Contract Data Extraction in Real Estate: A Guide to Using OCR and AI

June 21, 2024
10 min

Is your critical data buried in contract spreadsheets, PDFs, Word docs, so-and-so? It’s time to stop operating on stale information, and switch to modern technology.

Imagine: you have a pile of contracts to abstract, which will cost quite a penny and take a week to complete. With contract data extraction powered by OCR and AI, you can automatically analyze your contracts, getting the key points and terms in mere minutes, saving yourself from sticker shock.

From renewal dates, parties involved, to pricing and fees, every important detail is systematically extracted. This paves the way for better contract management, risk mitigation, and informed decision-making for both digital files and paper documents.

In this article, we explore how OCR contract data extraction automates manual work and optimizes the key aspects of real estate contract management.

Download AI in Real Estate E-Book [PDF]

Get a free AI in Real Estate E-Book copy to discover how to enhance your real estate operations with AI and ML technologies.

Full Name
Work Email

What is OCR in Contract Management?

OCR (Optical Character Recognition) scans paper and digital contracts and structures extracted data into a machine-readable text format.

Why Is OCR Contract Extraction Important for Businesses

A recent study found that issues with document management accounted for 21.3% of all productivity loss in the workplace. OCR easily converts images, scans, and other document formats into data that is processed by a computer in just a few clicks.

Additionally, it’s common for 7.5% of contracts to be lost and 3% to remain misfiled. With advanced OCR contract extraction software, brokers and managers can store all necessary contracts in a server minimizing chances of human error.

 

5 Use Cases for OCR Contract Data Extraction in Commercial Real Estate

OCR contract data extraction is a cutting-edge solution for the professionals in the real estate industry. Let’s look at real examples where OCR contract software offers swift and accurate solutions.

Lease Agreements

Commercial real estate agents and property managers often deal with many lease agreements for office spaces, retail outlets, and industrial facilities. OCR contract data extraction simplifies the extraction of key terms:

  • Lease duration;
  • Rental rates;
  • Renewal options;
  • Maintenance responsibilities.

This enables agents and managers to quickly analyze lease agreements, identify critical clauses, and track important dates for proactive lease management.

OCR for lease agreements

Contract Summary AI

Property Acquisitions

Investors and developers acquiring commercial properties must review numerous legal documents, including purchase agreements, title deeds, and property surveys. OCR contract tool optimizes the extraction of key data:

  • Property addresses;
  • Purchase prices;
  • Closing dates;
  • Seller disclosures.

This automation speeds up due diligence, mitigates risks, and supports informed investment decisions.

Construction and Development Contracts

Contractors and construction managers involved in real estate projects rely on various contracts. OCR contract software enhances the extraction of important contract details:

  • Project timelines;
  • Milestone payments;
  • Scope of work;
  • Insurance requirements.

This allows contractors to efficiently manage project finances, track progress, and ensure compliance with contractual obligations.

Brokerage Agreements

Real estate brokerage firms and individual brokers need to manage brokerage agreements effectively. OCR contract data extraction helps by retrieving key terms:

  • Commission rates;
  • Listing periods;
  • Exclusive rights.

This streamlines the brokerage process, enhances transparency, and ensures compliance with industry regulations.

Sales and Listing Agreements

Commercial property owners and listing agents use sales and listing agreements for property sales and leasing transactions. OCR contract software automates the extraction of main terms:

  • Property descriptions;
  • Sales prices;
  • Commission rates;
  • Listing durations.

This enables efficient management of listings, effective property marketing, and negotiation of favorable terms with buyers or tenants.

As you can see, OCR contract data extraction automates tedious tasks and speeds up manual data entry. The perfect final addition is to integrate OCR contract findings with your CRM.

How does OCR Contract Data Extraction work?

Here are step-by-step instructions that explain the work of OCR contract data extraction.

Step #1: Document Upload

To start the OCR contract data extraction, one must upload a document or an image. Note that the decent quality of the file is important. OCR usually pre-processes files and increases recognition accuracy.

The OCR contract extraction software retrieves data from various types of commercial real estate documents, including:

  • Lease agreements: Property managers and landlords can benefit from OCR contract data extraction when tracking lease details, such as tenant names, rental amounts, lease terms, and clauses.
  • Purchase contracts: To be in the loop on the essential purchase information from prices, payment term, to closing dates and contingencies, realtors and agents can also retrieve data via OCR.
  • Management agreements: Property management companies with the help of OCR can access details on service scopes, fees, responsibilities, and expectations.
  • Listing agreements: The OCR contract data extraction helps brokers and agents to extract information property listings and marketing plans. Property sellers and realtors can get data on commission rates, marketing strategies, and listing durations.
  • Construction contracts: In commercial real estate development, OCR can extract crucial data from construction agreements, such as the scope of work, timelines, costs, and quality standards. This allows developers and contractors to efficiently track project details and ensure they adhere to the agreed terms. By using OCR, they can maintain accurate records and manage construction projects more effectively.
  • Brokerage agreements: Clear and organized contract terms are essential for real estate brokerage firms and individual brokers to effectively manage their relationships and transactions. Brokers rely on contract details such as commission rates and the terms of the brokerage relationship to ensure transparency and clarity in their professional dealings. OCR contract extraction organizes key data efficiently.
  • Development agreements: If you are managing large construction or infrastructure projects that are developed in phases over several years, OCR contract extraction organizes the workflow. For example, OCR identifies key milestones and deadlines to track project cycles. It can also extract critical financial terms, such as payment schedules and cost-sharing arrangements for accurate budgeting and financial planning.

Step #2: OCR Preprocessing

In the preprocessing stage of OCR contract data extraction, the focus is on preparing documents for accurate data extraction. Please note that initially, physical contracts are scanned into high-quality digital formats.

The OCR preprocessing steps involve:

  • Enhancing image quality: Contracts must be readable. At this stage the clarity is improved, and uneven lighting is fixed. This enhances the distinction between the text and its background, making it easier to discern.
  • Standardizing font sizes: Creating consistency in font sizes throughout the document to facilitate accurate character recognition by the OCR contract extraction software.
  • Removing noise: Eliminating any visual distortions or noise for clarity.

Once the image is preprocessed and cleaned, OCR contract data extraction is applied to identify relevant document sections, from commission rates and client details to contractual terms.

The OCR contract extraction keeps files structured. The technology dissects the document into different parts to locate important characters or identifiers, ensuring accurate text recognition.

Performing these preprocessing steps, OCR contract data extraction effectively prepares the document for the subsequent phase of data extraction. This makes it easier for real estate brokers and firms to smoothly retrieve crucial contract information.

Want to Integrate AI into Your Existing Software?

See how AscendixTech can help you optimize your operations and improve your workflow with the help of AI.

Step #3: Character Recognition

Once the documents are prepared, OCR contract data extraction compares each part of the text to a database of known characters. It figures out which letter or number each part represents.

This step is like matching puzzle pieces – the software looks at the shapes of the letters and numbers to understand them. It helps to recognize different writing styles, like fancy fonts or handwritten notes, and pick out important details like dates, numbers, and amounts accurately.

In general, OCR contract data extraction can extract the following data:

  • Names
  • Dates
  • Risk language
  • Payment amount
  • Contact information

Step #4: Identifying Uncertain Segments

During the OCR contract data extraction process, it’s crucial to identify uncertain elements for maintaining data accuracy.

AI-powered OCR contract extraction tools excel at identifying ambiguous elements in analyzed documents, such as:

  • Unclear handwriting: Handwritten notes or signatures that are difficult to read.
  • Ink stains: Marks or smudges that obscure text.
  • Poorly scanned sections: Blurred or distorted text from low-quality scans.
  • Watermarks: Translucent logos or stamps that interfere with text recognition.
  • Faded text: Older documents where the ink has lit over time.

When the OCR contract extraction system detects these uncertainties, it alerts the user and highlights the areas that need validation.

In real estate contracts, where accuracy is crucial due to legal and financial implications, this approach greatly enhances reliability. By addressing potential inconsistencies in real-time, OCR contract extraction tools optimize the data entry process and prevent costly mistakes, ensuring that all contractual information is precise and trustworthy.

Step #5: Postprocessing

In the postprocessing stage of OCR contract data extraction, the following key steps are performed to ensure accuracy and usability of digitized documents:

  • Error correction: Fixes any mistakes made during earlier steps, like when the software misidentifies characters or messes up the formatting.
  • Contextual analysis: Checks the text in the context of the document to understand the meaning of words and phrases better.
  • Character assembly: Puts together the characters that were recognized to form words and sentences, making the document look like it did originally.

Once OCR contract extraction recognizes each character, it turns them into text that computers can understand. This makes it simple to store and manage the documents. In practical terms, if your company’s workflow mandates contract approval checks, the system quickly identifies who needs to receive these documents and where they should go. This makes it easy to find and analyze the documents when needed.

In essence, postprocessing ensures that the digitized contract documents are accurate, well-organized, and easy to access for efficient management and analysis.

Build a Custom Contract AI Tool for Real Estate with Ascendix

We’ve been in proptech development for 2 decades. Leverage our expertise to unlock AI opportunities and streamline your daily contract management.

Step #6: Data Export into CRM

At the final stage of OCR contract data extraction, you can add the retrieved data directly into your CRM. Additionally, you can convert extracted data into downloadable formats like PDF or XLS for future use. The Ascendix team can talk the technical talk and show you how OCR contract data extraction automates the manual workflow.

Book your free consultation today and explore how we can automate your contract data entry processes together.

AI Data Entry Tool by Ascendix

AI Data Entry Tool by Ascendix

OCR Contract Data Entry vs Manual Data Entry

OCR contract data entry and manual data entry are two methods utilized for processing critical contract data in real estate. While the latter has been the traditional approach, OCR, an advanced competitor, offers benefits such as improved accuracy, faster processing, and cost-effectiveness. Below, we’ll compare OCR contract data extraction and manual data entry, focusing on how each method impacts brokers, investors, and realtors.

AspectOCR Contract Data EntryManual Data Entry
AccuracyAdvanced algorithms that interpret text with fewer errors compared to human data entry, which is prone to mistakes.Relies on human input, making it susceptible to errors due to typing or inputting inaccuracies.
SpeedOCR can process large volumes of data quickly, processing thousands of pages in minutes, whereas manual data entry can be slow and time-consuming, taking days or weeks to complete.Manual data entry is limited by the speed at which the person can input data, making it slower compared to OCR, especially for processing large volumes of data.
CostWhile OCR requires an initial investment in software and hardware, the ongoing costs are minimal.Manual data entry can incur higher costs due to labor expenses, training, and potential errors, making it less cost-effective compared to OCR in the long run.

OCR’s smart technology guarantees accurate results, speedy data processing, and long-term cost savings, making it the go-to option for reliable contract data management that’s both efficient and dependable.

Build Custom AI Software with Ascendix

Hire AscendixTech and we’ll execute your vision and create a thriving AI tool or bootstrap your existing solution.

Enhanced Contract Extraction with AI and NLP

OCR has been a staple in contract management for many years, providing the ability to scan and convert paper documents into digital text. While this has significantly streamlined document handling and storage, the advent of AI and Natural Language Processing (NLP) has taken this technology to the next level.

With AI and NLP, the process goes beyond simple text recognition. The document is not just scanned; AI literally understands the content. This means:

  • Contextual understanding: AI can comprehend the context of the document, recognizing the type of contract (lease, sale, invoice, etc.), and understanding the roles of the involved parties, key dates, and other critical details.
  • Improved accuracy: AI-driven OCR reduces errors in data extraction by understanding the nuances of language and context, leading to more accurate and reliable digitization of documents.
  • Enhanced searchability: With NLP, you can perform more sophisticated searches within documents. Instead of just searching for keywords, you can search for concepts or specific types of information, improving information retrieval.

How Can Ascendix Help You Embrace Contract Data Extraction?

Ascendix has been a leader in business automation since 1996, with extensive experience in the real estate industry spanning over two decades. Over the years, we have closely monitored the evolution of AI technology and have specialized in property technology development and developed our own contract abstraction framework tailored specifically for real estate businesses. This means you won’t need to start from scratch with development or rely on generic tools that may not meet the specific needs of real estate documents.

Why choose Ascendix as your partner for contract data extraction?

  • Real Estate AI and software development expertise: With over twenty years of experience, we specialize in developing high-quality and tailored software solutions for a wide range of industries, including real estate and customs AI tools for the property sector.
  • Collaboration with industry leaders: We collaborate with major players in the real estate industry, such as JLL and Colliers, as well as over 300 other clients worldwide, to develop in-house software solutions tailored to their specific needs.
  • Global presence and outreach: Operating from five offices worldwide, we leverage our international presence to access diverse skills. Based in the US and outsourcing to Europe, we incorporate knowledge of international trends and demands into our solutions, ensuring they meet the highest standards of excellence.

How Ascendix can help you in contract data extraction:

  • Custom AI tool development: We offer tailored real estate AI solutions, including custom AI data entry automation tools, designed to meet your specific business requirements.
  • Integration services: We can integrate either your new AI tools or existing ones seamlessly into your business workflows, ensuring you don’t have to switch between screens and that all your data stays synchronized.
  • Consultancy services: Our experts can assist you in selecting the most suitable AI solution for your business, ensuring it meets your unique requirements.
  • Technical audit: Ascendix provides comprehensive audits of existing AI tools and can enhance them with additional features or artificial intelligence capabilities upon request.

Book a free consultation today to explore how we can help you automate your contract processing workflows.

Entrust Your AI Project to Ascendix

Contact us and we’ll execute your vision and develop a tailored AI solution for your company.

Contract Data Extraction FAQ

What is OCR contract management?

Contract management uses OCR technology within specific software. OCR contract management extracts the key data from scanned or digitally uploaded contracts. Incorporating OCR contract management allows real estate professionals to efficiently index, search, and report on contract information.

What is contract abstraction?

Retrieve, summarize, highlight the crucial data and more with contract abstraction tools. You can easily outline, find, and work with the key information in the contract documents, such as essential terms & conditions, timelines, clauses, obligations, etc.

Share:

1 Star2 Stars3 Stars4 Stars5 Stars (18 votes, average: 5.00 out of 5)
Loading...

Leave a comment

Your email address will not be published. Required fields are marked *

Comment
First name *
Email *

Subscribe to Ascendix Newsletter

Get our fresh posts and news about Ascendix Tech right to your inbox.