Can AI help transform the home-buying process in England?
In September 2021, we highlighted the issues with the home-buying process in England, which needs to be more efficient, inexpensive, and updated. Shockingly, one in three sales (28% of agreed sales subject to contract) don't result in the exchange of contract. The average time it takes to complete a sale, from agreement to completion, is now 250 days, almost nine months, according to Getagent.co.uk.
The total value of UK homes reached £8.68 trillion at the end of 2022. It is 3.5 times the value of FTSE 100, and yet we have a home-buying process which is outdated and not fit for purpose. Homeowners Alliance report that each sale that falls through costs an average of £2,727 in lost fees for conveyancing, survey, and searches, with emotional cost often considerably higher.
The idea of using Artificial Intelligence (AI) to transform the home buying process is intriguing.
With the introduction of Open AI's ChatGPT, machines have made remarkable strides in emulating human thought processes. Although it remains to be seen if the software can produce work of the same quality as humans, the technology is undeniably captivating. It prompts us to consider whether it has the potential to revolutionize the home-buying process by making it more efficient, cost-effective, and in line with modern demands.
One of the biggest concerns for homebuyers is not the expense of moving but rather the need for certainty in the process. Many report feeling frustrated by the need to provide the same information multiple times, such as utility bills, even though this data is readily available online. Trust is also a major issue, as individuals need help determining who they can rely on during this important transaction. Given that purchasing a home is often the most significant investment, the lack of transparency in the process is concerning.
AI should be considered as a means of increasing productivity rather than a direct threat to jobs in the industry. Its use should be focused on eliminating repetitive tasks and enhancing performance in more intricate ones to enhance overall efficiency.
Can AI facilitate the adoption of binding offers as a standard practice in England?
Binding offers, also called reservation agreements, allow buyers to reserve the right to purchase a property once an offer is accepted. This involves a contract between the buyer and seller, agreeing that the property will not be sold to anyone else within a specified period, usually three to six months. Both parties must pay a deposit to cover costs if the contract is breached.
If a seller wants to consider a binding offer, they must be transparent and provide relevant information like surveys and searches before signing the contract. The buyer should also have a mortgage in principle ready to show their seriousness. This will give the seller confidence in the buyer's commitment.
AI can improve the home buying process by eliminating wait times for searches and basic information. This technology can assist conveyancing lawyers in producing reports on homes much more quickly, rather than waiting weeks for sales to progress. Moreover, it could speed up mortgage approvals and reduce costs for buyers and sellers.
The buying process is 35 weeks of economic stasis whereby you cannot book a holiday, get your kids into school or even buy a sofa. If we had binding offers, you could be in your new home in 12 weeks, making it much more efficient.
While AI does come with certain risks, it can also significantly enhance productivity in various industries. Property professionals should welcome its potential to modernize the outdated home-buying process.