The real estate industry is turning to artificial intelligence (AI) tools for a variety of new use cases ranging from identifying potential investments to forecasting how renovations may impact a property’s value.

David Conroy, director of emerging technology at the National Association of Realtors (NAR), told FOX Business that he has seen a "particularly rapid uptake" of AI tools by real estate industry firms, which are playing a "transformative role in refining numerous processes within the real estate journey." That includes tasks like improving presentations, identifying similar attributes in a variety of properties using valuation models to optimize a sale price.

"Although AI has been on the horizon for some time, we’ve observed a marked surge in its adoption within the last 10 months with the introduction of generative AI tools like ChatGPT," Conroy said. "This recent acceleration underscores the value that both firms and individual investors are recognizing in AI tools for the real estate sector."

AI tools were initially used in the real estate sector for purposes such as "MLS and ADA compliance, refining appraisals, executing quality and condition assessments and enhancing SEO," Conroy said.

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He added that NAR research has found a "notable shift" toward the use of computer vision technologies powered by AI for new use cases, such as the "transformation of listing photos into immersive property walkthrough videos, which could revolutionize the way properties are showcased."

Conroy noted that even as AI is adopted more broadly in real estate, its "crucial to remain cognizant of potential pitfalls" and added that "AI-generated content, while sophisticated, can occasionally miss nuances or overstep boundaries, potentially leading to misinformation or misrepresentation, which can lead to serious issues in a real estate transaction."

Dave Oster, co-founder and CTO of DealMachine, told FOX Business in an interview that his firm is bringing AI to real estate investors – particularly those who are "driving for dollars" looking for distressed properties that could be investment opportunities and using the company’s app.

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"We’ve recently added AI on top of that stack so when you’re out in the field, you’re looking at a property, we put all of our property data we have for the entire United States into that chat assistant and you can ask the chat assistant information about that property," Oster said. 

"So instead of looking at a ton of numbers and information about the property, you can just ask your personal assistant that’s right there with you while you’re driving for dollars, or you’re out in the field negotiating with the owner," he explained. "And you ask questions like, ‘Would this be a good deal to wholesale?’ And it’ll kind of digest the information and give you back an answer that is generally pretty right. As we’ve seen with this AI technology, you know, it’s never 100% right, but it is very useful."

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Oster said that DealMachine’s AI tool, called Alma, can be used to help draft the content of a letter to be sent to a property owner, or to help practice negotiating ahead of a cold call, as well as estimating a property’s current value along with the cost of renovations and their impact on a property’s value.

"The thing people will use it the most is analyzing a deal – is this a good investment opportunity? So Alma will take a look at the estimated value of the property, how much it thinks renovations need to go into it and spit you out a yes or no answer," he said. "When you add the property and if they say yes, you should probably dive into the numbers a little bit more than just taking the AI assistant at face value. But it’s a great quick way to see if you should move on or investigate more."

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Oster noted that some of the publicly available APIs for large language models contain dated information on things like mortgage rates and other housing market conditions because those data sets are only current through 2021. DealMachine feeds the current rates and market information into the model that powers Alma to keep its insights relevant for potential real estate investors.

"We send it the current rates so it’s able to know what the true market conditions are," Oster said. "This technology is so interesting, and it’s only as good as what you feed it."