AI Agents
What is Tool Use / Function Calling?
Tool use (also called function calling) is AI's ability to interact with external tools and services—searching databases, calling APIs, updating records, and taking real-world actions beyond just generating text.
Understanding Tool Use / Function Calling
Standard AI is a conversation partner—it reads your text and generates text back. Tool use transforms AI into an agent that can take actions. Instead of just telling you what to do, AI can actually do it: search your MLS database, check your calendar, update your CRM, send an email, or create a document. It's the difference between an advisor and an assistant.
Tool use works through a structured process. The AI model analyzes your request and determines which tool (function) to call, what parameters to provide, and how to interpret the results. For example, you might ask "Find all 3-bedroom homes under $400K listed this week in [area]." With tool use, the AI can actually query a property database, get real results, and present them to you—rather than generating a plausible but fictional list.
This capability is what makes agentic AI possible. An AI agent uses tools to accomplish goals autonomously—a chain of tool calls that might look like: check calendar for availability → search properties matching criteria → draft showing request emails → schedule appointments. The HOME Framework helps structure these agent workflows: defining the Hero (client), Outcome (scheduled showings), Materials (calendar, MLS, email), and Execute (the tool-use sequence).
MCP (Model Context Protocol) is the emerging standard that makes tool use more accessible and standardized. As MCP adoption grows, AI tools will be able to connect to an expanding ecosystem of real estate services—making the Tiny Stack even more powerful by enabling your AI to interact with more business tools through a common interface.
Key Concepts
Action Capability
AI moves beyond generating text to actually performing actions—searching, updating, creating, and managing real data.
Function Definition
Developers define available tools (functions) with their parameters, and AI learns when and how to use each one appropriately.
Result Interpretation
AI processes the results returned by tools and incorporates them into its response, creating a seamless action-to-answer flow.
Tool Use / Function Calling for Real Estate
Here's how real estate professionals apply Tool Use / Function Calling in practice:
Database-Connected Property Search
AI queries actual property databases based on natural language criteria, returning real listings instead of generated descriptions.
You ask: 'Find me 3-bedroom homes in [neighborhood] under $500K with a garage, listed in the last 30 days.' AI calls the MLS search function with structured parameters, retrieves actual listings, and presents them with relevant details—all verified, real data rather than AI-generated assumptions.
CRM-Integrated Client Management
AI reads and updates your CRM directly, pulling client context before generating communications and logging interactions after.
You say: 'Draft a check-in email for Sarah Johnson.' AI calls your CRM to pull Sarah's record (past interactions, property interests, transaction history), drafts a personalized email using that context, and after you approve, logs the communication back to her CRM record.
Calendar-Aware Scheduling
AI checks your actual calendar to suggest available times and schedule appointments without back-and-forth.
You ask: 'Schedule a showing for the Hendersons at 123 Oak St.' AI checks your calendar for availability, checks the listing's showing instructions, proposes times that work, and upon confirmation sends calendar invites to all parties—eliminating the scheduling back-and-forth.
Multi-Tool Workflow Orchestration
AI chains multiple tool calls together to accomplish complex goals that span several systems.
You say: 'Prepare for my listing appointment tomorrow.' AI calls: (1) Calendar—get appointment details and client name, (2) CRM—pull client history and preferences, (3) MLS—get recent comps for the property address, (4) Document tool—draft CMA template with comp data, (5) Email—send pre-appointment confirmation to the client. Five tools, one command.
When to Use Tool Use / Function Calling (and When Not To)
Use Tool Use / Function Calling For:
- Tasks that require accessing or updating real data (CRM, MLS, calendar)
- Workflows that span multiple tools and would benefit from AI coordination
- Repetitive multi-step processes where AI can chain tool calls automatically
- Situations where AI needs real-time information rather than training data
Skip Tool Use / Function Calling For:
- Simple text generation that doesn't require external data or actions
- Sensitive operations where human confirmation should precede every action
- Tasks where the available tools don't cover what's needed
- Situations where you need to maintain full manual control of each system
Frequently Asked Questions
What is tool use in AI?
Tool use (also called function calling) is AI's ability to interact with external tools, databases, and services. Instead of only generating text, AI can take real actions: search databases, update records, send messages, create documents, and manage calendars. This transforms AI from a conversation partner into an active assistant that can accomplish tasks in the real world through your connected systems.
How does tool use differ from regular AI chat?
Regular AI chat generates text based on its training. With tool use, AI can access real-time information (current MLS listings, your calendar, CRM data) and take actions (send emails, create documents, schedule appointments). The AI decides when a tool is needed, calls it with the right parameters, and incorporates the real results into its response—bridging the gap between AI knowledge and your actual business data.
What tools can AI currently use in real estate?
The ecosystem is growing rapidly. Current capabilities include: web search (for market data and property info), email sending/reading, calendar management, CRM integrations (through APIs or MCP), document creation, spreadsheet analysis, and some MLS integrations. As MCP adoption grows, AI will connect to an expanding range of real estate-specific tools through a standardized interface.
Is tool use safe? Can AI take actions I don't approve?
This is where human-in-the-loop design matters. Well-designed tool-use systems include confirmation steps for high-stakes actions (sending emails, modifying records, scheduling appointments). AI can search and analyze freely, but should require your approval before taking actions that affect clients or change data. Always configure tool-use workflows with appropriate approval checkpoints—the OODA Loop applies here.
Sources & Further Reading
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