Be aware! Whether you are a broker, investor, builder, retailer, or a homebuyer/seller, artificial intelligence will forever change the Real Estate industry. And as it radically transforms one of the world’s biggest businesses, millions could lose their coveted jobs. But those who adapt to these changes could reap huge rewards.
Virtual broker explains this two bedroom apartment to a potential tenant.
Here are six ways that artificial intelligence and innovative tech are transforming the industry:
1. Real estate tech is poised to explode.
By example, according to TechCrunch, “Skyline AI, an Israeli startup that uses machine learning to help real estate investors identify promising properties, has raised $3 million in seed funding from Sequoia Capital. The round will be used to build its tech platform and hire experts in data science and machine learning to help investors make important decisions such as when to raise rents, renovate or sell.”
Travis Kalanick, the mercurial former CEO of ride sharing company Uber, tweeted that he will head City Storage Systems, a holding company that redevelops distressed real estate, particularly parking, retail and office space. He said “There are over $10 trillion in these real estate assets that will need to be repurposed for the digital era in the coming years.” He certainly knows how a new technology application can disrupt entire industries.
2. Improved efficiency = shrinking broker commissions.
Brokerage REX Real Estate exchange is using artificial intelligence and machine learning instead of Real Estate agents to sell homes. Its computers crunch more than a hundred thousand data points to find likely home buyers and target them with digital ads. REX also deploys robots at open houses to answer buyer questions. Good news for buyers is bad news for agents. The company charges a 2% commission instead of the typical 5% to 6% Real Estate agents charge. AI will definitely put downward pressure on agent commissions around the country.
According to The San Francisco Business Times, the local start-up Zenplace uses robots as rental agents to allow prospective tenants to see rentals more quickly while helping property owners rent properties faster. The report says “The economics are powerful. A traditional rental agent-dealing with traffic, parking and scheduling headaches- would do well to show three to four properties a day, while Zenplace’s licensed rental agents showing rentals through mobile robots can handle 15 to 20 properties a day.”
3. Disruption of antiquated models.
Also reported in The San Francisco Business Times, “Real estate tech is one of the hottest areas for startups. Oakland-based Mynd also sees an opportunity to use technology to disrupt the property management business. San Mateo-based Reali has raised $9 million in venture funding to cut the costs of buying and selling a house. Oakland-based Roofstock seeks to make investing in residential real estate across the country as simple as buying stock. San Francisco-based Opendoor, offering home owners a quick sale for a fee, is expanding rapidly from coast to coast.”
A potential tenant tours a listing with tech-assisted virtual broker.
4. Robots taking over traditional jobs.
The commercial real estate model is also changing. By example, the hotel management industry will see more jobs taken over by robots. When you arrive at a hotel, AI will automatically know it’s you by connecting with your cell phone or facial recognition. You will be assigned a room based on your preferences, then check in using your phone as a key. AI will also remember exactly how you like your room and have it all set up when you arrive. Another job that could see humans replaced with robots is room service. Automated robots will deliver food or anything else to your room and carry your luggage.
Retailers employ more than 8 million workers whose jobs are in jeopardy. Self-checkout systems and robots that replenish shelves will mean fewer workers will be needed. Restaurant jobs, whether it be a cashier at a fast food joint or a waiter at an eatery, are also at risk. Much like how the ATM reduces the need for bank tellers, robots will recommend what to eat, take your order, then cook it and serve it to you. No human hands needed.
5. Remote opportunities replace traditional offices.
And Artificial Intelligence is helping people move further away from commercial buildings to live in nicer neighborhoods. A neighbor of mine runs a grout company that employs eight workers driving to work sites with their website plastered on their trucks. It’s cheaper and more effective that billboards. He has no office, running his company on the internet from his home. SqueegeeClean, a company I use to clean our windows and gutters in Northern California, is run from the owners home 450 miles away in Palm Springs. No office needed.
6. AI supports the “stay-at-home” economy.
Finally, the emerging “stay at home” economy is boosting Real Estate sales, as companies such as Amazon, Netflix and Domino’s allow consumers to stay home to save money. And USA Today reports more millennials are buying homes thanks to the internet. “They see photos of homes on Instagram and Facebook their friends bought and think, ‘What About Me,’ or FOMO, fear of missing out”.
There is little doubt Artificial Intelligence is upending the traditional Real Estate model, costing the industry jobs and income as technology boosts productivity and shrinks profits. Still, it could be a boon for savvy, tech-oriented investors and consumers looking for the Holy Grail in Real Estate…”buy low and sell high.”
(Brian Banmiller is a national Business reporter for CBS News Radio, writer and public speaker. The former television business news anchor in San Francisco can be reached at firstname.lastname@example.org.)
This article was originally published on April 25, 2018.
CBS News Radio national business journalist Brian Banmiller has spent more than 40 years in the news industry, covering business, politics and the economy on television, radio and in print. Currently, his “Banmiller on Business” reports are delivered to an audience of millions nationwide.
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