4 Ways AI and ML are Changing the Way
Real Estate Companies Evaluate Potential Assets
Using the latest PropTech innovations is making asset valuation far more transparent
The real estate market is in a constant state of evolution – and fluctuation. Dynamically changing factors such as development in and around a property’s location, a neighborhood’s socio-economic status, real estate construction and design trends, and more, all play a pivotal role in the perceived value of a potential asset. As the size of the commercial real estate market is constantly on the rise, the use of technological innovations, such as artificial intelligence and machine learning (AI and ML), can and should be used to inject greater transparency and efficiency into the asset valuation process.
Here are four reasons why:
#1 – They automate the valuation process
Machine learning is an approach to artificial intelligence that makes computers learn from data, without being specifically programmed to do so.
As such, the collection and analysis of all data relevant to a potential asset and its surroundings is automated, saving tons of time traditionally spent on manual research or constantly referring back to similar assets, to compare their value.
#2 – They can detect suspicious behavior
With AI and ML constantly analyzing large amounts of data, the technology is able to create and identify data patterns, and learn when certain behaviors are correct, and when others are suspicious and could indicate misrepresentation of a given asset – quickly and precisely.
This way, real estate companies can know how much a potential asset is really worth, even if it is grossly misrepresented by its owners.
#3 – They can predict price compromises
AI and ML-based PropTech can further help streamline the asset valuation and subsequent negotiation processes. This, by using collected and analyzed data to learn about the local market and its standards as a whole – how much similar properties are being marketed for, what local buyer/renter profiles are like, and where price compromises are most likely to occur.
That way, sellers can list properties at a price that reflects a mix of how much the property is worth, and how much people tend to be willing to pay, with an appropriate amount of wiggle room for negotiating and closing the deal.
#4 – They can predict future market values
By combining marketplace, CRM and external data (such as schools, transportation infrastructure, local services, etc.), AI and ML are able to accurately predict the future value of a potential asset, within its market.
This is proving to be a selling point, as buyers can be “sold” on how much an asset is slated to increase over time, making their investment, well worth its weight in gold.
Bottom line
AI and ML are changing the way real estate companies evaluate – and market potential assets. Smarter collection and analysis of more relevant data points pertaining to any asset within a target market is enabling real estate investors to make better recommendations and smarter decisions, which, in turn, is driving the professionally managed global real estate market to grow and scale, year over year.
