Using AI in property transactions

Artificial intelligence (AI) encompasses automations and analytics that helps industries, such as conveyancing and property, to enhance efficiency, accuracy, and customer experience.

Tools such as ChatGPT, BingChat and others are transforming the UK property market by streamlining processes, increasing transparency and reducing work costs.

In JLL’s Global Real Estate Technology Survey 2023, AI and generative AI were ranked among the top three technologies that were expected to have a significant impact on the property market over the next three years.

Definitions

It’s important to clarify that there is no uniform definition of AI but there are specific characteristics that can distinguish whether a particular tool has AI qualities.

AI, in a broad sense, refers to the scientific methods that resemble human-like thought processes that can create certain models or hypotheses. It uses machine and deep learning algorithms to perform tasks that require the ability to understand complex concepts, learn from experience, recognise patterns and make independent decisions.

Generative AI can be considered as a subset of AI that generates new content, designs and solutions. It’s built upon vast computing power and extensive resources, and applications in this area are accelerating. Emerging use cases cover, for example, assistance in document sorting, price modelling, data analysis, leasing and property management.

What can AI do?

Property lawyers now have various tools at their disposal that can speed up tasks and improve customer experience. The use of platforms like Avail or Orbital Witness, which are specifically intended for use in the context of real estate transactions, significantly reduce the time lawyers need to spend on more time-consuming tasks.

Avail can assist lawyers in title and lease reporting, analyse legal risks, extract key clauses and generate succinct summaries. It also has the ability to search and purchase Land Registry documents and automate day list searching.

Orbital Witness is another platform that has multiple functions that cover each phase of a real estate transaction including, but not limited to:

• displaying plans, maps and data layers
• summarising key provisions of documents into plain English
• identifying information a client is interested in and generating a customisable and editable report in a matter of minutes
• summarising title documents, deeds and leases, and
• reviewing property documents for red flags.

Development of these platforms and other AI tools is forcing the property industry to take AI seriously.

Uses of AI

AI is beginning to help legal professionals and estate agents provide a more efficient property transaction process and therefore a better customer experience. There are a number of areas where AI is assisting with property work.

1     Data analysis and property valuation

AI can analyse the vast majority of data such as buyers preferences, property listings, and market trends. This helps professionals find properties tailored to the buyer’s needs, save time and reduce costs.

Automated valuation models assess property values based on location, property characteristics, historical sales, and market trends.

2     Chatbots and virtual viewings

AI-driven virtual reality and chatbots provide instant customer support, answering common queries, scheduling property viewings and guiding sellers and buyers through the process.

3     Risk assessment and fraud detection

AI technology can assess transaction risks and identify potential fraudulent activities, providing a more secure real estate ecosystem.

4    Improving investment strategies

Investors already analyse data by gathering building information from local brokers or digital systems to find out how accurate their investment hypotheses have been in the past and to predict areas of future interest.

AI technology can sort through unstructured data and provide recommendations on the properties investors should focus on.

5    Photography and videos

AI-powered algorithms can analyse images and videos to enhance their quality and make property listings more attractive to potential buyers.

6    Smart contracts

A smart contract is a self-executing contract that can automatically enforce agreed terms and conditions once predefined conditions are met. AI technology can facilitate the automation of the property transaction process through smart contracts, reducing the need for intermediaries.

7    Natural language processing

To understand and process human language, natural language processing technology has been introduced to extract relevant information from property documents, making the due diligence process more efficient.

While the technology is useful, to realise the full value of AI, property practitioners will have to do more than just learn how to use AI tools in practice. Law firms should start by thinking what data they need. It is essential to have the best data engineered the right way with the right data governance.

Will AI replace lawyers?

AI has the potential to significantly improve conveyancing by automating standard and time-consuming tasks. It can speed up the property transaction process and enable smarter decision-making based on facts gathered across a variety of digital activities.

However, while AI can manage many aspects of the process without difficulty, there are areas where experienced lawyers are a necessity. AI tools, with their coding, algorithms and data processing capabilities, lack a unique personality, which is what attracts buyers and sellers. By entering the real estate market clients are making a significant and potentially life-changing decision. Therefore, they seek someone they can feel secure with throughout the process.

AI does not change the duties of lawyers but rather assists them to be more efficient. By leveraging the broad capabilities of AI tools, lawyers are able to provide a smoother, quicker and more seamless service.

A word of caution

Although AI can offer valuable support and is a useful aid to augment the expertise and skills of legal professionals, it lacks emotional intelligence and the ability to listen and observe. Also, at present it’s not sophisticated enough to deal with the rigorous regulatory and compliance requirements expected by the legal regulator.

So while AI technology can make the property transaction process much more efficient, we are still some way off it replacing lawyers entirely.