The current movement and excitement surrounding moving real estate closings online is not a new trend. In fact, capturing digital signatures had started gaining traction before the big housing crisis of 2007-2008. But as housing came crashing down and foreclosures reached record highs, lenders shifted from one extreme to another. The last housing crisis undoubtedly crippled innovation in real estate transactions and the title/settlement process.
So now, 10 years after the crisis–and amid speculation about when the next housing bubble will burst–what has happened to innovation in the archaic and fragmented world of real estate closings? I would say not enough innovation, disruption, or meaningful movement into a digital platform has occurred over this period.
The real estate industry constantly lives in a state of perpetual fear that we are buying at an all-time high, that the next crisis is just around the corner, that if we push innovation and our fears come true, people will challenge mortgage and contract obligations to protect their home and investments.
Ultimately, this is the very heart of the problem–housing is intimate. It isn’t some position in a stock. Most people don’t think of real estate as an asset. In their mind, it is their home. Our instinct is always to protect ourselves, our loved ones and our homes.
If you spend time talking to consumers about what they really want and expect, they will tell you “a better closing experience.” That doesn’t always mean a fully digital remote eClosing. Sometimes they want to sit next to a trusted professional who explains documents to them–after all, this is often the largest investment of their life. Buying or selling a home can be emotional–and engineers, entrepreneurs, bankers, and the title industry sometimes lose sight of that.
Despite these concerns, I am a firm believer that the future of online platforms to manage and conduct real estate closings is promising. But I also think that the industry, despite the exciting momentum, needs to really stop and take the time to understand what consumers and users want. We need to work together to collaborate towards getting the involvement of all the necessary stakeholders.
The uncertainty we face today is perpetuated by the fragmentation and silos that we operate in. For instance, banks look at ways to improve mortgage processing but don’t invite their title and settlement vendors into the room. Federal, state, and local government involved in financing and recording real estate transactions consider and implement changes without always leveraging the vast experience of the private sector. I meet with entrepreneurs in the technology space all the time that want to ask me a question or two, because they are building the next great real estate, mortgage or title solution. But all too often, when I ask them what their prospective customers say, they look at me blankly.
Government, start-ups, venture capital, title insurance, real estate professionals, and lenders need to work together to identify their respective risks and concerns. We need to look at the opportunities that exist (based on what our customers and clients want) and work to create solutions that take an archaic and fragmented industry into the twenty-first century.