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When Joey Santiago embarked on the daunting quest to purchase a home in the fiercely competitive Southern California real estate market several years ago, his first port of call for guidance was not a financial advisor or a seasoned realtor, but an artificial intelligence chatbot: ChatGPT. Santiago sought a strategic roadmap to achieve financial stability and accumulate a sufficient down payment. While he concedes that the initial advice was largely generic—recommending fundamental principles like "save money" and "use a high-yield savings account"—he nevertheless found value in the structured framework it provided. This foundational interaction proved instrumental, as Santiago successfully amassed what he described as a "fat down payment."
His journey with AI did not end there. Earlier this year, with his financial goal achieved, Santiago revisited the artificial intelligence well, this time seeking assistance in visualizing and customizing potential properties. By supplying detailed measurements and photographs of various spaces—be it a kitchen, a guest room, or a primary bathroom—he leveraged AI tools like Grok and ChatGPT. He posed specific questions: "Could a queen bed comfortably fit in this space?" "What types of floor molding would complement this room?" "Which 30- to 32-inch mid-century modern vanity would be suitable for this bathroom?" Santiago acknowledged that the AI-generated responses were not infallible, necessitating rigorous cross-verification before committing to any offers or furniture purchases. Yet, he underscored AI’s invaluable role in deciphering a property’s potential, even when it was owner-occupied, cluttered with existing furniture, or marred by outdated features like "horrible carpet" and "popcorn ceilings." This personal anecdote highlights a burgeoning trend: the increasing integration of AI into the deeply personal and often complex process of home buying and selling.
The Expanding Influence of AI in Real Estate
Santiago’s experience is far from isolated. Across the United States, a growing segment of the population is actively incorporating artificial intelligence into their real estate endeavors, seeking answers, guidance, and a competitive edge. This widespread adoption is evidenced by recent market research. A LendingTree study revealed that 72 percent of all Americans expressed comfort using AI for at least one task related to buying or selling a home, ranging from identifying top-performing realtors to soliciting mortgage advice. A separate survey conducted by Realtor.com last year placed this figure even higher, at approximately 85 percent.
The embrace of AI extends beyond mere consultation. A study by Veterans United Home Loans indicated that a remarkable 53 percent of prospective homebuyers would feel comfortable purchasing a home with minimal or no direct human involvement. Further, the LendingTree study reported that 37 percent of respondents were prepared to entrust AI with managing their entire home purchase, requiring only minimal human input. This trend is particularly pronounced among younger demographics, with about a third of Gen Z buyers reportedly relying on AI for a significant portion of their homebuying research. Looking ahead, the LendingTree study found that 36 percent of respondents anticipate AI will be capable of handling most, if not all, aspects of a home sale or purchase by 2036. This rapid technological shift is generating considerable apprehension among real estate professionals, many of whom are already grappling with increasingly contentious transactions influenced by AI-driven advice.
The Double-Edged Sword: Opportunities and Ethical Dilemmas
While consumers increasingly lean on AI for guidance, the real estate industry itself is not immune to the technology’s transformative power. Many homeseekers have voiced concerns, coining the term "housefishing" to describe realtors’ use of AI to subtly alter listing photos or generate overly flashy, potentially misleading promotional videos. This practice, while aimed at enhancing appeal, raises ethical questions about transparency and accuracy, creating an "ouroboros" effect where both buyers and sellers are navigating an AI-influenced landscape. Beyond individual transactions, the broader rise of AI is profoundly impacting the housing market, with the proliferation of data centers contributing to market price fluctuations and raising significant ecological concerns that could, in decades to come, alter where humans can comfortably reside.
The financial ramifications of AI-driven advice are becoming increasingly apparent. Ryan Serhant, a prominent New York City realtor and reality TV personality, publicly recounted an incident earlier this year where a $50 million deal collapsed at the eleventh hour. Both the buyer and the seller had independently consulted ChatGPT regarding the property’s pricing. Reportedly, ChatGPT advised the seller to demand a higher price, while simultaneously informing the buyer that the property was overpriced, leading to an impasse. In another widely reported incident this spring, a Florida man gained viral attention for using ChatGPT to price, list, and sell his four-bedroom, three-bathroom house online without professional assistance. However, local realtors swiftly pointed out that the seller likely forfeited upwards of $200,000 due to subpar listing photos and an initial asking price that was significantly below market value—issues that a human realtor would almost certainly have identified and rectified. These examples underscore the potential for AI, despite its analytical prowess, to misinterpret nuanced market dynamics and human factors, leading to substantial financial losses.
Navigating the Digital Divide: Reddit Debates and Professional Concerns
The public’s engagement with AI in real estate is also playing out in online forums. Platforms like Reddit host lively discussions where users seek opinions on leveraging AI for tasks such as negotiation strategies, identifying potential local tax increases, or reviewing FEMA flood maps. This theoretical appeal is understandable, given that approximately a third of U.S. adults already use large language models like ChatGPT daily, according to an Elon University survey. Why not extend this utility to real estate, arguably one of life’s most significant financial decisions? Many individuals interviewed during the early reporting for this story by Dwell magazine expressed this very sentiment, often not perceiving their AI usage as particularly noteworthy.
However, the prevailing sentiment among Redditors tends towards skepticism. Common responses to inquiries about using AI for home buying include cautionary remarks like, "Is the most expensive thing you’ll ever buy the kind of thing you want to leave up to a computer that doesn’t know many letters are in a word?" Despite the skepticism, some users do share practical tips, such as using AI platforms like Claude to generate project checklists after an offer has been accepted, demonstrating a nuanced approach to its application.
Realtors on the Front Lines: Combatting AI Misinformation
For real estate professionals, the rise of AI has transitioned from a curious phenomenon to a pressing operational challenge. Megan Brenn-White, founder of Compass’s Upstate Curious team in New York, observed a noticeable uptick in buyer/seller AI usage about six months ago. However, it is only in the past two to three months that she describes it as having become an "overwhelmingly large problem" within the industry. This escalating concern has led her to repeatedly caution homeseekers against over-reliance on AI in her company’s newsletter. Following a New York Times story that detailed a reporter successfully listing and selling his upstate New York property with AI chatbot advice on everything from pricing to optimal listing photos, Brenn-White published an Instagram Reel presenting ten counter-arguments. She explained her motivation to Dwell, stating, "it’s important to educate the people that the agents on my team are going to have to work with, period."
Brenn-White’s team, comprising 23 agents who anticipate closing around 450 deals this year, frequently encounters clients who place undue trust in AI chatbot advice regarding critical aspects like listing prices or future interest rates. This often results in clients missing out on properties they genuinely desire. "It feels like it went very quickly from, ‘Huh, this happened with this deal, isn’t that strange,’ to, ‘Whoa, a lot of deals are falling apart—or not coming together—because of this,’" she recounts. In an effort to preempt the dissemination of faulty AI-generated information, the Upstate Curious team has resorted to a proactive strategy: inputting every conceivable query about a property into chatbots themselves before posting a listing. This allows them to anticipate and prepare for potential buyer or seller questions influenced by AI.
A particularly striking illustration of AI’s impact on transactions involves unrepresented buyers. Brenn-White notes that her company recently handled a listing where two separate, unrepresented buyers submitted virtually identical offers, word for word, a direct consequence of their independent use of the same AI platforms. "They were strange enough in their actual terms too that the seller couldn’t really accept them," she explained. "Buyers can be unrepresented and that’s fine, but this was giving them so much incorrect information and strategy that the offers just weren’t strong. Plus, when the offers come in and they’re strange, that is probably what’s going to happen again during the inspection process or negotiation. It makes sellers not want to take those kinds of offers."
Hillary Kolos, an Upstate Curious agent managing that specific listing, immediately sensed something amiss. Historically, unrepresented buyers either sought an agent if serious about an offer or submitted brief, unorganized emails. In this instance, both offers were meticulously structured, divided into sections with headings, and employed subtly persuasive language. Furthermore, both offers were for almost precisely the same amount—approximately five percent under the asking price. Kolos initiated her own informal investigation: posing as a potential buyer, she asked ChatGPT to draft an offer. Unsurprisingly, the chatbot’s response mirrored the submitted offers, both in proposed price (around five percent under asking) and in linguistic style.
Ultimately, the sellers did accept one of these AI-generated offers. However, during the inspection process, several routine issues emerged. Had the buyer been represented by an agent, these minor concerns could have been easily contextualized or addressed through renegotiation. Instead, the buyer, lacking professional guidance, backed out of the deal, losing the $1,000 spent on the inspection, and forcing the sellers to relist the property. This incident highlights the critical role human agents play in providing context, reassurance, and negotiation expertise that AI currently cannot replicate.
The Perils of AI-Driven Inspections and Cost Estimates
The impact of AI extends significantly into the inspection phase of home purchases. Brenn-White frequently encounters buyers who feed home inspection reports into AI for analysis. When these AI-generated concerns are then presented to realtors, the professionals face limitations. "Inspections are a very regulated field and they can be pretty terrifying if an inspector doesn’t explain the results well," she notes. "As realtors, we’re not allowed to get into what they mean but we can say, ‘If the inspector says the roof is falling apart, here are three contractors that can give you a quote on the roof.’"
The problem intensifies when buyers use AI tools to solicit contractor recommendations and cost estimates. According to every realtor interviewed for this piece, AI chatbots are notoriously deficient in providing region-specific recommendations. For example, a request for a roofer in upstate New York might yield a recommendation for a contractor in Albany, rather than the more localized Hudson Valley area. Moreover, AI chatbots often provide inaccurate cost estimates, sometimes quoting prices akin to Michigan rates for a home in the Bay Area, where labor and material costs are substantially higher. "People are dropping out of deals or asking for wild numbers—like a roof that we would get a quote from a contractor for let’s say $30,000, AI was telling them would be $70,000," Brenn-White states. "It undermines their trust in us because if we’re like, ‘We have contractors who almost certainly can do that for less because we’ve seen this a million times,’ they’re like, ‘Well, ChatGPT says it could be this amount so this is what we want to negotiate.’"
Kati Spaniak, a realtor in the Chicago suburbs, emphasizes that buyers who use AI to parse inspection reports forfeit the invaluable benefit of a realtor’s local expertise. "They’ll ask ChatGPT, ‘Is this an issue?’ and they’ll get generic comments, like, ‘Yes, that’s an issue,’ You need to bring in all these people to fix it," she explains. "A local agent on the ground is going to be able to tell you more about that specific situation. Like if somebody’s inspection finds that a home has foundational cracks, the agent could say that these are the same kinds of cracks you’re going to find in ninety-nine percent of the homes in this location."
The potential for AI to mislead goes further. Shantih Moriarty, a Redfin real estate agent in the Bay Area, has witnessed instances where AI agents "hallucinate" issues within inspection reports. "I’ve seen AI talk about cracks in foundations that aren’t there. I’ve seen it talk about particular types of piping, even if those pipes aren’t present." Both Brenn-White and Suzanne Goldklang, a licensed real estate salesperson in New York, highlight that buyers’ misplaced trust in AI often leads them to assign undue weight to these baseless assertions. Goldklang succinctly puts it: "Just because a computer spits something out and boldfaces and puts bullet points on it doesn’t mean it’s the best or most accurate information. AI is very good at making things look authoritative that are actually just random guesses."
The Lure of Autonomy: New AI-Driven Real Estate Models
Despite the risks, some buyers are willing to overlook AI’s fallibility in favor of a perceived sense of autonomy and convenience. This demand is driving the emergence of new business models in the real estate sector. In Texas and Florida, for instance, the newly launched real estate platform Homa offers AI agents that guide users through the homebuying process, eventually connecting them with centralized human agents to finalize deals. Homa’s stated objective is to reduce total commission fees by streamlining processes and potentially minimizing human involvement. Arman Javaherian, Homa’s CEO and co-founder, asserts that their AI chatbot is specifically trained on real estate issues pertinent to its operational markets. He believes this appeals to buyers who appreciate the ease and "isolation" of a digital-only lifestyle, drawing parallels to ordering groceries via Instacart rather than physically visiting a store. "We did a survey of a thousand homebuyers that closed in the last three years and something like sixty-one percent said that they held back a question they wanted to ask their realtor because they worried it would be too annoying or cause them too much work," Javaherian reveals. To date, Homa has facilitated over 100 home closings or contracts and plans to expand into California soon, signaling a growing market for hybrid or AI-centric real estate services.
A Path Forward: Trust, But Verify
While the majority of real estate agents interviewed expressed skepticism, if not outright dismissal, regarding the complete abandonment of agent expertise in home transactions, some did acknowledge AI’s potential for limited, valuable contributions—provided its outputs are treated with a significant degree of caution. Moriarty, for example, believes AI tools can be effective in generating pertinent questions about reports or specific listings. She suggests that clients occasionally run lengthy documents, such as condo CC&Rs (Covenants, Conditions, and Restrictions), through AI for summarization and question generation, as these can often exceed 300 pages. "Nobody’s reading that in a week and coming up with questions, and there is stuff buried in there," she explains. "AI can come up with a list of questions about things that you might be worried about and then you can talk to someone about those. Maybe it’ll come up with a hundred questions, ten of which are very pertinent and three of those you may not have asked. That’s valuable."
Moriarty advocates for a philosophy of "trust but verify" when it comes to AI, emphasizing that this verification should ideally be conducted with a human agent. Ultimately, the question posed by that insightful Redditor remains paramount: is the most expensive purchase of one’s life truly something one should entrust entirely to a computer? As AI continues its inexorable march into every facet of life, the real estate industry finds itself at a critical juncture, balancing the allure of technological efficiency with the enduring value of human expertise, local knowledge, and nuanced judgment. The future of home buying and selling will likely involve a dynamic interplay between advanced algorithms and seasoned professionals, where informed discernment becomes more crucial than ever.
