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How AI Is Really Going To Change Real Estate In 2020 And Beyond – Forbes

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By 2030, AI is predicted to add +$15 trillion to the global GDP thanks largely to solving data issues according to PwC. Lending money used to be a tricky business but time consumers and technology is changing. Banks and other industries are struggling to cope with the changing consumer demand, but a few are getting it right. 

Real Estate is one industry that has a big AI opportunity due to its late mover position. The early pitfalls have been identified and now fast progress can be made with a sensible strategy.

Lending money is an easy task but validating a client is tricky. “Risk is the biggest hurdle to get over” according to Reynaldo Reyes, Director of Sales, Sharp Loan. “Biases still exist, and algorithms aren’t going to solve the issues if they are built-in from the ground up…let alone when facial recognition and GPS really get integrated into systems.” Real Estate is starting to use technology to its full potential, according to Reyes. From virtual reality, smart contracts, virtual assistants to better UX on sites and voice bots; “We’re using AI chat bots and Virtual Assistants, it really helps answer consumer queries with little delay. This feature is more targeted toward millennials looking for property because trigger messages based on certain actions or keywords provide timely assistance which makes the mortgage experience less stressful. Technology is helping us get people to the right place, figuratively and literally.”

Susanne Eickermann-Riepe, Head of Real Estate, PwC Germany is bullish on AI’s further contributions to the Real Estate market as the industry is only part way through the potential AI offers; “There are four main areas: Automated intelligence: Firstly, automating manual, cognitive and routine versus non-routine tasks. Secondly, supporting intelligence; helping people to accomplish tasks faster and better. Thirdly, expanding intelligence: helping people to make better decisions and finally, autonomous intelligence. Automation of decision-making processes without human intervention.”

Real Estate is, like many industries, turning its attention to learning from the playbooks of Netflix, Uber, Facebook, and Amazon to determine their client’s likes and dislikes are. When it comes to Real Estate, big data could involve using CRM tools that show when a potential customer visits your listing or website and collect data based on their activity on the page. Jasjeet Thind, Vice President, AI and Analytics at Zillow agrees; “Today the real estate transaction is stressful and often duplicative. By leveraging AI we can create a more personalized, end-to-end experience for our customers, eliminate many of the pain points associated with buying and selling a home, and help our customers close on their home faster.” Such information can forecast when a prospect might be selling or buying an investment property, or even the sell or rental price of a home. 

Several startups are focusing on the Real Estate industry when it comes to AI, but AI isn’t a save-all for Real Estate. Bad planning, execution and problem-identification can lead to solutions that cause more problems than they solve. Data availability, data quality and standardization are key areas to focus on along with legal requirements around the world for the Real Estate industry. AI is just part of Real Estates future, not just the next 12 months. An in-depth look at cryptocurrencies, blockchain, the sharing economy, co-living and drone tech is needed by governing bodies to asses the opportunities and impact these and future technologies will have on the home lending and PropTech market as a whole. 

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Lapse in enforcement, effect on B.C. real estate market in focus as money laundering inquiry opens – Richmond News

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Justice Austin Cullen, commissioner for the independent Commission of Inquiry into Money Laundering in British Columbia, hinted Monday that his team will specifically address trade-based money laundering, the ability to act on evidence of wrongdoing and the impact of criminal proceeds on the B.C. real estate market.

The commission heard opening statements from lawyers for the provincial and federal governments on the first of three hearing days this week. This week is the first of several weeklong hearing intervals to the end of the year.

article continues below

If the first day is any indication, the inquiry will be a slow grind through complex matters related to government legislation, regulatory oversight and enforcement efforts.

“I think we’ll be hearing evidence that it’s a pretty elusive issue and one that’s difficult to bring down to the ground,” said Cullen.

Both senior governments largely outlined their existing efforts to address money laundering.

B.C. government lawyer Jacqueline Hughes opened by noting that “the Lower Mainland has earned an international reputation for money laundering,” and asked, “Was there wilful blindness to what’s going on?”

She said the government hopes the commission can address that question and many others over the course of the year.

Hughes’ statement focused on two key areas: government-regulated gambling and the real estate industry.

Judith Hoffman, general counsel for the federal government, began by saying the inquiry is a provincial one but money laundering “obviously has many federal dimensions.” Ottawa is assisting the inquiry to understand the scope of the problem in B.C. and the effectiveness of federal enforcement, she said.

Hoffman said new federal regulations are coming for foreign virtual currencies that have yet to face the kind of regulations that govern credit cards or bank accounts. Likewise, cryptocurrencies present similar oversight issues.

Cullen interjected at one point to note that the commission may want to specifically look at trade-based money laundering and may seek federal help in better understanding current efforts to address it.

Hoffman addressed a maze of federal agencies whose work falls under the umbrella of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The Financial Transactions and Reports Analysis Centre (FINTRAC) “has an enormous mandate,” with upwards of 25 million reports annually, Cullen said.

“I am interested in perhaps turning Canada’s attention to that,” he told Hoffman.

Hoffman noted the interconnected roles of FINTRAC, RCMP, the Canada Revenue Agency, the Canadian Security Intelligence Service and the Office of the Superintendent of Financial Institutions, which regulates banks and money service businesses. The Canada Mortgage Housing Corp. also plays a role as the federal regulator of housing policies.

Using money service businesses as an example, Hoffman explained how the RCMP’s Combined Forces Special Enforcement Unit is working with the B.C. Attorney General and City of Richmond on a provincial licensing program.

Both senior governments are looking at new regulations for greater transparency in business ownership.

Hughes spoke about B.C.’s ongoing public consultation process to create a provincial public registry of corporate beneficial ownership, as it has done for property ownership – key recommendations of the Expert Panel on Money Laundering in Real Estate, commissioned by the province in 2019.

That panel provided a broad picture of money laundering in B.C., estimating that between $800 million and $5.3 billion was cleaned through B.C. real estate in one year.

The Cullen inquiry has been spurred largely by the perceived impact of dirty money on the real estate industry and its impact on B.C.’s middle class. Furthermore, as noted by Hughes, criminal proceeds from the opioid crisis are flowing through casinos and ending up in real estate.

The BC NDP government has created a new Crown agency to regulate the real estate and finance sectors in the province – the B.C. Financial Services Authority, which now controls the formerly independent role of the superintendent of real estate.

gwood@glaciermedia.ca

 

 

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Don’t Let the Real Estate Industry Bring Back Brokers’ Fees – The New York Times

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Will banning brokers’ fees actually save renters money?

The question is being asked around the world as governments try to reduce move-in costs for renters. Over the past decade, Germany, Britain, Scotland and Spain have ruled that landlords, not renters, should pay brokers’ fees.

In a surprise ruling this month, New York also adopted fee reforms. A judge temporarily blocked the changes after real estate groups sued the New York Department of State.

Investigating reforms abroad offers insight into what might happen in New York. The preliminary findings? A ban looks like it would be a good deal for apartment hunters.

Real estate agents in New York have argued that if landlords are forced to pay brokers’ fees, they will pass those costs on to tenants.

There’s evidence that may have already happened. Prices for about 5 percent of rentals on the listings website Localize.city increased in the week up until the ban was halted. “Someone has to take the photos, write the listing description and arrange the open house,” said Jamie McShane, senior vice president of communications at the Real Estate Board of New York, an industry lobbying group. “Those costs are going to get rolled into the monthly rent.”

For renters who want to stay put, it makes more sense to pay a one-time brokers’ fee than have a rent bump add up over the years, Mr. McShane said.

But when researchers in Germany analyzed online rental listings in two cities after the law there took effect, it was as if nothing had happened. Prices of units that once charged renters a fee grew at the same rate as no-fee units.

Landlords in Germany didn’t pass on brokers’ fees


Landlords in Germany didn’t pass on brokers’ fees

Advertised prices of rentals in Frankfurt and Stuttgart before and after the 2015 reforms, three-month rolling average




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Fee reforms

$1.40 per square foot

Rentals with a fee

before reforms

1.30

Prices of rentals that once had fees grew at the same rate

as no-fee rentals

1.20

“No-fee” rentals

1.10

2012

2013

2014

2015

2016

Fee reforms

$1.40 per square foot

Rentals with a fee

before reforms

1.30

Prices of rentals that once had fees grew at the same rate

as no-fee rentals

1.20

“No-fee” rentals

1.10

2012

2013

2014

2015

2016


Sources: “Inattention in the Rental Housing Market: Evidence from a Natural Experiment” by Eva M. Berger and Felix Schmidt, Immobilienscout24.de

Economists have found that consumers forget to add extra charges like sales taxes, property taxes and shipping charges into the total cost of a purchase. The German experiment suggests that most renters don’t consider brokers’ fees when they compare apartments, and that removing those fees won’t affect how much they are willing to pay.

“People don’t always act that rationally,” said Eva Berger, a researcher at the Johannes Gutenberg University Mainz and an author of the study.

More reason for New York tenants to be optimistic: Forty-four percent of New York units are rent regulated, meaning owners can’t jack up prices overnight.

After Gov. Andrew Cuomo signed a set of laws capping rental application fees at $20 last June, some brokers continued to charge applicants hundreds of dollars in “processing” fees.

The same thing happened with application costs in Scotland, where 11 percent of landlords surveyed by a real estate industry group reported charging new fees as a result of reforms there in 2012.

Such surcharges are banned in Germany. A few brokers have skirted the law, according to Dr. Berger, but those violations have been rare and tenants can reclaim illegal fees up to three years after paying them.

As of this month, there’s a lot less wiggle room for New York landlords or brokers to pile on new fees. When the state clarified that landlords should pay brokers’ fees, it also underscored other charges that are now illegal, such as a security deposit greater than one month’s rent and move-in fees.

After fee reforms took effect in Germany, some property owners stopped using real estate agents.

Once they were on the hook for the brokers’ fees, these landlords couldn’t or wouldn’t pay for the agents’ services they had previously enjoyed free.

Some landlords balked at paying brokers to advertise their units


Some landlords balked at paying brokers to advertise their units

Rental listings in Frankfurt and Stuttgart that charged renters a brokers’ fee before the 2015 reforms




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100% of rental listings

Listed by commercial entities

Listed by agents

After fee reforms,

landlords listed more

rentals themselves

Listed by

landlords

2013

2014

2015

2016

Fee reforms

100% of rental listings

Listed by commercial entities

Listed by agents

After reforms,

landlords listed more

rentals themselves

2013

2014

2015

2016


Sources: “Inattention in the Rental Housing Market: Evidence from a Natural Experiment” by Eva M. Berger and Felix Schmidt, Immobilienscout24.de

Most landlords continued to work with brokers, but at a discount. The average commission that agents received dropped by about half, according to the news website Zeit Online.

Landlords also started to pay only for the specific services that they needed, such as photographing an apartment, according to Dr. Berger.

Technological advances have also made it easier for landlords to find tenants, with listing websites like StreetEasy and Craigslist. New artificial intelligence tools, with names like ResidentScore 3.0, claim to help landlords pick the applicant most likely to pay rent on time.

Reduced demand for agents’ services would put many New Yorkers out of work, argues Sarah Saltzberg, a co-founder of Bohemia Realty Group. She guessed that more than half her agents would be pushed out of the industry if New York’s ruling stands.

“A lot of them are living paycheck to paycheck,” Ms. Saltzberg said.

The British Ministry of Housing estimated that fee reforms would cost the real estate industry almost twice as much as landlords. It did not forecast how many agents’ jobs would be lost, but it stated that agents who imposed “unfair, excessive or duplicative charges” would be the most likely to lose business.


While broker fees are an annoyance for New Yorkers, reforms could have the most impact on families living near and below the poverty line.

New York has the highest rate of homelessness in the nation and a shortage of affordable housing for extremely poor households. Lopping even a few hundred dollars off move-in costs could shorten the amount of time a family stays in a shelter by months.

Along with bringing down apartment prices for low-income renters, said Giselle Routhier, policy director at the Coalition for the Homeless, the changes could save the city and state money currently spent on grants to help the homeless afford broker fees. “They could reinvest that money into more rental assistance,” she said.

Lower move-in costs also make it easier for unhappy tenants — rich and poor — to leave an apartment, increasing pressure on landlords to respond quickly when the elevator stops working or the heat goes out.

Landlords have emerged as the real winners in New York’s housing market, benefiting from brokers’ labor on the renter’s dime. In almost every other city across the country, landlords pay for brokers’ services.

Naysayers may argue that New York’s rental market isn’t the same as Germany’s or Scotland’s. But in the absence of a crystal ball, some data is better than none. And that data suggests that if a court upholds New York’s fee reforms, renters will finally catch a break.

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.

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Lapse in enforcement, effect on B.C. real estate market in focus as money laundering inquiry opens – Burnaby Now

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Justice Austin Cullen, commissioner for the independent Commission of Inquiry into Money Laundering in British Columbia, hinted Monday that his team will specifically address trade-based money laundering, the ability to act on evidence of wrongdoing and the impact of criminal proceeds on the B.C. real estate market.

The commission heard opening statements from lawyers for the provincial and federal governments on the first of three hearing days this week. This week is the first of several weeklong hearing intervals to the end of the year.

article continues below

If the first day is any indication, the inquiry will be a slow grind through complex matters related to government legislation, regulatory oversight and enforcement efforts.

“I think we’ll be hearing evidence that it’s a pretty elusive issue and one that’s difficult to bring down to the ground,” said Cullen.

Both senior governments largely outlined their existing efforts to address money laundering.

B.C. government lawyer Jacqueline Hughes opened by noting that “the Lower Mainland has earned an international reputation for money laundering,” and asked, “Was there wilful blindness to what’s going on?”

She said the government hopes the commission can address that question and many others over the course of the year.

Hughes’ statement focused on two key areas: government-regulated gambling and the real estate industry.

Judith Hoffman, general counsel for the federal government, began by saying the inquiry is a provincial one but money laundering “obviously has many federal dimensions.” Ottawa is assisting the inquiry to understand the scope of the problem in B.C. and the effectiveness of federal enforcement, she said.

Hoffman said new federal regulations are coming for foreign virtual currencies that have yet to face the kind of regulations that govern credit cards or bank accounts. Likewise, cryptocurrencies present similar oversight issues.

Cullen interjected at one point to note that the commission may want to specifically look at trade-based money laundering and may seek federal help in better understanding current efforts to address it.

Hoffman addressed a maze of federal agencies whose work falls under the umbrella of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The Financial Transactions and Reports Analysis Centre (FINTRAC) “has an enormous mandate,” with upwards of 25 million reports annually, Cullen said.

“I am interested in perhaps turning Canada’s attention to that,” he told Hoffman.

Hoffman noted the interconnected roles of FINTRAC, RCMP, the Canada Revenue Agency, the Canadian Security Intelligence Service and the Office of the Superintendent of Financial Institutions, which regulates banks and money service businesses. The Canada Mortgage Housing Corp. also plays a role as the federal regulator of housing policies.

Using money service businesses as an example, Hoffman explained how the RCMP’s Combined Forces Special Enforcement Unit is working with the B.C. Attorney General and City of Richmond on a provincial licensing program.

Both senior governments are looking at new regulations for greater transparency in business ownership.

Hughes spoke about B.C.’s ongoing public consultation process to create a provincial public registry of corporate beneficial ownership, as it has done for property ownership – key recommendations of the Expert Panel on Money Laundering in Real Estate, commissioned by the province in 2019.

That panel provided a broad picture of money laundering in B.C., estimating that between $800 million and $5.3 billion was cleaned through B.C. real estate in one year.

The Cullen inquiry has been spurred largely by the perceived impact of dirty money on the real estate industry and its impact on B.C.’s middle class. Furthermore, as noted by Hughes, criminal proceeds from the opioid crisis are flowing through casinos and ending up in real estate.

The BC NDP government has created a new Crown agency to regulate the real estate and finance sectors in the province – the B.C. Financial Services Authority, which now controls the formerly independent role of the superintendent of real estate.

gwood@glaciermedia.ca

 

 

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