It’s well known that the real estate industry is large and complex, which lends itself easily to frustrations and consequently, opportunities for improvement. The goal to simplify is a consistent narrative I hear across the technology sector and seems to be the common denominator for technology-led innovation in all industries touching the home-buying process. I experienced many challenges as a first-time home buyer, and knowing what I do now, I plan to leverage advances in property technology to conduct my next investment quite differently.
Everyone’s looking to shave some time and save some money throughout this long, stressful and often secluded journey — and these feelings are quantifiable. Homes.com conducted a survey of 2,000 home buyers and found over a third of respondents noted they felt nervous during the process and that it took much longer than expected — 30% of which even admitted to breaking down in tears at some point in the process. I won’t admit to having ever reached for a box of tissues myself, but I do attest to having these same issues as a first-time home buyer.
When I started my journey as a real estate investor five years ago, I was blown away by the lack of information on the properties I was considering to help me make an informed decision — apparently the norm for the industry. Clearly I wasn’t the first and far from the last to go through the biggest purchase decision of my life to date feeling mostly in the dark.
The need for simplification has been a huge driver for business leaders in 2019. The fruit of these efforts has led to a few stand-out improvements, not only accommodating the expectations of modern home buyers, but also to make the process more efficient for the entire ecosystem, including real estate agents, brokerages, mortgage lenders and homeowners insurance providers — among others.
As a real estate technologist leading a real estate technology company, I can account firsthand to the creative, bold and innovative solutions to real problems in real estate thought up by valiant entrepreneurs, talented innovation teams and industry visionaries.
Digital Lending
One successful approach has been to simplify the mortgage lending process through digital and user-centric offerings. A well-designed digital solution can be one of the most impactful ways to alleviate the most prolific home buyer woes. With fintech companies working hard to facilitate streamlined online lending services, applicants can expect their mortgage loan processing timeline to be much shorter. Applicant-owned uploading of key documents anytime and anywhere, automated underwriting, and integrated credit checks are just a few ways online lending is helping to make the application experience more efficient and convenient for home buyers. Roostify and Blend are two examples of fintech platform providers that are stepping up to help the lending industry go digital.
Embedded Homeowners Insurance
Companies are working across fintech and insurtech lines to consolidate currently fragmented parts of the home-buying process — removing the potential for error with prefill applications, cutting unnecessary transfer of information and using data automation instead of manual processes where possible. You can imagine from the perspective of a home buyer or a real estate agent the benefits of only having to work with a single institution to get not only a mortgage, but also the homeowners insurance generally required to secure financing.
The same players in the digital lending platform space are paving the way for embedded insurance services. Blend now has its own subsidiary, Blend Insurance Agency, as an option for its partners, and Roostify is working with Matic, an independent digital insurance agency, to enable embedded homeowners insurance as part of the mortgage application. (Full disclosure: My company is a partner of Blend Insurance Agency.) Now, rather than spending time and energy on getting insurance and then proving it to your lending institution, it’s seamlessly tacked on to the existing mortgage process.
IBuying
IBuying is a hot topic in real estate, especially since Zillow joined the game. Even though the iBuyer market share is still fairly minuscule in comparison to the total number of home transactions that occur, if you’re buying, selling or working in markets where iBuying is already in full swing, it can certainly be a simpler option.
First launched back in March of this year, Zillow offers self-guided iBuyer tours through its app, called “Tour it Now.” Through the app, there are no agents and no appointments. If you’re slightly allergic to structure — or if you’re already feeling your heart race at the idea of scheduling, rescheduling, interacting with an agent, etc., you’re not alone. Buying a home is the most stressful event of modern life, according to 40% of respondents from the Homes.com survey.
Decision making is part heart, part science. I believe why people make the decisions they do is starting to become even more data-driven, thanks to the availability of data when it matters. Knowing that in general a seller is incentivized by selling at a higher price, it might be comforting to know that in iBuying, the price was set by data science, probability and fixed inputs instead — controlling some of the subjective elements of appraising.
Whether you’re a first-time or repeat home buyer, there are certain challenges that will remain for now — but for others, these three tech solutions are helping businesses that serve the real estate industry offer a different, simpler approach, and that’s a start.
While I’m excited about the progress that’s been made across the real estate tech ecosystem, I think we can do better. I’ll be keeping my eye out for a 2020 rendition of the home buyer satisfaction survey. After all, progress will be in the data.