A once paper-heavy and time-consuming process, homebuying is increasingly digital and more efficient. In 2019, a strong seller’s market further propelled the need for speed lest a homebuyer miss out on a deal.
Title agents and real estate professionals looking to satisfy their clients’ demand for swift transactions turn to fintech, which has the potential to “streamline time-consuming processes, increase security and improve the home-buying experience for potential homebuyers,” said Mark Fleming, Chief Economist at First American.
“The fintech revolution is here, and it is here to stay in real estate,” he said.
About 67% of title agents and real estate professionals intend to adopt new fintech in the next year, according to the latest bi-annual First American Real Estate Sentiment Index. About 31% of those surveyed plan to do so in the next three to six months.
The fintech tools with the greatest potential to quench the growing thirst for speed and efficiency in real estate are secure communication/collaboration and hybrid eClosing tools, according to the First American survey.
Mimicking the sentiment revealed a year ago, more professionals prioritized a secure communication portal than any other fintech in the survey. Nearly 35% of professionals surveyed said secure communication portals have the greatest potential to expedite the homebuying process.
Fleming added, “One of the major trends affecting the real estate industry may explain why the 2018 and 2019 survey findings were consistent—the rise in wire fraud.” Wire fraud is on the rise, according to data from the FBI, which reported a 166% increase in reported wire fraud between 2017 and 2018.
About 28% said hybrid eClosings have the greatest potential to expedite the homebuying process for their clients. Hybrid eClosings not only expedite the closing process by allowing some documents to be signed electronically prior to closing day, but they also decrease the risk of manual errors.
Ranking third in terms of fintech with the potential to expedite transactions was “remote online notarization eClosing,” which 17% of professionals said could have the most potential impact on transaction timelines. Online notarizations are completed with audio-video conferencing and fraud prevention tools and are allowed in some, but not all, states.
In terms of the market overall, Fleming said, “Overall, optimism among title agents and real estate professionals increased this quarter compared with one year ago.”
Expectations of further economic growth, income growth, and low mortgage rates this year contributed to optimism among title agents and real estate professionals, Fleming said.
Confidence that residential purchase volume will grow over the next year increased 38.4% over the year, while confidence that refinance volume will grow increased 123.8% from a year ago.
Also, home prices are expected to grow 2.7% over the year, according to the survey respondents.
First American conducts its survey of title agents and real estate professionals each quarter.