Glenn is president of Ally Home with more than 35 years of experience in consumer lending, mortgage and capital markets.
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Real estate agents today are tasked with guiding their clients through both a competitive market and an already-complex home-buying process made more so by the pandemic. A new imperative has emerged, urging agents to offer their clients speed and ease across all aspects of the home-buying, selling and mortgage process.
This past spring, as the country socially distanced to slow the spread of Covid, the real estate industry quickly pivoted to digital-first. Suddenly, open houses became virtual events and many home lenders adjusted measures around home appraisals to support drive-by or video tours in lieu of walkthroughs. Surprisingly, consumers responded enthusiastically to these changes. According to a May 2020 study from the National Association of Realtors (NAR), 41% of buyers said they could envision buying a home during the pandemic without ever physically stepping inside. In that same study, a whopping 70% of buyers and 67% of sellers said they were comfortable with conducting all business on a computer (such as reviewing and signing documents electronically). In this kind of environment, NAR reported, 62% of buyers believe it is essential that an agent/broker be knowledgeable about ways to electronically sign some or all closing documents.
The residential real estate market had already made strides toward digital, which delivers the powerful combination of speed and convenience, but the pandemic cemented this shift as a necessity. Now, it’s essential for real estate agents to familiarize themselves with these new digital capabilities so they can continue to add value to their customer relationships in this digital world.
Another issue that calls for speed and the benefits of digital is today’s fast-paced market. With record-low interest rates combined with low home inventory in many parts of the U.S., real estate agents need to prepare their buyers to act quickly once they find the home of their dreams. This includes not only securing pre-qualification ahead of time but also being ready to quickly revise those pre-qual letters online so buyers aren’t waiting on a brick-and-mortar lender to send an updated letter before they can submit their offer. Most real estate agents have some trusted go-to local mortgage brokers, but as the home mortgage industry becomes increasingly technology-centric, brokers must add go-to digital lenders to their arsenal to meet the needs of today’s customer and market conditions.
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These digital-first lenders can give real estate agents (and their buyers) a competitive advantage by expediting the overall mortgage process, including faster pre-approvals, online rate locks and calculators that let consumers easily do the research to understand how much home they can afford, as well as the ability to complete applications online and upload necessary documents without having to meet with a banker in person. Compared to traditional, manual mortgage processes, a digital experience is typically faster, simpler and makes the mortgage process easier for buyers to navigate. This kind of modern mortgage experience puts the consumer in control and lets them drive the process, allowing them to move at their own pace, on their own schedule and on their own terms.
It’s important to note a digital-first mortgage experience doesn’t mean buyers are on their own if they have questions and want to talk to someone. Real estate agents will want to look for lenders that offer a powerful combination of digital expertise with guidance from actual mortgage experts who are available to help (by phone, email or even text) when needed throughout the process. This capability is especially important for first-time buyers or those who haven’t been in the market for a while.
A lasting legacy of 2020 will be the rapid pivot real estate and other industries made toward a more digital way of conducting business. Now that consumers have experienced the benefits of an online approach to the buying and selling process, there’s no turning back. The challenge for real estate agents is to stay current with their digitally savvy customers so they can continue offering the same guidance and value-add for which the industry is known. In the coming years, you can expect the introduction of new digital real estate advancements to continue for the benefit of both consumers and brokers. It’s certainly an exciting time for all of us in the industry.
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