AI In Real Estate

05 March 2019

Artificial Intelligence is sweeping across most industries, and that also includes Real Estate. It is generally conceded that A.I. can do a better job than humans at analyzing data and drawing conclusions. It has already been proven that A.I. can do a better job than doctors at diagnosing patients with diseases and illnesses. In real estate, several firms are betting that A.I. can estimate values better than appraisers and sales people.

We would agree if A.I. had access to all the property information. But they don't. Sure, you can provide all the numerical data, but you need to visit the actual property. Because each one is different. A.I. computers just sit in an office. There are all sorts of factors that cannot be entered into a spread sheet. How can you put a value on different paint colours, furnishings, showability, even availability! You get the point, there are just too many subjective factors. People don't buy houses based just on numbers.

Zillow started the trend with its "Zestimate's" program. I tried it with my property in Florida. There value was off by 15%. Nonetheless, Zillow has now started to buy homes through its "Zillow Offer" program. They appraise your property using AI, then give you a market price, less 6%-9% for their costs.

This sounds like 'The Guarantee Sales' program to me, which was popular in the 70s and 80s. So, how long will this program last? My guess, until Zillow runs out of money.

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