Last week, I had the honor of giving the keynote speech at the 30th Annual Georgia Real Property Law Institute. It was an incredible experience to share with Georgia commercial and residential attorneys, who are thought leaders across Georgia and our industry, about their practice over the next five years in view of national changes that will either be disrupters for our industry or opportunities to innovate options for the closing experience to their clients. While the topics covered throughout the conference were diverse in scope; there were several common themes woven throughout. Namely: technology is constantly advancing and changing the way consumers, real estate professionals and lenders are thinking about real estate and the choices in the marketplace. There are incredible opportunities for title companies and closing attorneys to innovate and market the choice of a digital closing experience, in addition to the traditional table closing experience, to lead this change into the future. In the words of Steve Jobs, “Don’t give the customers what they want – show the customers what they should want.” It’s time for the real estate industry to consider this advice and innovate – adopting a hybrid eClosing experience and making the entire process faster and more efficient.
The first major takeaway I’d like to share is this: technology is changing our industry.
Digital disruptors in the real estate industry
There are several technological advancements that have already been identified as “game changers” for the future of the real estate industry:
- Artificial Intelligence is dramatically changing how work is completed. AI platforms are able to mine documents for evidence and information, and raise red flags to identify potential fraud.
- Machine Learning algorithms turn the complex into simple. They are currently used in due diligence for loan purchase and sale in commercial transactions, and we can expect their role to continue to grow. They are used for title review, entity review, regulatory compliance, initial deal vetting, contract and lease and loan document review – the list is endless.
- Virtual reality is already being used as a new way to show real estate, and consumers want more. Builders and developers are able to show a home before it is built. Commercial landlords are able to show tenant improvements before the drywall goes up. It takes foreign investors and out-of-state buyer’s minutes to look at a property rather than days driving around a city.
- eSignature, eClosing, and eNotary technology has come a long way and now has the ability to improve data quality and accuracy. These technologies also offer improvements in the security of consumer and client data over traditional pen and paper mortgage closing transaction and manual processes.
- Adoption of eRecording technology in your closing practice reduces recording of important legal and title documents down from weeks to hours in many cases. Who doesn’t want to record documents as quickly as possible to protect the buyer and lender’s interest in the property?
The marketplace reality is that clients and consumers now expect digital solutions to improve their real estate transaction experience because these transactions are already happening today. These solutions are already being utilized by financial institutions, retail and more – with transactions occurring electronically and with risk levels acceptable to institutions.
My second major takeaway from the conference is that consumer demographics are changing faster than we may have realized and our lender clients and real estate professionals are very aware of these trends.
A new demographic of consumer
Consumers in the marketplace today look very different than they did a decade ago, but we still use the same processes and technologies. As technology continues to be adopted by younger audiences, we have a unique opportunity to show these new buyers and sellers what they should want in a closing experience.
Case in point: A $30 trillion wealth transfer from baby boomers to millennials and Gen X has begun. When you consider the rapid retirement rates of the baby boomer generation (about 10,000 a day), this means upward mobility for next generations, including using wealth to buy and refinance real estate. Technology is not just a big motivator for these generations, it’s expected!
And don’t forget about – the up-and-coming Generation Z! This generation is the most technologically adaptable of any generation, and already 97% say that they want to own a home.
My third major takeaway is real estate and lender changes are all pointing toward technology and the reality that we are already in a digital marketplace today.
Real Estate Changes
More and more, we see that buyers and sellers prefer to be in the driver’s seat of the real estate buying process. Zillow, Trulia, Realtor.com (virtual reality), etc. make it easy to shop and online forms make it easy to purchase. Real estate professionals’ recognize the threat of lenders and digital technology providers working directly with buyers and sellers driving out real estate professionals. They are already reinventing how you buy and sell a home with a real estate professional by bringing innovation to the market and driving the future through use of eSignature technology to sign Listing Agreements and Purchase Contracts. An eClosing option would offer real estate professionals’ another closing choice for their buyer and seller customers all integrated with lender technology- something truly amazing!
Lenders are really leading the push toward eClosing. Case in point: Approximately 30 percent of the nation’s mortgage volume flows through Ellie Mae’s Encompass platform which enables lenders’ use of DocuSign integration for disclosures and other loan documents. Also, eNote and eMortgage has the potential to speed up the sale to the secondary market – going from taking weeks to go from closing to note sale down to a matter of a few hours. Most industry insiders say it’s not a matter of whether the eMortgages and eClosings will eventually become the norm – but when.
How to lead the change
Real estate remains a local business that is best served by local law firms and title companies. Regardless of technology advancements, clients and customers will always want the local services and human touchpoints that they get from knowledgeable real estate closing experts and professionals. That is why I want to see title companies and closing attorneys engage in this conversation with lenders today to bring a hybrid eClosing to market and drive the future! A hybrid approach, which allows some, but not all of the documents to be signed electronically, allows you to start engaging clients, lenders, real estate professionals and consumers online today!
It is up to us to lead the transformation of the industry rather than letting the change lead us – ensuring an eClosing solution becomes reality.