Why Sellers & Buyers Should Combine AI with Human Analytics for Quality Residential Real Estate Valuations
According to research conducted by McKinsey & Company, adoption of artificial intelligence (AI) in business has increased by 25% year-over-year. Venture Capital (VC) companies are pouring money into every sector of AI including the real estate sector. AI is advancing every field of human existence including medicine, transportation, and the military by its efficient ability to gather data and predict outcomes.
Consumers AI affects consumers by providing them with more accessible data on-line. Consumers are becoming more educated and independent by accessing this data and this is a good thing. Although not all data on the internet is accurate, having greater access to information is empowering and revolutionizing the way we learn and consume. In the real estate industry, buyers of real estate properties can now access a huge amount of information about homes for sale directly from the internet. Sellers of homes can surf the web to compare properties and their sale prices. The internet has completely transformed the relationship between the buyer/seller and the real estate professional.
Real Estate Valuations Skilled real estate professionals can now use sophisticated valuation models that pull data from multiple sources. They are automated systems that are usually a product of multiple models of proprietary algorithms. In the real estate industry, these automated systems can provide data on individual markets including job growth, commuting times, cost of living and median prices.
They're are also platforms for investment valuations that include data on local market conditions, mortgage records, historical pictures, tax information, and long-term appreciation rates based on short term or long term holding periods.
Automated real estate valuations can only be highly accurate when they're combined with human refinement and corrections. For example, when pricing a home for sale (or to buy), a skilled real estate professional can run a valuation that pulls up public records and listing and sales data. Then she or he absolutely must evaluate the home from the inside. Based on an audit of the home, the real estate professional can then refine and correct the data, which includes providing data and cost adjustments for home upgrades. Or a subtraction of value based on needed improvements of the interior or exterior or issues related to the proximity of the home to a railroad track or a flood zone.
Human Intelligence Like the use of all technology, we need to know where the role of data collection and predicts stops and where human capacity begins. Many mistakes occur when we misunderstand the role of machine learning and assign it human roles. This conversation is critical in every industry where AI has a significant role. We should constantly be asking how can I best combine machine learning with human intellectual and emotional capacities. This will help us to find the optimal balance between machine learning and human abilities.
The new relationship between real estate home seller or buyer More than ever, the home seller or buyer has done some amount of internet research on the local market before he or she contacts a real estate professional. He or she is more knowledgeable than in years past and is upping the game as far as his or her expectations of the real estate professional. As a buyer, he or she now has access to basic details regarding potential homes to purchase. What therefore should buyers and sellers be looking for in a top-notch real estate professional? First and foremost, PRICING. For both sellers and buyers, real estate professionals should be able to run, adjust, and interpret price valuation models to help their clients price right to sell and to purchase. This includes the ability to adjust for market conditions. He or she also must be able to represent your best interest by having strong negotiation skills, work for an established real estate brokerage with an excellent reputation, and have a strong network of professionals to refer her clients to in the lending and legal sectors. AI has significantly impacted the real estate industry and its relationships. In order for this impact to be positive, we have to understand new ways to relate to the real estate professional and the automated systems of data collection and prediction.
Lisa Keshet works as a real estate professional at Unlimited Sotheby's International Realty and can be reached at: 617.902.8295 or [email protected]