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Artificial intelligence (AI)—once a far-fetched capability only dreamed up in films—is becoming mainstream, including within the real estate industry. More brokerages are becoming reliant on proprietary algorithms that use datasets to streamline various processes and make them more efficient. Lately, these algorithms are becoming popular among industry disruptors—companies that are straying from the traditional model, using tech such as AI and big data to provide an all-in-one real estate experience. But at what cost?

WHITE PAPER: The Disruption of the Real Estate Industry: A Survival Guide for Brokers and Agents

With new technology comes risk. For example, a recently introduced full-service real estate service, REX Real Estate, uses an unconventional, AI-based business model with over 100,000 data points to identify which buyers should be marketed to. While efficient, this opens the door to potential discrimination lawsuits. Unless the algorithms can clearly break down why it chose certain buyers for its marketing strategy, controversial datasets that focus on or omit prospects based on familial status, race and gender can become entangled within the buying and selling process.

With the OJO Labs, Inc., and loanDepot partnership, AI can lead to problematic and assumed discriminatory lending practices. These companies may find themselves under the scrutiny of government officials if there is a trend in who is being chosen for home loans based on the proprietary algorithm.

MORE: Realogy Bets on AI With OJO Virtual Assistant Partnership

The technology is becoming controversial, facing ethical queries for its lack of code of conduct and regulation. According to the Wall Street Journal, New York City proposed a law in August that would require businesses to publish the source code for these algorithms. After pushback from tech firms looking to protect their proprietary algorithms, a bill without source-code requirements passed in December.

The mass regulation of AI would be difficult, as each industry uses the technology differently; therefore, proposed guidelines typically include vague provisions, such as privacy protections and general requirements for explaining how an algorithm makes choices—a difficult endeavor, as they tend to run on complex networks, according to the Wall Street Journal.

While the U.S. Office of Science and Technology Policy released white papers on the ethical implications on AI under the previous administration, today’s officials are currently cutting back on government-imposed regulation, providing more freedom to businesses in how they use technology. Many industry professionals are welcoming AI as a way to stand apart from competing brokerages and to increase business profits and efficiency using big data; however, they may be unaware of the inherent risks these algorithms introduce.

Stay tuned to RISMedia for more developments.

Dominguez_Liz_60x60_4cLiz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at For the latest real estate news and trends, bookmark