledgeable about the subject matter of the ChatGPT-created blog post? If the reader and agent then engage in conversation, it’s doubtful the agent will appear proficient on the topic, creating doubt in the prospective client.
Building trust with prospects or clients takes time. AI and ChatGPT are tools, not replacements for the hard-earned market expertise and years of transactional and interpersonal experience.
The residential real estate brokerage industry relies on public trust in agents to guide them through the process of buying and selling homes. Smart agents will recognize how AI tools can enhance their practice by optimizing their time, freeing them up to gain additional knowledge about their market and have more quality interactions with clients and prospects. Conversely, passive agents who expect AI to build their “expert agent” brand will not survive the inevitable industry disruption.
Grow business and drive efficiency with custom chatbots
Chatbots are AI-powered messaging tools that allow users to interact through conversational texting. The latest chatbots, like ChatGPT, are far more advanced than those encountered on most retail websites. They not only answer questions but also engage in conversations like a real person, rather than a machine.
Think of a custom chatbot as a ChatGPT that is uploaded with the agent’s data. It could be the listings, noteworthy closed transactions, blog posts, videos, podcasts, website copy and agent bios. When website visitors interact with a custom chatbot, it’ll be as if they’re talking with someone who knows everything about the agent and their business. Or, they could build an internal chatbot for their team that could answer commonly asked questions and direct them to resources.
Real estate agents choose how to build their business. The options are vast — social media posts, emails, videos, digital ads, postcard mailers, park benches and even billboards. Regardless of the campaign, success is typically determined when a prospect reaches out to the agent for a conversation. Most likely, this initial contact is a text or email.
But what about those potential clients who are intrigued, yet not quite ready to dive into a direct conversation with the agent? They might have some preliminary queries that they feel are too minor to trouble the agent with, or perhaps they’re just not prepared yet to directly connect with a real estate agent. That is when an AI-enabled chatbot can nurture a lead.
Below are some of the benefits of custom chatbots.
Sell homes — listing chatbot
Great First Impression. Engaging in an informative and pleasant conversation with a listing chatbot leaves a positive first impression on the buyer regarding the property and the seller. Ease of accessibility promotes confidence and trust.
Chatbots nurture leads. The chatbot not only answers questions but also asks them. For example, the question, “What is your ideal timeframe for moving?” will identify which buyers require immediate contact from the listing agent. When the chatbot identifies the right moment, it can ask the user to provide their contact information and preferred method of contact with the listing agent.
If a potential buyer engages in a lengthy conversation with the chatbot, they’re likely gleaning valuable information. This increases their inclination to contact the listing agent. Plus, the chatbot can engage with multiple parties simultaneously, a feature that’s particularly useful when interest peaks — say, when a highly-anticipated house hits the market.
Chatbots work 24/7. A buyer who stumbles upon the listing late at night could converse with the chatbot, which is able to provide answers as if it were the agent. A quality chatbot will not provide a lifeless, robotic reply when asked about the property size. It would not say, “The property is 28 acres.” Instead, it would answer the same way as the agent by highlighting the property’s features and describing the beauty and allure of the landscape.
Chatbots provide valuable feedback. Conversations with the chatbot give the listing agent a glimpse into the minds of prospective buyers. If just 10 people each ask 10 questions, that’s 100 data points. This wealth of information could help the agent ascertain whether their marketing campaign is hitting the mark or needs fine-tuning.
Chatbots are a live resource. During a house tour, a listing agent could use the chatbot to answer an obscure question about the property to provide an answer in real time as opposed to researching the answer and then providing an answer.
Stay connected with buyers after they close — house chatbot
When a buyer’s real estate agent presents a gift to their client after closing, it isn’t just a kind gesture — it’s an experience that creates a warm and memorable moment. The gift may even help smooth over any rough patches experienced during the transaction. However, once the wine from the gift basket has been consumed, and the flowers have wilted, the warm sentiment becomes just a pleasant memory.
A house chatbot that can answer all the homeowner’s questions that arise after moving in. A house chatbot is a great alternative to a file folder including warranties, lists of contractors, utility providers, maintenance checklists, and inspection reports.
Whenever the buyer has a question, they can simply ask the house chatbot, which would be branded with the agent’s information. Every time the buyer interacts with the chatbot and gets their question answered, they’ll be reminded of their agent, sparking that warm, oxytocin-fueled feeling.
Win listings — listing presentation chatbot
Before the listing appointment, a demo chatbot of the property could be built with data from previous listings and other available information. The chatbot will also provide information about the community and publicly available data. During the listing presentation, an agent can differentiate themselves from their competition by offering to include a listing chatbot. After the agent explains how a chatbot works and the benefits it offers, the agent can let the sellers experience it themselves.
If the seller is familiar with ChatGPT, they will have high expectations and will undoubtedly be impressed. If they’re not familiar with it, they will be pleasantly surprised and wowed by the experience. Since real estate listing bots are the new, cutting edge technology, the agent can boast that their listing has the potential to attract media coverage since it will be among the first in their state.
The adoption curve
Technology drives efficiency, but its adoption takes time. The technology adoption curve shows distinct stages — innovators, early adopters, early majority, late majority, and laggards. The time frame between the early adopters and early majority is a critical gap referred to as the “chasm.” Today, custom chatbots for real estate sit in the chasm awaiting broader market acceptance.
In my conversations with real estate agents who lead teams and industry experts, it has been intriguing to hear their perspectives on how chatbots will impact agents. Some acknowledge the potential value of chatbots in answering listing-related questions, training new team members or providing market insights. However, they may be hesitant to invest their time and budget in a technology that doesn’t have a well-established track record.
On the other hand, early adopters are highly focused on how chatbots can give them an edge over their competitors, attract new clients and strengthen relationships with existing ones. They aspire to be market leaders and are eager to explore how customized chatbots can solve their most pressing challenges.
Where are you on the adoption curve?
Rich Hopen is the co-founder of REAL-E.