EP 193: Real Estate's AI Transformation - What's Next?

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How is AI going to impact the real estate industry? You know, it's something that we all do. You know, maybe you're not a realtor, but at some point in our lives we all buy, sell, rent homes. So how is artificial intelligence going to impact the process in which that's done? Well, we're going to talk about that today and a lot more on Everyday AI. Welcome. My name is Jordan Wilson and I am your host. And Everyday AI, it's for you. It's for me too, but it's for all of us everyday people who are looking to learn about generative AI, but also how we can leverage it to both grow our companies and to grow our careers. So yes, today we will be talking with a special guest today about how AI is already impacting and will continue to impact the real estate industry and how real estate companies even work and operate. But before we get to that, let's start as we always do, by going over the AI news. All right, and as a reminder, go to your everydayai.com Sign up for the free daily, free daily newsletter. Yes, this is a live stream of podcasts, but if I'm being honest, I think the daily newsletter is where it's at if you really want to grow your company and grow your career. We break down each conversation every single day as well as highlighting more of the news pieces and a whole lot more. And I mean our website right now it is like a free generative AI university. We have now about 190 interviews with expert guests ranging across all topics. So no matter what you want to learn, you can do so on your everydayai dot com. All right, let's take a look at the AI news now. So Google is showcasing its newest AI video product. So Google has announced a new AI video generator called Lumiere, which can create realistic, diverse and coherent videos in various scenarios. It uses a unique architecture to simultaneously handle the space, space and time aspects of a video, resulting in a smoother and more consistent output compared to existing models. So yeah, Google is throwing their hat right in the in the ring here. You know, Meta has, you know, their kind of text to video product. But the leaders here obviously are Runway and Pika Labs. But Lumiere kind of stands out for its ability to generate more realistic and diverse motions and options for easy editing. It's unavailable for actual testing at the time. Google just Kind of released some, some teasers on it. All right, next piece of news has to do with a lot of money, $3 trillion. So that is the market cap that Microsoft just passed. So Microsoft reached the 3 trillion dollar market cap for the first time driven by its success in artificial intelligence and the broader tech rally that we talk about on the show all the time. Microsoft became just the second company to eclipse that 3 trillion dollar market cap after Apple recently achieved the milestone as well. So it's been major tech companies, including Microsoft and Meta, that have seen their market valuation soar, mainly due to investors interest in AI. And it's always funny to look at the AI, you know, the, the quarterly calls when it seems like a race to see which company can just say the word AI more times. Right. But we've talked about this earlier in the show, even about how the magnificent seven tech stocks, all AI heavy, accounted for 70 of the S P's gains in 2023. So yes, seven stocks accounted for 70% of the S P's gains last year. All right, last piece of news, More big tech. Here we go. But some of the biggest names in AI are actually teaming up with the US Government. So the National Science Foundation NSF is launching a national artificial intelligence research resource which is Nair N A I R R. All right, so this pilot program is in collaboration with the top tech companies in and federal agencies in order to ensure the US Remains a leader in AI research and innovation. So this is a somewhat rare public and private collaborative efforts led by 10 federal agencies and 25 private and nonprofit organizations to democratize access to advanced AI resources in the U.S. so all the major tech companies are in this, you know, your Amazon, IBM, Microsoft, Nvidia, etc. And they're all contributing in kind resources. Yeah, big cash to support the program. The effort is in response to the AI resources being concentrated and difficult to access for many communities. Right, Yeah, a lot of, you know, AI tech, it's you know, out in Silicon Valley or maybe just the, the larger cities, you know, here in the US So this is an effort to bring it to all areas of the United States. All right, so for more, make sure you go to your everydayai.com and sign up for that free daily newsletter. But we're not here to talk about the news all day. That's Mondays when we talk about news that matters. Today we're here to talk about real estate. And don't worry if you're joining us live like Josh tuning in from Dallas or Brian joining us from Minnesota. Harvey Good Morning to everyone. Mauricio and Woozy, what are your questions about how AI is going to impact the real estate sector? I'm excited, but don't worry, we have an actual guest today to answer those questions. Not me. Don't worry. So please help me. Welcome to the show as we bring on cats all day who is the VP of AI and Product Operations at Appfolio. Kat, thank you so much for joining the everyday AI show.

Good morning. Thanks for having me. I'm very excited to be here.

Yeah, special good morning to you. Right, West Coasters join it, joining at 5:30am I love it. But Kat, maybe just tell us a little bit about what you do as the VP of AI and product and a little bit also about what AppFolio is and what AppFolio does.

Great. So I'll start with telling you a little bit about what Appfolio does so that it makes sense to what I do at AppFolio. So AppFolio is a property management software company. So we build software to support the property management business as well as the real estate investment business. So when we think about real estate, you know, everybody's looking to buy properties. Either they're investing in those properties, everybody lives in a property, whether that you're an owner or a renter. And. And then there's the whole ecosystem around managing those properties, whether those are vendors like your plumbers that need to come in and repair or you know, people who are doing leasing and advertising. So all of those things. So we, we support that entire ecosystem of end users that use our products to manage properties day to day. And what I do at Appfolio. So for the last few years I've been leading our AI initiative, which is really how do we apply these technologies to our products to help our customers run their businesses. And over time my role has evolved and I also run sort of our operations function within the product team.

Nice. Maybe can you give us just a glimpse of, of different AI initiatives that you've had at Appfolio so far and also how those have been received. Right. Because I think, you know, every all companies and, you know, soft, you know, whether you're software or not, you know, are trying their best to implement AI, you know, to make people's lives easier. So maybe just quickly talk about what AI initiatives AppFolio has already put out there and kind of what the reception has been so far.

Yeah, so I'll share. This is like, I think pretty exciting News. So in 2023, 90, over 90% of our customers used an AI feature in our product. So pretty wide adoption. What we've done is we've made it really easy for our customers to engage with AI and they may not even realize it. So our very first foray into AI was with a leasing assistant. So we have a product called Lease, which is the digital leasing assistant. So if you think about the process of renting an apartment, you might be driving down the street, you see a release sign on a, on a, you know, on a banner outside of an apartment building and you go to call that number. Well, what if it's at 9 o' clock at night? More than likely you have to leave a voicemail and somebody might call you back the next day, but then you're at work, right? And so it's like there's this like, phone tag that happens. Well, with, with this product, what we did is we, we added the capability for a bot to interact via text message. So when you call that phone number, if we recognize it's a cell phone, we're able to send a text saying, hey, I'm not able to talk right now, but I can interact with you via text. And the bot uses SMS to communicate with the prospect and can answer questions about the apartment building price. Do they allow pets? Pretty much everything you can think of. And now what that bot has done is it's taken that heavy load of that prospect conversation and then what does, is it directs it to like, okay, do you want to come view the apartment? And then it hands it off to a real person, to the leasing agent. So what it's done is it's freed that leasing agent up from answering all that inbound and really focus then on, hey, I'm going to show the apartment because that's the real value I add as a person person. Right now I can use my sales pitch and actually do that work versus filtering all these leads that might not ever actually go anywhere. Yeah, so that was our first foray and pretty powerful, as you can imagine.

Yeah, 90, 90%. That's. Yeah, that's a huge adoption right there. You know, you bring up a good point because I think, you know, we're going to be seeing more and more of bots, right? Not just, you know, in, in real estate, but, you know, across any probably major website that you use. And I think that sometimes, you know, bots got a bad name, right, because chatbots have been around for, you know, more than 10 years, but they've been traditionally not always very smart. You know, this is before generative AI, when you went and chatted with A bot. It was kind of pre programmed answers and it was super frustrating. So do you think that cat, just across the real estate industry is this kind of a trend because. Yeah, it's. People sometimes don't look at apartments or houses during the normal 9 to 5 schedule when people in the real estate industry are working. So is this kind of a wider trend, you know, across the industry, to use generative AI in this way?

Yeah, I think especially in the leasing space. I think that's where I first really got a foothold in real estate because of this. Like, I think you're right. It's not. People don't look for apartments during business hours.

Right.

When leasing agents are typically working and leasing were getting lost left and right. So that's definitely where AI sort of got a foothold. But I do think that, you know, in the future we're going to see a generative AI specifically being used throughout the life cycle of a resident in a unit. Right. So not just in the front upfront leasing part, but like throughout the time that they are living in that unit. Right. And every interaction they have with the, the property manager. So I think that's pretty exciting.

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You know what, let's, let's talk a little bit about this because I think when a lot of people who maybe aren't, you know, the VP of AI, such as yourself, but I think when people think of AI in general, they think, and sometimes I even fall into this way of thinking is okay, well this is less human interaction. Is that the case at least when it comes to, you know, where real estate is is headed next, does it mean less human interaction?

Yeah. So people get into real estate because they like people. It's a very relationship heavy industry. And I think that this is a concern I've heard from lots of people I've talked to. I think what's exciting is that AI is actually going to allow people to have more human interaction. So think about the person who's sitting behind a desk at the property management business, answering the phone, answering all these inbounds, answering emails, doing all this stuff. They're not interacting with their residents. They're not out there community creating community in their, in their properties. And so if AI can eliminate all of that busy work that they're doing at their desk and, and now allows them to get out into the community, running community events, you know, interacting with their residents, solving problems face to face, I actually think you're going to have more human interaction with these technologies than they do today. So I, I think it's going to be the opposite. They're going to, you know, their, their residents are going to wish they'd go away. Just kidding.

So a pretty, a pretty relevant question here from Cecilia. So even to that point, right, Because I think sometimes the holdup in AI, I think, you know, that I've seen, you know, working with, with businesses is that handoff from AI to human and not losing it. So Cecilia here asking, in the situation that you said where, you know, someone can text or, you know, when they call a number, you know, they get an automated text back that, you know, gives them directions or, you know, information. Cecilia asking, does that lease bot actually send the text thread to, you know, a sales or a realtor so they can have that, that handoff?

Yeah. So in our product we have this thing called a guest card, which is the, it's like in a CRM where you have all the information about the prospect, so that entire text conversation. So all the questions that the, the prospect ask and everything that the digital leasing assistant responded, how they answered those questions, all of that is, is kept in the guest card. So when the leasing agent is showing that unit to that person, that they know exactly the questions that that person asked up front. So yeah, they're totally equipped with that, which I think is amazing because if you think about what happens when you're on the phone as a leasing agent talking, you're not writing down everything that the person asked. And so it's actually a more thorough, you Know, I think experience for the leasing agent to have all of that verbatims.

Yeah, I, I love it when our everyday AI Live audience does a better job than me. Coming up with questions. So Tara here saying, can you share with us how your company has addressed the chall of customers who may be hesitant to use AI powered features in real estate and how you've worked to overcome this barrier?

Tara, great question, great question. You know, I think it's demonstrating value, helping the customer understand, like, how this technology actually will help them meet their goals or business objectives. Just like any piece of software, right. You have to show the value to get somebody to adopt it. And so it's about ease of use, it's about seamless experience. I think those are all things that are pretty core as you're designing these types of tools and how they can be used. And it's no different in the real estate industry than any industry, I don't think. But I think it's about, like, really showing how you are eliminating the work that they don't want to do. And it's pretty easy to convince somebody once they are able to, you know, not have to do the five extra steps. Right. And we're seeing customers who will say, hey, this thing that I used to do, this particular activity used to take me 40 hours and now I'm able to do it in two hours. So those huge, like, improvements sells itself. You don't have to do a whole lot of convincing. Sure.

So, Kat, what happens in that scenario though, where, you know, maybe someone was doing more of these tasks like you said, that took up 40 hours of their week, and now if they, you know, successfully, you know, use AI, of course there's always a little bit of a learning curve, but yeah, then what does happen if, you know, there's 40 hours of, of manual tasks and now they can use, you know, different AI solutions and it's two hours or four hours, you know, what, what happens to those people's jobs, their work, you know, what, what, what happens with that?

Yeah, you know, this is one. I get this question all the time, right. And I think now you're able to take that person who you hired for a very important reason, which was, hey, they're really good with customers or they, they're, they're a great relationship builder and now you can allow them to do what you really hired them for, because I guarantee you probably didn't hire them to do 40 hours of data entry. Right. And so I do think you're going to. These jobs are going to evolve. It's going to be less time behind the desk, more time in the field. It's going to be, you know, going out and building your, helping build your business by maybe going to find more owners who want to use your company as a property management business. So I think that there are. The roles will shift, the work will still be there, but the work will be different. That's the way I anticipate seeing that.

Change, you know, in, in general. So not even just talking about, you know, Appfolio's different offerings. What would you say is the one biggest gain that people in property management, you know, real estate. What is the one biggest gain that they can get if they haven't started to use AI already?

Yeah, so I think there's a couple of things. I mean, one, there's time savings. That's, that's a huge component. But I also think there's consistency and experience. By leveraging AI who will do the same thing every time, you can create a very consistent experience for your residents or for people you interact with in your business. And so that's one thing. And I think that's something people don't always think about. Right. When you're training an employee, you have to train them how to run your business. You've got your, your SOP binder, right, which is like, here's all the things that we do and if you can teach an AI to do that, now you've created this consistent experience.

I love it. You know, I'm, I love talking to, you know, people that run AI departments or are in charge of artificial intelligence at large companies such as yourself, Kat, because I like to ask them this. Aside from, you know, the actual products that you're ultimately, you know, products, services, software features that you're, you know, making for all of your customers, how are you using generative AI in your day to day role, aside from building it?

Yeah, yeah. So I don't take notes at all. I, I stopped taking notes. And so when I'm in a meeting, you know, and I, I spend probably 80% of my day in meetings. In my role, you know, I used to take notes and I'd have notebooks filled with notes and then I would be like, okay, I know I wrote down an action item and I need to go back and do that. So I actually use a tool that like takes notes for me during my meetings. And not only does it take the notes, but it summarizes the notes. So it's not just a transcription, it summarizes the notes and it Tells me my actions and assigns who that action is assigned to. It's amazing. It's a time change. It's like a game changer. And so when I'm in the meeting, I am 100% present in the meeting versus like, you know, trying to capture notes. Wait, can you repeat that? And that's been like, to me, that's like a game changer.

That's, that's huge. And I'm, I'm curious which, because everyone's going to be asking which, which program do you use for that?

I use super powered.

Super. Yeah, that's a, that's a great one. Yeah. And hey, if you are listening on the podcast too, we'll make sure to put in. We've done like two, like separate episodes on, on different ways to use AI, even like in the, you know, in your meeting. So we've talked about this one multiple times. But great tip there from Kat. So, so Cat, I'm also wondering, you know, is it hard to change people's behavior? Right. So, so whether we're talking about, you know, property, you know, property owners, real estate, you know, companies that, you know, maybe they're like, hey, we've been successful for, for decades, you know, doing things the old fashioned way. Like, is there maybe, you know, I'm not going to say a, a danger to that, but is there a huge downside to just doing things the way that they've always been done? If everyone else, you know, in the industry is realizing these, these huge gains in time savings, like, is, is that a bad thing if they don't jump on board?

Oh, I think it will definitely be a competitive disadvantage. Right. When your competitors are able to run their business more efficiently with less people getting more work done, building and then building those relationships, they're going to be stealing those, you know, your customers away from you. So I do think it's going to be a competitive disadvantage for folks who don't think about how to leverage technology to drive the business outcomes they want.

Right.

But I think to your point earlier, it's hard to change behavior. Like, I'm not, I'm guilty of it. I've been using AI tools for years, right. And I still go back to the old way of doing things because it's what's comfortable or this muscle memory that says I should read that entire article from, you know, start to finish instead of using, you know, a tool that will summarize and give me the Cliff Notes. I think those are little things that are behavior changes that are really hard and you have to be deliberate. And, and so when we're asking customers to do something similar, we have to be, we have to give them a little bit of space and grace, right. To like, know that it's going to take them a little while to get over the fence. But I think it's about our job is to show them the value. Like how do, how does it help them demonstrate it? And then that's the thing that's like the proof is in the pudding. Right. Then they're, they're willing to give it a shot.

Yeah, absolutely. So, you know, you've been, you know, helping build, you know, AI powered offerings for AppFolio. But maybe as we think about what hasn't happened yet, right, because like you said, you've seen a 90 adoption rate for people using and I'm sure the majority of those people have, have seen positive gains and you know, positive outcomes from using these different AI features. But kind of what's, what's next, right. When we look at real estate in the intersection of artificial intelligence, generative AI, large language models, what maybe hasn't happened yet for the industry, but you can see, hey, this is one of the next big obstacles or the next big time saving pieces that our industry is going to see soon.

Yeah. So I think the way that people interact with the, the tools will change fundamentally. So I'm a huge proponent of speech to text or using voice dictation to get things done. I hate. I've no, no longer can I use the texting on my iPhone. For some reason the keyboard's gotten smaller. I don't know what it is. I transpose number letters all the time. So I use voice all the time. I think voice is going to be an interesting foray into, you know, using voice with generative AI. And so I'll give you an example where I think it could be really powerful. So I'm like on a property, I'm walking around, I see a car parked illegally and I'm like, okay, whose car is that? Which tenant owns that? You know, BMW. I could use voice dictation into my phone in an app that maybe has access to my tenant records. And I can say, tell me whose car has this license plate. It brings up that record and from there I can say send a text to so and so telling them if you don't move, move their car in the next two hours, I'm going to have it towed. And I don't have to do anything. I just use my phone and I use voice dictation like that. I think is the power of generative AI in the future. And so now I don't have to go back to the office to look that person up on the computer. That is, I think where it's, it will change the way we interact with technology and solve our problems in our businesses. Right? And so that's, that's just one example where I think it'd be pretty powerful.

I think, I think that's a great point too because when you think about, you know, the real estate industry and property management, yeah, it's, everyone is on the go, right? You're like, you're at those properties, you're at those facilities and yeah, even myself, like, I hate, I hate texting. Like I was literally, my wife was watching me text last night and I, I tried to send the same word four times and I got it wrong each and every time. So I, yeah, I think even myself I just need to get to more just, you know, text to speech. It's, it's, it's terrible. So maybe like, you know, Cat, we've talked about so much here so far today. You know, we've talked about how AI can actually, you know, bring a little more personal and a little more human face to face interaction. You know, we talked about even what appfolio is doing to, you know, offer these new AI features to customers. But maybe if there was one takeaway, right. That you wanted people to know about, you know, how AI can best be used in the industry. What is that one piece of advice that you have for people that, you know, can really help them, you know, if, if they work there, you know, grow their career. What is that one piece of advice that you have?

Yeah, so I think the reason we, people get into the real estate industry is because they want to help people get housing. Like, it's one of the most important things that we can provide in this, in the, you know, in this industry is like, hey, we're helping people find a home. We're helping people feel safe and secure. And so how do you leverage technology to help you on that mission? Right? And I think if you use technology that allows you to be more efficient, get more done, you're helping more people find housing. And I think that you can tie that mission to the technology. And I think that's something that we don't often think about, kind of forget about, you know, why we get into this business in the first place. And so I think like to me, my advice would be don't be afraid of the technology. Try it. There's there, it's only going to help you and it will help your business and it'll help you really achieve that goal, which is, you know, helping your residents have a great experience or helping somebody find an apartment who maybe is having a hard time doing it. And so I think that is the kind of the way I think about how we solve these problems for our customers.

It's good. Yes. Still, like, what I love there, cat, is everything you said, it wasn't about technology. It's actually about helping humans. And I think that's a great takeaway for people tuning in today that, hey, AI can be used in this industry to help humans have better outcomes. It's fantastic. Well, Kat, we covered so much. Thank you so much for joining the Everyday AI show. We super appreciate your time.

Great. Thank you.

All right. And hey, as a reminder, everyone, we talked about a lot. Don't worry. We're going to be recapping it all in our daily newsletter. So make sure if you haven't already, go to your everydayai.com Sign up for the free daily newsletter. Don't take it from me. Josh literally said the Everyday AI newsletter is the bee's knees. Thanks, Josh. So we'll be recapping our conversation with Kat a little bit more about what Appfolio does. It's all going to be in there. So thank you for joining us today and we hope to see you back tomorrow and every day for more Everyday AI. Thanks, y'.

All.

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