Cherre co-founder L.D. Salmanson is one of the active users of the PropTech Connect Slack channel (here is a link in case any of you are interested in joining the conversation) so I decided to ask him his opinions on the technology that has so much potential but seemingly so many misconceptions. “On of the common misconceptions about AI in real estate is that it is a “plug and play” operation,” he told me. “‘Sprinkle some AI on it’ is not a real expectation. Rather, you need to find a very specific problem you’re trying to solve and be very focused on actionable results. Otherwise, it is a wild goose chase.”
Cherre is using a similar technology that private equity firms and high-frequency traders have been using for years. L.D. is surprised by the people who think that using these techniques for real estate is untrodden ground. “People think that you’re reinventing the wheel. We’re taking tried and proven methods, and applying them to real estate data,” he said. The problem isn’t that the technology might not work, the problem is making sure that the data you are putting in is good enough, “the hard part is getting access to high-quality training data.”
Many of the headlines around AI is that it will replace humans for a lot of repetitive tasks. When it comes to real estate investing, L.D. doesn’t think that this is the case at all. “The idea of replacing humans in real estate (while appealing to some), is an unrealistic expectation. We need to turn witch doctors into doctors, not get rid of the medical profession,” he said. “These technologies will not replace the need to have a human crunch the numbers, it will just augment them so they can do much more at a much higher level.”
Since there has been a lag between the promises about what AI can do for real estate and how it has actually changed the industry I asked L.D. about what he thought was a realistic timeline for when artificial intelligence would be part of every major fims strategy. To that, he said, “we’re getting there faster than people think. Within five years, every major fund will be augmenting their investment and underwriting decisions with AI.”
Artificial intelligence has the potential to inform every decision that we make in the real estate world. It can find correlations in huge data sets that would be impossible for humans. But rather than being something that you just flip a switch and get an answer it requires a level of human oversight. I expect to see a lot more people in the property profession with at least a base amount of knowledge in data science and AI in the near future.