ARTIFICIAL INTELLIGENCE IN THE REAL ESTATE INDUSTRY

BY JOHN WAIT | General Counsel

Artificial Intelligence (“AI”) has rapidly infiltrated various industries, revolutionizing the way they operate. The real estate sector is no exception. AI has been implemented in various aspects of real estate, including property search and evaluation, market analysis and client engagement. This article provides a comprehensive review of the current usage of AI by REALTORS® and real estate brokers.

I didn’t write that opening paragraph. Not one word. I took about 10 seconds to register my Gmail account with viral sensation ChatGPT, and then I asked it to “write a paper about artificial intelligence being used by REALTORS® and real estate brokers.” It gave me 450 words in about 20 seconds. I watched the screen as it dutifully wrote each line with perfect grammar (and no backspacing for typing errors . . . show off).

The rest of the article AI wrote for me is, frankly, as good, coherent and thoughtful as the opening paragraph. Instead of reprinting that article here, however, I decided to put ChatGPT to the test. After all, it had just written an impressive article for me about, well, itself. I wanted to see if it could deliver on the three items it mentioned as “revolutionizing” our industry.

Sometimes when I’m watching TV at night with my family, I daydream about living in a mountain house in Wilkesboro right next to the mountain bike trails with no family. My fantasy does not include how I will make money, but it does involve spending a lot of time on gnarly trails and spending copious amounts of money on carbon fiber bikes and cool gear. Anyway, in my first test, I asked ChatGPT to “find me land near Wilkesboro with a view of the mountains.” It was not so impressive this time:

I’m sorry, I am an AI language model and do not have the ability to search for specific properties. However, you can use real estate websites . . . to search for properties near Wilkesboro, NC with mountain views.

Well, so much for a property search. Next, I decided to test property evaluation, and I asked it to “evaluate my home located at [home address].” I got the same non-answer answer. With ChatGPT batting 0 for 1, I decided to test its second claim about market analysis. I asked it to “write an article about real estate prices in Clemmons, N.C.,” which happens to be my hometown and where I was recently the mayor for four years. The response this time was quite good:

REAL ESTATE MARKET TRENDS IN CLEMMONS, N.C.

Clemmons, North Carolina is a charming and growing suburban town located in Forsyth County. The area is known for its beautiful natural scenery, high-quality schools, and a growing economy. As a result, it’s no surprise that the real estate market in Clemmons is thriving and attracts many potential buyers and investors. In this article, we will discuss the current trends in real estate prices in Clemmons, North Carolina.

CURRENT HOME PRICES

The median home price in Clemmons, N.C. is currently around $310,000, which is a significant increase from recent years. This trend is reflective of the growing demand for homes in the area as well as the overall appreciation of the real estate market. Homes in Clemmons tend to range in price from the mid-$200,000s to over $500,000, depending on the size, location and features of the property.

The rest of the article went on to give short synopses about the demand for real estate in Clemmons and a medium-term forecast about the market over the next few years. As you might imagine from the first few paragraphs, it was a very sunny forecast, but also generally accurate on the facts. For the third and final test, I decided to see how AI might suggest engaging with a real customer. I told ChatGPT to “write a short message to a real estate client from a broker’s perspective”:

Dear [Client Name],

I hope this message finds you well. As your real estate broker, I wanted to touch base and see if there have been any developments or updates regarding your real estate needs. If you’re still in the market for a new property, I would be more than happy to assist you in your search and provide you with any information or support you may need.

If you have any questions or would like to schedule a showing, please don’t hesitate to reach out. I look forward to hearing back from you soon.

Best regards,

[Your Name]

Wow, this seems like a more applicable message to a prospect rather than an existing client, but in my opinion, this was an impressive response. AI wrote the message in less time than it would take me to just type out a copy, and I am not a slow typist by any means.

ChatGPT is a general AI tool that can be used for many things. It is not specifically tailored for real estate. However, there are other companies out there using AI for real estatespecific needs. You’ve probably already received solicitations from companies who use AI to chat with prospective customers, predict home values and market trends, manage existing customers, populate contracts, generate leads, offer virtual assistants and more. Depending on the service provided, AI might be front and center interacting with a customer, or it might be running in the background and automating much of the tasks that, up until recently, required a human touch.

So, how should brokers use AI? Of course, answers will vary widely. But here are a few things to keep in mind as you incorporate these new AI tools into your practice.

Do not assume that AI-created content is correct, and be mindful of fair housing issues

During the sign-up, ChatGPT provided a warning to me: “While we have safeguards in place, the system may occasionally generate incorrect or misleading information and produce offensive or biased content.” If you use ChatGPT or some other company to, for example, create descriptions of properties you are listing, be sure to: (1) independently verify the accuracy of the information; and (2) ensure that the content complies with fair housing laws.

Watch out for copyright traps

You’ve likely already seen AI-generated art in your social media feed. It is important to know that this kind of art is not created in a vacuum, nor is anything else AI makes. Rather, most AI models analyze millions and billions of data sets, examples and templates. It then synthesizes these inputs to create “new” content. For example, if you use AI to create images of a home to showcase a new build or renovation project, the AI-generated image may borrow from other copyrighted work. Posting such content could therefore be a violation of someone else’s copyright, which means that just like any other picture, agents should verify they have the appropriate license before publishing an AIcreated image.

When it comes to checking for copyrighted text, you might use an AI text detector or similar service. For this article, I used one called GPTZero to make sure that the responses ChatGPT gave me were, in fact, written by ChatGPT and not someone else. I double-checked those results in Dupli Checker, which is a plagiarism detector service. Once I confirmed the authenticity of the AI output, I checked ChatGPT’s terms of use to make sure I could republish it.

Be transparent with clients and prospects

Under Article 2 of the Code, REALTORS® must “avoid exaggeration, misrepresentation, or concealment of pertinent facts” relating to a property or transaction. The License Law has a similar prohibition. If you use AI to add or change the furnishings or features of a home, be sure to disclose those edits clearly to the consumer.

Remember that the Do Not Call registry still applies

In my law practice, I have had to help several agents navigate allegations of violating the DNC Registry rules. These rules become tricky to navigate when you are using automated lead generation in conjunction with a virtual assistant, which can easily cause a violation if an agent is not careful. If you use AI to locate and contact prospects, be sure that the vendor you are using is taking steps to comply with the DNC Registry and conduct your own scrub of the data for compliance.

Evolving technology has always been part of real estate, and these new AI-based tools will undoubtedly continue to become more prevalent. The law and the Code will adapt to it over time, but the fundamental rule and focus will remain the same. If you maintain your fiduciary duty to the best of your ability and be open and honest with every consumer, you will navigate these new waters with ease. And in cases where you have a question, the NC REALTORS® Legal Hotline is available to assist.