Is AI in Proptech Overhyped?

There is no doubt that we are in the age of artificial intelligence, but whether it will deliver on its hype for real estate is still too early to determine, according to proptech entrepreneurs.

Proptech founders and CEOs are in agreement that AI is here to stay, but will require real estate companies to structure their data, embed the technology into their workflows and more, before the return on investment (ROI) those companies demand will be produced.

“The short answer is that it is overhyped on how it was sold to proptech,” said Vijay Anand, vice president of AI at MRI Software. “And I believe proptech is not the only industry. Some McKinsey studies show that the utilization ROI has been 10 to 15 percent. So, in that sense, the implementation and delivery of AI has been hyped up, and that’s what we are seeing right now. Not necessarily that AI is overhyped, but more the implementation and how companies in domain-specific, workflow-embedded systems are not seeing the benefits that they were expecting.”

Despite such underperformance, MRI remains bullish on AI’s potential in real estate. The Solon, Ohio-based software giant began a major push as a data platform three years ago and it’s begun to pay dividends on the company’s AI investments, Anand said.

“Our investment actually is increasing, not just with what we are doing with our overall data strategy, which we have started to accelerate, but we are also hiring more teams to build more AI capabilities,” he said. “In fact, I spun up a brand-new AI labs team in Q3 2025 and now I’m actually increasing that headcount. I still have an AI team, but now I have a labs team that’s brand new for investment in AI resources.”

The Al lab mission is threefold.

“One is looking at our customers and our own product workflows to see where we can enable agentic AI across our platforms,” Anand said. “Two, to build out. I mean the speed with which this innovation is happening in AI is tremendous, so we are not able to keep up with our core product teams that are supporting our existing product. The labs team is to accelerate any new tech that literally comes up with AI to see which ones are giving us the biggest bang.”

Additionally, the labs team evaluates MRI’s AI acquisition strategy — whether it should buy a company more grounded in AI, or how MRI plans out its investments with AI.

The way in which AI is being applied in proptech and real estate is a complex question not open to easy answers, said L.D. Salmanson, CEO at Cherre, a proptech data management company.

“I think of this as levels of effect,” Salmanson said. “First of all, there’s an effect that all the firms that service the industry are now using AI tools to pump out features, and they’re all providing features at 30 to 50 percent faster. Every single piece of software in the industry is getting better much faster right now. So the industry is benefiting from that. And that has kind of a network effect. All the firms are putting our future together. They’re all demanding from each other. It’s good for the market.

“I think the second place you’re going to see it, probably in the very immediate future, is you’re going to see a lot of compliance stuff in the tools that are being rolled out. So all these companies are rolling out AI stuff. Dealpath has stuff around ingesting the source document, and VTS has some stuff. They’re all being offered as features that otherwise the company would have to build on their own.”

Mike Sroka, CEO and co-founder of Dealpath, recognizes that there is some concern about AI hype in the industry. 

“Yes, and frankly, there should be,” Sroka said in an email. “AI is incredibly powerful, but in proptech it’s often being marketed ahead of the underlying data and workflows required to support it. Real estate is still a fragmented, relationship-driven industry with inconsistent data, so when AI is positioned as an ‘easy button, magic layer’ rather than an outcome of strong digital infrastructure, expectations get ahead of reality. The most credible proptech companies today are less focused on flashy AI demos and more focused on quietly rebuilding the plumbing of how deals, data and decisions actually move through organizations.

“They are anchoring AI to concrete workflows. Instead of buying AI in isolation, firms are embedding it into deal screening, underwriting, document processing and portfolio review — places where time, accuracy and scale truly matter. They’re also insisting on human-in-the-loop models, auditability and governance. In real estate, AI doesn’t replace judgment, it augments it. The firms doing this well are treating AI as operational leverage, not a branding exercise.”

Ultimately, most institutional real estate firms are actually quite pragmatic, Sroka said. “They’re looking for measurable ROI, not science projects. That’s a healthy shift for the industry.”

Others aren’t so convinced of AI’s power, at least for now.

“While AI is currently overhyped and several companies are leveraging it as a silver bullet for proptech, it should be better understood as a practical software evolution that must deliver measurable ROI to survive,” wrote Will Mitchell, CEO at Austin-based construction workflow platform Rabbet, in an email. “The industry is currently facing a reckoning where unrealistic 2021-era valuations are colliding with a failure to meet AI-driven growth expectations, likely leading to increased acquisitions and cash shortages. Traditional real estate firms remain cautious of the hype due to general industry-specing concerns, yet they continue to invest as they are afraid to miss out on the hype. Ultimately, AI cannot solve the industry’s core data-sharing problems until companies prioritize structured data and realistic value-add over marketing claims.”

Mitchell added that AI isn’t going to be “the game-changer” people assume it might be. 

“It’ll be the next evolution of software delivering value, not a complete revolution,” he said. “This problem is running headlong into another problem: Several startups raised too much money at too high of a valuation in 2021 and 2022. The combination of this is investor push for an AI silver bullet, and unrealistic valuation demands will cause a lot of proptech companies to continue to run out of cash or get acquired.

“I do think most people are still more worried about missing out than the over-hype. The penalty for missing a ‘winner’ is greater than investing in a loser. Therein, funding will still flow to good pitches.”

Some proptech companies understandably view AI and its uses through their own narrow service provider focus.

For Carson Berish, senior vice president of product management at property maintenance company Lessen, that means delivering his firm’s software products to customers in a way that makes their work lifecycle run as efficiently as possible.

“For us, we have seen measurable outcomes and improvements in these areas,” said Berish.

“On the work order intake piece, we see 20-plus percent improvement in the accuracy of the work orders upon the initial intake, and that has resulted in a metric that we call first-time fix. So, when a vendor goes on site, they’re able to fix it without having to go back. They know what they’re getting into when they’re going on site.” 

There’s a flipside to that that’s also beneficial, Berish said. 

“On the proposal piece, the rejections of proposals for us has gone down by 40 percent, which is awesome,” he said. “This is an evolution of the technology in general, but there is some skepticism as far as going into full-blown automation. There’s trust that you have to build, whether it’s through customers or even internal operations or vendors. So we’ve done a little bit of applying it with a human-in-the-loop model to be able to ultimately make those decisions.”

Rowland Hobbs, CEO and co-founder of Dallas-based Stake, which gives renters an opportunity to receive cash-back rewards for paying their rent, sees a gap between what AI can provide landlords and renters.

Hobbs emphasized that while AI tools can help renters find better deals, they are not yet customer-obsessed enough to tackle the core issue of affordability. He noted that Stake uses AI for lead generation and ongoing renter interaction, and that AI adoption is growing in the industry. It still has room for improvement in meeting renters’ needs, however.

“I think a lot has been focused toward the needs of the owner and operator,” said Hobbs. “We can make workflows a lot easier. And I think in that area, obviously, it’s done a lot of good. There’s a lot of things that are coming out that are beneficial. But, I think if you were to turn around and ask renters what they’re experiencing, they would still say that they’re experiencing the same affordability challenges. I’m not sure if AI has made a dent in the top issues that the renters care about.”

A proptech company that has aggressively pivoted its work to AI is Willow, a Sydney, Australia-based global firm that deploys digital twins for the built world to collect, organize and analyze data.

Willow’s AI co-pilot technology integrates real-time data and legacy information to improve maintenance and operational efficiency, said Joshua Ridley, chief growth officer and co-founder of the company. Willow’s AI initiatives are backed by Microsoft and integrated with Willow’s digital twin technology to gain traction in sectors like health care and aviation.

“I’m sensing just incredible enthusiasm from all our customers,” said Ridley. “When you show them that they can save 7 to 15 percent on utility bills, and that’s verified through their customers, peers and other customers, and you can reduce costs on the utility side, they’re interested. Then they say, ‘Wow, all right, if I can get more productivity from my maintenance workers and increase the uptime of my refrigeration, or a research facility, then I’m getting better use of that building.’ That’s a big win for them.”

While not abandoning its roots as a digital twinning company, Willow is now focused “100 percent” on delivering AI solutions for its customers, Ridley said.

“What’s happening with most of our customers is that they are engaging with Microsoft on an enterprise level,” he explained. “From the CEO down we must be an AI-focused organization. Whether it’s for McKesson, the Mayo Clinic, or UT Southwestern in the health world, as well as DFW airport or any other airport, we’re seeing mandates coming down from the leadership to embed AI into the enterprise. As Willow is the co-pilot view for the knowledge worker, it is also the operational AI for the front-line worker. 

“So we are all in on AI as a business. We are very focused on helping customers extend the AI initiatives that they’ve started, say for the knowledge worker inside their enterprise, out to the front-line worker.”

The proptech consulting world is also aware of the potential for overhyping AI. Generally, it views the technology as early in development, but still wildly promising.

“I will tell you that representative buyers and users in all categories are largely bearish and skeptical,” said Joe Aamidor, managing director of Boulder, Colo.-based Aamidor Consulting, an operational commercial real estate advisory firm. “And, if I had to summarize, there seems to be some vendors who just put AI in the product name or the product tagline, and it’s not any change in the product. Just, ‘We call it AI, because everyone’s calling it AI, so we have to call our product AI.’”

The high cost and time required to prepare data for AI can dilute its return on investment, Aamidor said, emphasizing that successful AI adoption should focus on final outcomes rather than the technology itself.

“I think there’s a little bit more just bearishness on building operations, completely separate from bullish or bearish on AI,” he said. “And that stems from the fact that there just haven’t been nearly as many successful exits or wins in that market over the past, let’s say, eight to 10 years. As you might expect, the signal VCs are using today is to say, ‘I haven’t seen a lot of success stories out there, and AI doesn’t change that.’”

Jeff Schacher, chief AI officer at MetaProp Labs, a Manhattan-based proptech AI consulting spinoff from early-stage venture capital firm MetaProp, is an unsurprisingly strong believer in the tech’s impact.

“I think we’ve seen the companies that have invested heavily in it — whether it’s JLL or CBRE — they’re seeing ROI payback,” said Schacher. “Big companies were thinking two to three years, and now it’s down to 18 months, some within a year. So the big companies that have these teams, you know they’re not hype.”

Schacher doesn’t wear rose-colored glasses, though, when it comes to assessing AI in proptech.

“Are there roadblocks?” he said. “Yes, this is a huge job for me. AI needs to be able to access the same data and the same systems that my employees do. So that’s a big, big roadblock. People are the other huge, huge roadblock. From a cultural perspective, there’s a lot of fear of this new skill. How can I delegate somebody else to do some work for me, which is inherently scary.”

Philip Russo can be reached at prusso@commercialobserver.com.

Correction: This article was updated with the correct headquarters city for Stake.