A Systems Approach To Digital Experience

By Satyen Yadav, CTO, Digital Solutions &...

A Systems Approach To Digital Experience

Paving The Way for IoT in your Organisation

By Lou Lutostanski, Vice President, Internet of...

Paving The Way for IoT in your...

Digital Transformation Is Not all about Technology It's about Change

By Eric Acton, Head of Innovation Ecosystems, R2...

Digital Transformation Is Not all...

Digital Innovation on a Budget

By Darin Marsden, CM-BIM, Director of Productivity...

Digital Innovation on a Budget

Is AI the New Favorite for Real Estate Underwriters

By Enterprise Technology Review | Monday, December 23, 2019

AI-influenced underwriting process holds the potential to reduce operational errors and expenses.

FREMONT, CA: Underwriting is an important part of investment decision-making in the finance sector. The process of underwriting can manage the risks and result in the potential return on all types of investments. In the real estate sector, the analysis starts with a property’s gross potential income followed by deducting variables such as vacancy allowances and operating expenditures to determine the property’s Net Operating Income (NOI), which can be used by combining with a cap rate to get a property’s value. The commercial real estate underwriting process can be monotonous, resulting in a significant amount of time spent on evaluating paperwork and transferring data from one place to the other. Manual underwriting also includes errors and unnecessary costs. Artificial intelligence (AI) is a promising technology that can address this challenge.

AI can help automate the new underwriting process. Automated underwriting with AI enables quick scanning of a document in different formats and extracting the essential information for underwriting. Thus, AI-enabled underwriting takes a few minutes rather than hours or days, presenting an advantage over conventional underwriting procedures. Machine learning (ML) takes the underwriting automation a step ahead by making correlated analyses of unrelated assets and predicting to estimate the creditworthiness of a borrower quickly. The above capability provides lenders an error-free, fast, and secure means to underwrite a loan with lesser risk.

Incorporation of AI in the commercial real estate underwriting enables the lenders to become more efficient and productive. Automated underwriting can reduce the costs as well as the human resources required to take a loan. Another essential advantage of AI algorithms is that it excludes the ‘human-bias’ from the decision-making process. For instance, a lender may have a possible bias towards a particular borrower. However, the incorporation of AI algorithms eliminates any such preference, and the loans can be strictly based on parameters and data. ML algorithms also collect massive data sets across each asset class and use the knowledge towards every new loan opportunity.

AI technology promises to transform the world of commercial real estate underwriting process.

See Also :- Top Proptech Solution Companies