AI is making its presence felt in a range of industries from banking and insurance to manufacturing and health care. This is just the tipping point, the dawn of a new age where AI will play a major role in our work and personal lives. Real estate can also benefit from the power of AI applications. Lease abstraction, in particular, is a necessary but tedious task that comes with the territory. It typically eats a lot of man-hours to perform this task.
Lease Abstraction
Lease abstraction is the process of summarizing contracts and other source documents so that a concise version of the relevant facts is available. Although you must have the original documents, it is convenient to have essential facts such due dates, payment amounts and so on in an easy to access document that you can quickly skim.
Change in The Game
Lease abstraction was typically entirely manual, with a second round of review to verify that all critical and pertinent information was correctly summarized in the final document. Tedious to say the least. AI has entered the arena and is making this process much easier and a whole lot faster. The real estate industry is waking up to the potential of AI and for good reason. AI does not get tired of reading similar documents day after day. It is capable of extracting data from documents much faster than humans. Distilling data from a lease can take up to 5 hours per lease when performed manually, maybe longer if there are complexities. AI cuts this down to mere minutes.
An additional advantage is that AI can perform lease abstractions in multiple languages, reducing the effort that would have been necessary from multiple human resources. Initial training in those languages is necessary and then you’re good to go.
Once extracted, the results can be exported to a range of software applications such as Word, Excel or Yardi to name a few. Real estate firms, landlords, lease administrators, tenants and lenders all benefit from this technology that speeds up lease abstraction.
However, despite all these benefits, AI requires training by professionals with relevant data before it can do anything useful. In addition, human review of the output of these applications is still necessary as the accuracy rate is not yet completely infallible. Although accuracy rates are high, they are not 100% yet.
Maybe total automation will be a standard feature in the future, but at the moment, AI still needs humans for certain aspects of the lease abstraction process including training, oversight and administration. The exciting thing about AI software is that it gets smarter as it learns. In any case, when implemented for lease abstraction, AI provides substantial improvements in efficiency, as well as significant cost and time savings. These advantages make it a worthwhile investment for the real estate industry.
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