Real estate has been historically slow to modernize, but AI is changing that. The integration of artificial intelligence is transforming how buyers and sellers interact with agents, fundamentally altering competitive dynamics in the industry. 

With AI reshaping daily operations of a real estate agent’s business by automating tasks — from generating property listings to conducting neighborhood analyses — the agent’s focus in day-to-day activities will shift. 

Ryan Serhant, CEO of Serhant and reality TV star of “Owning Manhattan,” says AI is already making real estate less about access to information and more about the agent building deeper relationships. He predicts a mindset shift is on its way as agents leverage AI and at the same time are forced to find new ways to differentiate themselves in an increasingly competitive market. “If we are all using AI and have the same level of expertise, who wins? It’s the game of attention,” said Serhant at the CNBC Evolve AI Opportunity Summit in New York City this past week. 

Buying a home is the single largest investment most Americans make in their lives, which makes real estate a business where greater success can be achieved with greater personal touch on the part of the agent. Serhant says the big advantage he sees in use of AI is having more time for the real estate agent to provide personalized attention to their clients. 

“The product in sales is no longer just the skill set,” Serhant said. “It is the attention to the skill set.”

His own company, Serhant, has developed a service called “Simple” for sales automation to handle daily tasks in customer relationship management, which typically consumes over 60% of agents’ time. 

AI tools are being used to streamline lead generation, automate marketing campaigns, and provide predictive analytics to identify opportunities, but that is not replacing the critical role of the agent in providing top performance. Serhant says AI won’t virtualize relationships, but for the real estate agents who embrace the AI revolution — which he says is a necessary move to make — it will strengthen their relationships.

Making access to real-time market data and sales insights less onerous may allow agents from small boutique firms to compete on a more equal footing with larger real estate corporations. “There is a trust factor in sales. … It isn’t about who is the largest, but who is the most empowered,” Serhant said. 

That also stands to benefit homebuyers and sellers, Serhant said, with a wider selection of suitable agents with enhanced personalized services and greater focus on the client. 

The real estate industry is still in the initial stages of adopting AI and understanding remains low among real estate professionals, but the interest is there. Generative AI was ranked among the top three technologies expected to have the greatest impact on real estate over the next three years by investors, developers, and corporate occupiers, according to JLL Technologies’ 2023 Global Real Estate Technology Survey. But the survey also finds that real estate professionals have very low understanding of AI compared to other technologies.

According to Serhant, agents who understand how AI can empower their business are going to have huge opportunities over the next 20 years to take significant market share. 

No tech innovation comes without risks, and wire fraud remains a major challenge for the real estate industry, which will be exacerbated by AI. The FBI reported a big year-over-year increase in wire fraud cybercrime losses in 2023, driven significantly by real estate transactions. Improved artificial intelligence technology is facilitating real estate scammers. 

Fraud can’t be ignored, said Serhant, but he believes real estate will adapt to the risks inherent in new technology in the same way the business has in the past, such as with digital listings. “With every advancement in technology, greater rules get put into place that can help stop those fakes,” he said. 

Matt Mullenweg, who turned 40 in January, has now spent more than half his life working on WordPress. He’s never had such an insane two weeks.

WordPress, best known as a leading content management system, has hundreds of millions of sites currently using its templates, tools and plugins. But the WordPress universe is a complicated mishmash of open-source products, nonprofits, for-profit companies, trademarks and licenses.

The typically quiet but extremely important part of the internet — WordPress powers roughly 40% of all websites — has suddenly emerged as a major source of tech industry drama, threatening to upend an ecosystem that’s long been viewed, from the outside at least, as collegial, thanks to its longevity and the various fun-loving camps and learning sessions it hosts every year.

While WordPress’ technology is open source, meaning anyone can install it and use it for free, Mullenweg is also founder and CEO of Automattic, a venture-backed startup valued at $7.5 billion, as of 2021. WordPress.com is Automattic’s central businesses, and individuals and companies pay anywhere from $4 a month to over $25,000 a year for services like ad products, security, customer support and inventory management.

The saga that burst into public view in September featured the normally mild-mannered Mullenweg as its central character in a battle with WP Engine, one of the leading providers of WordPress hosting. Silicon Valley private equity firm Silver Lake bought a majority stake in WP Engine in 2018, investing $250 million and obtaining three board seats.

“I’ve been doing WordPress for 21 years, I have good relationships with every other company in the world,” Mullenweg said in an interview this week with CNBC.

WP Engine’s offense, according to Mullenweg and a cease-and-desist letter his attorneys sent to the company on Sept. 23, revolves around years of trademark violations and WP Engine’s claim that it’s bringing “WordPress to the masses.”

“We at Automattic have been attempting to make a licensing deal with them for a very long time, and all they have done is string us along,” Mullenweg wrote in a Sept. 26 post on his personal website, ma.tt. “Finally, I drew a line in the sand, which they have now leapt over.”

Since then, the matter has escalated on an almost daily basis. WordPress took the drastic step of banning WP Engine from using the WordPress resources necessary to serve its customers, which preceded a lawsuit filed on Wednesday by WP Engine against Mullenweg and Automattic. Mullenweg then put out another post, calling WP Engine’s suit “meritless,” and announcing that he’d hired Neal Katyal, former U.S. acting solicitor general, for legal defense.

Tomasz Tunguz, a venture capitalist and founder of Theory Ventures, says the conflict speaks to the perpetual challenge of open-source software.

“What are the legitimate ways of monetizing open source and does the commercial entity created by the authors — how much control should they have with the commercialization efforts?” Tunguz said. In this case, “hundreds of millions in revenue is at stake between the two,” he added.

But to the outside world, it all felt very sudden. Mullenweg first referenced the matter in public on Sept. 17, in a blog post ahead of WordCamp, the largest annual gathering in the U.S. of WordPress users. The four-day event took place in Portland, Oregon, beginning on Sept. 17.

In the post, Mullenweg criticized WP Engine for not contributing enough back to the WordPress ecosystem. He said that Automattic contributed 3,786 hours per week to WordPress.org, (“not even counting me!”) compared to 47 hours for WP Engine.

For businesses and developers considering who they want to support, Mullenweg had this message: “Silver Lake doesn’t give a dang about your Open Source ideals. It just wants a return on capital.”

A Silver Lake spokesperson said WP Engine was handling all inquiries. A WP Engine representative referred to the company’s complaint against Automattic and Mullenweg, filed on Oct. 2. The spokesperson highlighted the introduction of the complaint.

“This is a case about abuse of power, extortion, and greed,” the filing begins. “The misconduct at issue here is all the more shocking because it occurred in an unexpected place — the WordPress open source software community built on promises of the freedom to build, run, change, and redistribute without barriers or constraints, for all. Those promises were not kept, and that community was betrayed, by the wrongful acts of a few—[Matt Mullenweg and Automattic]—to the detriment of the many, including WPE.”

On Sept. 20, three days after Mullenweg’s initial post, the WordPress founder showed he wouldn’t be backing down.

In his keynote, at an event that attracted an estimated 1,500 WordPress fanatics, Mullenweg warned the audience upfront that it “might be one of my spiciest WordCamp presentations ever.” After reading out his prior blog post, Mullenweg took swipes at Silver Lake, even naming a partner at the firm, Lee Wittlinger, as the man behind WP Engine, comparing him to a “schoolyard bully.”

Prior to taking questions, Mullenweg said of WP Engine’s presence at WordCamp, “they’re not going to be at future ones, I don’t think.”

He wasn’t done.

The next day, in a post titled, “WP Engine is not WordPress,” Mullenweg wrote that even his mother didn’t know the difference, and he said WP Engine is “profiting off of the confusion” and “needs a trademark license to continue their business.”

His mom wasn’t the only one confused.

Bob Perkowitz, president of environmental nonprofit ecoAmerica, told CNBC that he’s known Mullenweg for 16 years and is even an investor in Automattic. For a number of his organizational and personal websites, Perkowitz said he’s long been a WP Engine customer. Tuning in remotely, he heard Mullenweg’s WordCamp presentation.

“I always thought that was part of WordPress,” Perkowitz told CNBC in an interview, referring to WP Engine. “They’re misleading, and they don’t contribute to the community.”

Perkowitz said he’s having his website administrator migrate all of the websites to different hosting companies.

Following Mullenweg’s presentation, WP Engine sent Automattic’s legal chief a cease-and-desist letter on Sept. 23, due to what the company called Mullenweg’s self-described “scorched earth nuclear approach.” The letter said Mullenweg had demanded a payout of a “very large sum of money” before his WordCamp keynote, and WP Engine didn’t pay up.

The letter said Mullenweg’s “false, misleading, and disparaging statements are legally actionable.”

Two days later, Mullenweg wrote on the WordPress.org site that WP Engine had been banned, meaning it “no longer has free access to WordPress.org’s resources.” Mullenweg encouraged WP Engine’s thousands of customers to contact the company “and ask them to fix it.”

WordPress then temporarily unblocked WP Engine and gave it until Oct. 1 to agree to terms of a licensing agreement, which Mullenweg made public. The crux of the deal is that WP Engine would agree to a royalty fee of 8% of monthly revenue to Automattic or commit 8% of revenue “in the form of salaries of WP Engine employees” working on WordPress features for WordPress.org.

No deal was made. The ban went into effect Oct. 1.

To the universe of WP Engine customers, Mullenweg’s actions were harsh and clumsy. Mullenweg says that what his critics don’t understand is how long he’s been trying to come to a deal.

“They’ve been delaying forever,” Mullenweg told CNBC. He decided, “I’m going to finally start talking about the evil stuff you’re doing unless you talk to me,” he said.

WATCH: An open-source future

In 2012, Amazon founder Jeff Bezos was asked by TV host Charlie Rose whether his e-commerce company would ever venture into brick-and-mortar stores. Bezos said shoppers were well-served by existing physical retailers and that Amazon wasn’t interested in launching a “me-too” product.

“We want to do something that’s uniquely Amazon,” Bezos said. “If we can find that idea, and we haven’t found it yet, but if we can find that idea, we would love to open physical stores.”

Six years later, Amazon landed on a revolutionary retail concept that it hoped would transform how people shop in brick-and-mortar stores. The company launched its first Amazon Go convenience store featuring a new kind of technology, called “Just Walk Out.”

In practice, customers would be able to load up their cart and exit the store without standing in a checkout line. Amazon soon brought cashierless checkout to its Fresh supermarkets and two Whole Foods locations. In 2020, the company began licensing Just Walk Out technology to third parties, signing on retailers in stadiums, airports and hospitals. 

But the company has since taken a sideways turn.

In April, Amazon announced it was removing cashierless checkout from its U.S. Fresh stores and Whole Foods locations, a move that coincided with CEO Andy Jassy’s efforts to rein in costs to meet rapidly changing macro conditions.

As part of that effort, Amazon also reevaluated its retail plans. The company discontinued some of its retail chains, closed eight Amazon Go stores, and hit pause on new Fresh store openings. It’s launched a handful of new Fresh stores in recent months.

In place of Just Walk Out, which typically requires ceiling-mounted cameras, shelf sensors and gated entry points, Amazon Fresh stores and Whole Foods supermarkets will feature Dash Carts. The carts track and tally up items as shoppers place them in bags, enabling people to skip the checkout line. Amazon continues to use Just Walk Out in its grab-and-go marts and UK Fresh stores. 

The main challenge for Amazon and other startups working on autonomous checkout is the need to scale it to enough locations and retail categories that it becomes a natural part of in-store shopping, said Jordan Berke, founder and CEO of retail consulting firm Tomorrow.

“Until that’s the case, it’s an uphill battle,” Berke said. “These technology providers, Amazon included, are going to have to subsidize and continue to invest to train the retailer, train the consumer, train the market, that this is a mainstream experience that we can all trust and not need to think about as we walk in and out of a store.”

At one point Amazon saw Just Walk Out becoming a core part of the experience of shopping in its physical stores. The company in 2018 planned to open as many as 3,000 Amazon Go stores within a few years, Bloomberg reported at the time, citing people familiar with the plans. 

Bezos had assigned top talent from across the company, including a longtime Amazon executive who built the original Kindle e-reader, to work on cashierless checkout. The technology was considered a key ingredient in Amazon’s long-running pursuit to become a giant in the $1.6 trillion U.S. grocery market. 

When Amazon debuted Just Walk Out in January 2018, it was a “quake moment” for the industry, causing Walmart and “almost every other retailer” to leap into action and consider developing their own vision-based checkout systems, said Berke, who previously led Walmart’s e-commerce business in China.

Amazon and other retailers soon learned that automating the checkout process is “the hardest problem to solve,” Berke said. Cashierless checkout systems require a hefty upfront investment to blanket a store with overhead cameras and hire staff to label and review shopping data.   

“It meant a store had to dramatically increase its sales in order to pay off that investment,” Berke said. 

Walmart teams found as part of a cost analysis in early 2019 that it would run a retailer between $10 million and $15 million to create a similar computer vision-based checkout system for a 40,000 square foot supermarket, Berke said.

Just Walk Out became an expensive project for Amazon, too. In 2019 and 2020, the company shelled out roughly $1 billion per year, including research and development costs and capital expenditures, to “learn and scale” the technology, Berke said. He said those figures are based on discussions with a former Just Walk Out executive who left Amazon to join Walmart. Amazon didn’t provide a comment on the figures.

Many retailers have since moved on from computer vision in favor of simpler methods like mobile checkout through an app, Berke said. 

Walmart uses a self-checkout app in its stores, while supermarket chain Kroger has been experimenting with Instacart’s Caper connected shopping carts at some locations. Retailers like Target and Dollar General are rethinking self-checkout entirely due to concerns of rising theft in their stores, and have added more traditional checkout lanes.

While it’s no longer featuring Just Walk Out as prominently in its own stores, Amazon says it has inked deals with a growing list of customers. More than 200 third-party stores have paid Amazon to install the cashierless system. The company expects to double the number of third-party Just Walk Out stores this year, Jon Jenkins, who previously served as vice president of Amazon’s Just Walk Out technology, said in a recent interview. Jenkins departed Amazon in late September to become technology chief of electric bike and scooter startup Lime, according to his LinkedIn page.

Jenkins disputed characterizations that Amazon’s phasing out of Just Walk Out from its own supermarkets represents a setback or a sign of the technology’s demise. He said Amazon proved through tests in its own grocery stores that the technology is “incredibly capable,” noting it deployed the system in large supermarkets with “600 people in the store at the same time.”

Other startups such as AiFi and Grabango have developed autonomous systems for supermarkets, convenience stores and other retailers, but widespread adoption has been slow, as the technology remains costly and challenging to operate in large store formats. 

The testing lab, which it calls “beverage base camp,” is located in Amazon’s Seattle headquarters. It has faux gates that mimic the experience of scanning your smartphone or credit card to enter a Just Walk Out store. The walls are lined with shelves of typical grab-and-go products like Milky Way bars, pita chips and gum, and there are coolers stocked with Coke cans and other beverages.

Amazon sets up Just Walk Out stores by first creating a 3D scan using LiDAR machines or iPads that help it determine where to place cameras so they have the clearest view.

“The goal is to have the fewest number of cameras possible, so we optimize the camera placement so that we can get enough coverage on each fixture to see what is happening in the store,” Jenkins said.

The system determines what shoppers purchased using several inputs, including the 3D scans, a catalog of product images, the video footage, and weight sensors on the shelves. Amazon in July updated the AI system behind its Just Walk Out technology to handle all the inputs in a store simultaneously.

The new “multi-modal” system can generate receipts faster by more accurately predicting which items shoppers have picked up and put back on shelves. The company said these changes should make it “faster, easier to deploy and more efficient” for retailers who install the system in their stores.

Amazon’s “primary focus” is selling the technology to third-party businesses and deploying it in small to medium-sized store formats, where the system “tends to generate a little better [return on investment],” Jenkins said. Earlier this year, Amazon also began selling its connected grocery carts to third parties. 

At one Just Walk Out store, inside Seattle’s Lumen Field, home to the NFL’s Seahawks, the company said it boosted sales by 112% last season, with 85% more transactions during the course of a game.

“It was awesome that we had our own stores as the laboratory to sort of build and launch this,” Jenkins said. “But over time, like many things at Amazon, the success of this project and the product will depend on third parties adopting the technology. There will always be more third-party stores in the world than there will be first-party stores.”

Amazon has used a similar playbook in in the past. Amazon Web Services, the company’s wildly successful cloud-computing unit, originated from the company’s need for IT infrastructure to support its fast-growing online retail business. And in recent years, Amazon has leveraged its logistics and fulfillment network to provide services for third parties. 

With Just Walk Out, Amazon faces the challenge of convincing retailers that they can trust one of their biggest competitors with handling valuable shopper data. 

In 2022, Amazon moved the team behind Just Walk Out from its retail organization to AWS. It marked one of the clearest signals yet that Amazon is serious about selling the technology to other retailers, and could help ease some fears among rivals. 

“They’re clearly in sales mode,” said Sucharita Kodali, retail analyst at Forrester Research, in an interview. 

Kodali said Amazon still has a “long way to go” before the technology is ubiquitous. Getting there will require patience from Amazon investors and data that shows both retailers and shoppers are embracing the technology. 

“There’s almost a viral effect that will occur over time,” she said. “It’s just going to take a long time because you’ve got to cycle through everybody in America having this experience, and for the most part, it’s just Amazon fighting this fight right now.”

Watch the video for a behind-the-scenes look at Just Walk Out: https://www.cnbc.com/video/2024/10/02/amazon-is-making-a-big-bet-on-selling-cashierless-tech-to-outsiders.html