David McCarthy

This has been a year of incredible technological advancements, none more significant than the proliferation of artificial intelligence (AI). Just a few short years ago, many of us would have said AI was a thing of the future with visions of The Terminator in our minds. In the past 12 months, the number of programs and tools implementing AI has grown exponentially, although maybe not in the ways we had anticipated, and perhaps feared. Real estate professionals now have myriad new tools that can be used to assist in day-to-day business activities and help streamline work, leading to more effective agents.

AI is a tool that leverages the abilities of computers to replicate the problem-solving and decision-making abilities of human beings. Generative Al (GenAI), which is the type of AI garnering the most attention lately, is using technology to produce varying types of content, such as images and text. The real estate industry is seizing the opportunity to implement this technology in a number of ways.

One of the primary applications of AI in the real estate industry is predictive analytics, which can be used to identify patterns and predict market trends in the future, equipping real estate professionals with even more information when pricing properties.

Agents are also using text generators to assist with listing descriptions and content for social media, such as blog posts. Image tools are being utilized to generate budget-friendly marketing materials and even help buyers visualize properties as their own, be it demonstrating what a renovation could look like upon completion, virtually staging a vacant property, or adding landscaping to a property with none. The applications of AI to the real estate sector are virtually endless.

Brokerages Need AI Policies

While the possibilities seem infinite, the use of AI comes with its own unique set of risks and challenges.

The output generated by an AI program may contain inaccurate information, or could even include plagiarized content, which may be not only embarrassing, but has the potential to lead to legal liability. Additionally, content generated using AI is not currently protectable under U.S. copyright law because it lacks human authorship.

Further, real estate agents using AI must remain vigilant to avoid using any content that may violate fair housing laws. Ultimately, it will be the agent and their broker that are responsible for anything that they publish.

In an effort to avoid some of the potential pitfalls presented by AI, brokerages will need to adopt internal policies to address the use of this technology in business activities, such as content creation, development of marketing materials and lead generation.

Additionally, agents need to understand the potential risks of entering confidential information into such tools. Many AI tools use the information submitted by users as prompts to further train the system, which could compromise business practices, as well as violate data privacy and consumer protection laws.

Discrimination Risk Is Real

In addition to the steps that can be taken by individual real estate brokers, the Biden-Harris administration has acknowledged the need to balance the benefits of AI with the need for ensuring it is used safely and responsibly.

In an Oct.30 executive order, President Joe Biden laid out eight guiding principles and priorities relative to AI, including advancing equality in a number of areas, namely housing. In this executive order, the president encouraged evaluation of underwriting and appraisal modeling, tenant screening systems and digital housing advertisements for potential discrimination and biases against protected groups in housing and consumer financial markets.

The timing and importance of this executive order cannot be stressed enough. As AI-based systems are trained using historical data, the content they produce may exacerbate discrimination against historically disadvantaged groups. Promoting and protecting fair housing is the cornerstone of the American dream.

As AI continues to evolve, there will be new integrations of this technology that have the power to   reshape the real estate industry as we know it. With its advancement will come transformative solutions, from optimizing the customer experience in buying or selling a home to enhancing business operations; however, we must remain vigilant about the potential risks posed by the use of new technologies. Regulatory oversight to protect against privacy infringements, violations of copyright law and discrimination will likely be critical. Balancing innovation with responsibility will be the key to leveraging AI for positive outcomes in the real estate industry.

David McCarthy is the 2023 president of the Massachusetts Association of Realtors and the operating partner of Keller Williams Metro Boston