Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Prospective home buyers and renters should be cautious of AI-powered search tools that could force them to pay higher prices or even discriminate against them, a government watchdog recently said.
Federal agencies have examined AI’s usage in the home buying and mortgage application process, and in some cases have taken legal action against organizations that violate fair housing policies, the Government Accountability Office said in a Dec. 1 report on its website.
Don’t Miss:
At the same time, the Federal Housing Finance Agency and the Department of Housing and Urban Development should provide companies with written guidelines to ensure AI tools are used properly throughout the buying or renting process, the GAO said in its report.
“We think more could be done to oversee such technology and prevent its potential misuse,” the agency said.
Trending: From Moxy Hotels to $12B in Real Estate — The Firm Behind NYC’s Trendiest Properties Is Letting Individual Investors In.
Artificial intelligence can be found in just about every step of the home buying process, from searching for available properties to mortgage underwriting. While AI can help speed things up, it also has the potential to make it harder for some people to find or buy a home, the GAO said.
“For example, there would be a problem if AI technology didn’t recognize problematic search terms users may input such as terms related to their race, ethnicity, gender, age, or other protected classes,” the report said. “This could result in discrimination that may be illegal under fair housing laws.”
Additionally, AI-assisted mortgage underwriting could “perpetuate biases in mortgage lending” and make it more difficult for home buyers to understand why their loan application was denied, according to the GAO.
See Also: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100.
Using AI to set rents could cause some tenants to pay more than they should due to its inability to factor in things like building condition and amenities, the GAO said in its report.
There have already been cases of AI increasing rental prices on tenants. Greystar, the largest landlord in the U.S., agreed to stop using algorithmic rent-setting after it hiked prices for thousands of tenants, according to the U.S. Department of Justice.