Embracing new technology is a solid strategy to help real estate professionals boost efficiency and gain a competitive edge. However, these innovations sometimes come with unexpected pitfalls. Certain events in the news are a good reminder that, while technology is an extremely valuable tool, and can transform business practices, it also requires careful oversight and proper integration.
In The News
Australian AI Listings
In November 2024, an Australian real estate agency made headlines when an AI-generated rental property listing contained errors (most notably, references to non-existent schools). This mistake not only misled potential tenants but also hurt the agency’s reputation. While the error was eventually attributed to inadequate human oversight, it underscored a critical lesson: even advanced AI systems produce flawed output and need to be carefully reviewed.
iBuying
Zillow’s attempt to revolutionize home buying with its iBuying program serves as another reminder of technology’s double-edged sword. Relying heavily on AI algorithms to estimate property values, Zillow encountered significant inaccuracies that ultimately led to financial losses and the shutdown of the program in 2021. This highlights the risks of completely depending on automated systems without proper human intervention and continuous validation.
Learning from These Experiences
These two incidents share common themes.
Over-reliance on Automation
Whether generating listing content or determining property values, relying solely on algorithms without human oversight can lead to errors that affect customer trust and business performance. Technologies can save significant time and effort, but they do need monitoring.
Insufficient Testing and Training
New systems, including property management tools, AI-driven solutions, chatbots, or other new technologies, need robust testing and comprehensive training programs to ensure that staff can spot and correct issues quickly.
Communication and Transparency
If technology fails, prompt and transparent communication with clients can help mitigate damage and restore confidence. In both these situations, enhanced communication, with transparent explanations delivered sooner, could have helped in managing the fallout and loss of trust.
Strategies to Mitigate Technology Risks
To gain the benefits of new technology while avoiding potential pitfalls, there are best practices to follow.
Establish Strong Review Processes
Always review automated outputs before they go live, and get experts involved when necessary. Whether you are implementing AI-generated listings or automated valuation models, a human check catches any errors that might otherwise be missed.
Invest in Ongoing Training
Equip your team with the skills needed to operate new tools effectively. Continuous training helps staff understand the system’s limitations, know what issues to look for, and be confident in troubleshooting problems if they arise.
Implement Redundancies and Backups
Have backup plans in place. Regularly update your systems, and maintain contingency plans to handle unexpected errors without significant disruption to your operations.
Stay Updated on Regulatory and Industry Changes
As new technologies emerge, regulatory standards often evolve. Keeping abreast of these changes ensures your practices remain compliant and ethically sound.
Conduct Regular Risk Assessments
Periodically review your technological infrastructure to identify potential vulnerabilities. Early detection of issues allows you to address them before they impact your real estate business significantly. As part of this, make sure you have response procedures in place and communicated to all team members.
Technology is transforming real estate in positive ways, offering new ways to streamline operations and enhance client services. However, to benefit from these innovations properly, the implementation of technology must be paired with vigilance and human oversight. By implementing robust review processes, investing in continuous training, preparing backup plans, and staying informed about industry changes, real estate professionals can harness the power of new technology while minimizing its risks.
