Technology Won’t Replace Great Real Estate Agents: The Last Mile” Problem

Technology has changed almost every part of real estate.

Buyers can search thousands of homes from their phones. Sellers can estimate their home's value online. Contracts can be signed electronically. Artificial intelligence can analyze data, write marketing copy and help consumers understand complicated information almost instantly.

So it's fair to ask:

If technology can do all of that, do buyers and sellers still need real estate agents?

I believe the answer comes down to something called the last mile problem.”

What Is the Last Mile Problem?

The term originally comes from transportation and logistics.

Moving a product from a factory to a warehouse and then to a local distribution center can be remarkably efficient.

But getting that package through the last mile and successfully into the customer's hands is often the hardest part.

Real estate has its own version of the same problem.

Finding a house online is relatively easy.

Getting information about a property is easy.

Running comparable sales is getting easier.

Even preparing paperwork and getting a transaction into escrow can increasingly be assisted by technology.

But then real life shows up.

And that's where things get interesting.

Getting Into Escrow Isn't the Same as Getting to the Closing Table

Imagine a buyer has completed inspections and discovers the home needs a new roof.

The buyer wants the seller to pay for it.

The seller refuses.

The buyer threatens to walk away.

Now what?

Or an appraisal comes in low.

The moving company is scheduled, but closing gets delayed.

A lender discovers a problem days before funding.

A seller can't move out on time.

A title issue appears.

An inspection uncovers something nobody expected.

Suddenly, this isn't primarily a technology problem.

It's a people problem.

And people are considerably more complicated than software.

Real Estate Is Financial — But It's Also Emotional

Buying or selling a home is unlike most financial transactions.

For many people, a home represents years of savings and a significant percentage of their personal wealth.

But there's something else involved.

Life.

People buy and sell homes because they're getting married, having children, changing jobs, retiring, divorcing, relocating, inheriting property or losing someone they love.

Those circumstances don't fit neatly into an algorithm.

A buyer who appeared perfectly rational on Monday can become terrified on Tuesday.

A seller who agreed with a pricing strategy can suddenly become emotionally attached to a number when an offer arrives.

Residential real estate is driven by numbers, but the people making the decisions are still human.

Great Agents Solve Problems Before Their Clients Even Know They Exist

This is the part of real estate consumers rarely see.

I've watched experienced agents go extraordinary lengths to get transactions closed.

Sometimes that means coordinating contractors.

Sometimes it's solving inspection problems.

Sometimes it's negotiating between two parties who have stopped communicating effectively.

Sometimes an agent needs to assemble what I jokingly call a Justice League” of real estate professionals — agents, lenders, title, escrow, inspectors, contractors and other specialists — to solve a problem before it destroys the transaction.

The best agents aren't simply opening doors.

They're managing a complicated process involving money, deadlines, contracts, expectations and human emotions.

That's considerably harder to automate.

Technology Is Making Great Agents Better

None of this means technology isn't changing real estate.

It absolutely is.

And artificial intelligence will accelerate that change.

Technology can help agents analyze markets faster, communicate more efficiently, identify buyer behavior, market properties more effectively and reduce repetitive administrative work.

That's good for consumers.

But the most interesting question may not be:

Will technology replace real estate agents?”

The better question is:

What happens when a great real estate agent has dramatically better technology?”

That's where I believe this is headed.

Technology handles more of the routine work while skilled professionals spend more time on the things technology struggles with: strategy, negotiation, judgment, relationships and problem-solving.

The Last Mile Will Always Matter

Buying or selling a house isn't finished when someone finds a property online.

It isn't finished when an algorithm determines a value.

It isn't even finished when everyone signs the contract.

It's finished when the transaction successfully closes.

There are dozens of opportunities between an accepted offer and closing for something to go wrong.

That's the last mile.

And when hundreds of thousands of dollars are involved, having experienced professionals who know how to navigate that last mile can make an enormous difference.

Technology will continue transforming real estate.

It should.

But rather than eliminating the best real estate professionals, I think it's much more likely to make the value of truly skilled ones easier to see.

Technology can make the process faster. Great people still get it across the finish line.

Bobby Tarango & Mike Arias
Chicago Title

For title and escrow questions or a free title assessment, visit Chicagotitlepro.com or TitlesEverything.com.https://leadmarketer.com/el/assetmanager/usermedia/87308/Orignal_49_TechnologyPsychology_CT-DIGITAL.jpg