Artificial intelligence (AI) systems captured considerable attention with the release of a large language chatbot, ChatGPT, by OpenAI, in November of last year. On March 14, OpenAI unveiled GPT-4, a more powerful “multimodal” chatbot responding to both text and images. And, on March 21, Google launched its conversational computer program, Bard, to compete with GPT-4. These chatbots allow users to initiate detailed queries or requests and receive prompt responses in complete sentences. Users are not forced to scroll through a list of results like those produced by search engines and follow-up questions can be asked. AI systems have been touted for many years and these new breakthroughs may drastically change the way that we create content.
Notwithstanding their unprecedented capabilities, AI systems can produce imperfect results. New chatbots, for example, can generate plausible-sounding but nonsensical, biased or false responses. Accordingly, heavy fact-checking is necessary. OpenAI has warned that ChatGPT is prone to filling in replies with incorrect data if there is not enough information available on the topic on the internet. Bard includes a website disclaimer that it “may display inaccurate or offensive information that doesn’t represent Google’s views.” On March 20, a breach at OpenAI allowed users to see other people’s chat histories before the service was shut down. Further, there is a real risk that courts will rule that certain content generated by these systems infringes the copyright or database rights of the owner of the materials and data that the technologies relied on. When entering into agreements with AI software providers, companies should also be concerned about other risks, including misappropriation of data, security, confidentiality, privacy and third-party claims.
The Real Estate Industry
The real estate industry has been slower to adopt new technologies than some other industries, but that could change quickly with new AI systems. Business use cases for AI systems in the real estate industry include the following:
Investments and Modeling. Real estate investors have been using advanced quantitative metrics for years to analyze assets and inform investment decisions, including market trends, past transactions, and expense data. AI systems permit modeling based on vastly more data, including qualitative non-mathematical data from news reports, crime statistics, public filings, corporate strategy roadmaps and other sources. Perhaps more importantly, AI systems can be used to automate this analysis, providing more and faster actionable data to investors.
Property Marketing. Many realtors are using ChatGPT and other AI software to save time and create the narratives within MLS listings, write social media and blog posts, connect with clients, and help with lead creation. Zillow has added an AI search feature to its app.
Property Management. AI systems assist asset management teams by automating tasks, such as establishing rental rates, rent collection, report generation and responding to maintenance requests and tenant inquiries. Controlling and monitoring building systems, such as security, lighting and HVAC, with AI technologies can make buildings more efficient, comfortable and convenient for tenants.
Legal Documents. Given the amount of publicly available legal documents on the web, AI systems are well-positioned to assist with basic document drafting and the preparation of generic templates, but they have no expertise in law. AI systems cannot be used in lieu of lawyers, who are still needed to spot mistakes, customize documents and provide legal expertise.
Architecture. AI systems can produce virtual reality simulations for testing and predicting building performance, including traffic flows and occupancy patterns. GPT-4 can be provided with images and respond with a detailed description of the image and answer questions about its contents. AI technologies will lead to improved construction techniques, better project management, sustainable design and smart homes and cities. For the artistic elements of architecture, the statistics-based responses provided by these AI systems can assist the human creativity process.
It is too early to predict the longer-term impact of these impressive new AI systems, but they should not be ignored because the opportunity for the real estate industry is clear. Any user that needs to produce clear written materials potentially stands to benefit as a result of the time and resources saved. To mitigate the risks, users should keep human controls and guardrails in place. As value is created with AI systems, users should also keep an eye out for new regulations and rules.