Technology and real estate collide Part 1: ChatGPT
Screenshot: Warner Bros. via CNET/CBS Interactive
ChatGPT is blowing up the internet. Not surprisingly, it’s making a small splash into residential real estate, too. Agents are using it to write listing descriptions, language for addenda, and social media content. As well as, of course, blog articles.
I’m sure everyone knows by now that ChatGPT is a natural language AI chatbot. You can interact with it by asking questions or giving it instructions. It then spits back what it thinks you want to hear, within the confines of it’s programming.
No, it’s not gonna turn into Skynet anytime soon. It’s not even capable of true conversations. You give it a prompt and it responds back. It’s not really building on past prompts… each prompt is a new interaction.
It becomes more useful the better you get at writing prompts. Open ended questions with specificity generate useful responses.
It’s been fed a smorgasbord of source material to learn on, up through 2021, IF you’re using ChatGPT through OpenAI.com.
No, it didn’t write this article… so far.
It is SUPERRRR cool. It’s hard to grasp how deep it could infiltrate into our everyday lives. Right now it’s shallow. Eventually… it will be VERY deep.
Marketing, advertising, communication, news, school systems, law enforcement… there are so many ways that an increasingly sophisticated system like this could alter our world.
For now, ChatGPT is simply AWESOME at producing brain-numbingly mediocre blog content. Welcome to a new world where people can post fully formed blog articles in a matter of minutes. As uninteresting as most blog articles used to be… now we’re going to have to sift through even more bland material to find something useful… Although, maybe Bing will let us sift out any blog articles written by itself! LOL
So, let’s have it write us an article about real estate and critique how it does!
My comments are in Dilithium Orange
My prompt:
”Write a blog article about how to purchase a home in Oregon. Include pros and cons of using a real estate agent. Explain at least 3 pitfalls to buying a home. Explain 3 benefits of buying a home. Explain financing contingency and the appraisal process. Explain inspection contingency. Explain typical timelines. Explain title contingency. Explain the different aspects of negotiation during a transaction. Explain the concept of earnest money.”
How to Purchase a Home in Oregon - a blog by ChatGPT
”Purchasing a home is a major life decision, and it's important to understand the process before diving in. If you're looking to purchase a home in Oregon, there are several factors to consider, including whether or not to use a real estate agent, potential pitfalls, and the benefits of owning a home. In this blog post, we'll go over everything you need to know about purchasing a home in Oregon.
It’s important to note here that while it uses the word “Oregon” twice, NOTHING about this article is specific to Oregon.
Pros and Cons of Using a Real Estate Agent
When it comes to purchasing a home, one of the first decisions you'll need to make is whether or not to use a real estate agent. A real estate agent can help guide you through the process, provide valuable insights and advice, and negotiate on your behalf. However, there are also some potential drawbacks to using an agent. For example, you'll need to pay commission fees, which can be as high as 6% of the sale price. Additionally, some agents may push you towards homes that are outside of your budget or not in your desired location.
Ouch! That last part certainly should NOT be true if you pick the right agent! Regarding commissions, it’s clear after asking it a few questions, ChatGPT fundamentally does not understand real estate commissions. 99% of the time, buy-side commissions are negotiated between the seller and the listing agent before the home ever goes on the market, and are included as part of the purchase price. The buyer agent has no say in them. I’d need to write a whole other blog to explain more… or contact me if you’re curious. And, always remember, there’s no such thing as a standard commission.
Pitfalls of Buying a Home
There are several pitfalls to be aware of when purchasing a home in Oregon. One common issue is the potential for unexpected costs, such as repairs or renovations that weren't disclosed during the inspection process. Additionally, if you don't have a good understanding of the local housing market, you could end up overpaying for your home. Finally, it's important to carefully review the terms of your mortgage to avoid any surprises down the line.
Okay, I respect what it’s TRYING to do here, but first off… it’s mixing up the Seller’s Property Disclosure Statement with the inspection contingency. Two completely different things.
Secondly, yes, if you don’t understand the market you might overpay for your home… and that’s about a lot more than just watching final sold prices. A buyer has no idea when looking at Zillow or Redfin whether or not a property had multiple offers, if the seller paid any closing costs, if repairs were included… And, looking at pictures or even going to Open Houses doesn’t tell a buyer much about the condition of different properties.
What it says about mortgages is actually quite true, but I wonder what it’s getting at specifically? Does it mean ARM (adjustable rate mortgage) terms? Occupancy fraud? Prepayment penalties?? I sure wish ChatGPT wrote more in depth info here!
Benefits of Buying a Home
Despite the potential pitfalls, there are also many benefits to purchasing a home in Oregon. For example, owning a home can provide a sense of stability and security, and can also serve as an investment in your future. Additionally, if you're able to secure a fixed-rate mortgage, your monthly housing costs will be more predictable over time.
True, true, although super light on the details.
Financing Contingency and Appraisal Process
One of the most important aspects of purchasing a home is securing financing. To protect yourself, it's important to include a financing contingency in your purchase agreement. This contingency allows you to back out of the deal if you're unable to secure financing on the terms you agreed to. Additionally, as part of the financing process, your lender will typically require an appraisal to ensure that the home is worth the purchase price.
This isn’t exactly how I would have explained the financing contingency but in a very basic way, it’s not wrong.
Inspection Contingency
Another important contingency to include in your purchase agreement is an inspection contingency. This contingency allows you to back out of the deal if there are any major issues with the home that were not disclosed during the inspection process. It's important to work with a reputable inspector to ensure that all potential issues are identified.
<Sigh> Okay, again, it’s mixing up the Seller’s Property Disclosure Statement with the inspection process. THESE ARE VERY DIFFERENT THINGS.
Typical Timelines
The timeline for purchasing a home in Oregon can vary depending on a number of factors, such as how quickly you're able to secure financing and find a home that meets your needs. On average, the process can take anywhere from 30 to 60 days from the time you make an offer to the time you close on the home.
It’s kind of odd how it starts the first sentence talking about timeline for purchasing a home, doesn’t give any idea how long this could take, and then immediately switches to discussing transaction timelines.
I had ChatGPT run this same prompt a few times and sometimes it said 30-90 days to close and other times 30-60. Realistically it usually takes between 15-45 calendar days once you’re in contract. Shorter for cash transactions. 30-45 days is most typical for financed transactions. 45+ when there are extra contingencies involved.
Title Contingency
A title contingency is another important aspect of purchasing a home in Oregon. This contingency allows you to back out of the deal if there are any issues with the property's title, such as liens or other legal disputes.
This is not completely accurate. The standard title contingency in Oregon on most sale agreements gives the seller the right to “cure” an issue found on title within a specified time period. Otherwise, yes, the buyer can back out. But, it’s not a “get out of jail free card”.
Plus, it’s gettin’ loosey goosey on the language. Someone reading this might think that all liens are a legal dispute and are bad. Most liens have nothing to do with legal disputes. Most liens found on title are for innocuous things like home loans (will be paid off at closing as long as there’s enough equity) and tax liens (always present on title).
Negotiation During a Transaction
Negotiation is a key part of the home buying process. Some aspects of the sale that may be negotiable include the purchase price, closing costs, and any repairs that need to be made. It's important to work with your real estate agent to come up with a negotiation strategy that meets your needs.
True dat!
Earnest Money
Earnest money is a deposit that you make when you make an offer on a home. This money is held in escrow and is typically applied towards your down payment or closing costs. If you back…”
Sorry, I guess I gave ChatGPT too many prompts to swallow! OpenAI only allows the responses to be so long before it cuts you off. Already there are plenty of 3rd party paid platforms offering a great deal more functionality using ChatGPT. I’ll have to check them out.
How did ChatGPT do?
Overall, I’m not sure how useful any of that information was. The parts that are correct are so basic and generic that I see little value in it. And, this had way too much misinformation for my liking.
It worries me that this might be used by newer licensees (who don’t know better) and busy agents (who don’t have the time to bother proofreading and rewriting) for social and web content. FYI, I had it run this same prompt a couple other times and all of them had about the same amount of misinformation.
I hope that ChatGPT gets better over time, but with an industry like real estate, the vast majority of what we do is based on knowledge that you can’t easily gain online or in any books. Real estate forms, putting together an offer or listing, the myriad of contract terms, negotiation strategies, project management, marketing, communication, software… Every single real estate transaction is different with varying degrees of complexity. I’m skeptical of how much value ChatGPT will really add to my industry… for now.
What do you think?