Qualia CEO Nate Baker joined HousingWire Editor in Chief Sarah Wheeler at The Future of Fintech event, hosted by technology analyst firm CB Insights, for a fireside chat on the future of real estate. Baker explained how digitizing the title company on a significant scale will unlock a better experience for real estate brokerages, lenders, home buyers, and sellers.
Title—the entry point to digitize the entire real estate transaction
Over the past decade, the homebuying experience has become increasingly digitized. Tech-enabled brokerages now offer high-touch digital home search experiences while mortgage lenders almost ubiquitously offer digital applications. “The title company meanwhile was systematically forgotten,” Baker said.
Qualia recognized that the title company is the most important, yet overlooked participant needed to transform the real estate closing experience. They play this pivotal role because they are at the very center of each real estate transaction. Title companies are the only party involved in every closing while mortgage lenders and real estate brokerages miss out on a sizable percentage of transactions such as for sale by owner, refinance, or all-cash purchases.
With this insight, Qualia observed that title is the entry point to digitize the entire real estate transaction. Once title & escrow operations are powered by a modern technology infrastructure, all other parties in the real estate ecosystem can accelerate their innovation in new ways.
“We can unlock—through the title company—workflows for the lender, the real estate agent, and ultimately change the consumer experience in a meaningful way,” Baker said.
Qualia’s platform approach to revolutionize title
To tackle the title challenge from an infrastructural level, Qualia built a platform that is the core system of record for title companies. Baker explained how this approach differs from other technology solutions on the market. “You see lots of businesses try to provide very narrow point solutions to solve some part of the real estate transaction. Their end customers are using the product for about five minutes a day as part of closing a loan,” he said. “Our philosophy is to be the system of record for the title company—to be the thing that the title company spends 8 plus hours a day in doing all the work.”
Qualia’s platform is the core system that title companies across the country use to complete their day-to-day work. By creating a web-based, truly efficient back-office experience for the title company, Baker explained that the real estate brokerage and lender experience is also improved. Instead of navigating different point solutions to interact with a real estate brokerage or a mortgage lender, the title agent remains in the Qualia platform to efficiently and securely communicate with outside parties.
Baker also explained how Qualia differs from digital title companies and title insurers that are now entering the market (such as Doma). Simply put, Qualia is not a digital title company or title insurer. Rather, Qualia is a flexible technology platform that operates as the core workflow system for title & escrow companies and title insurers. Both traditional and newly formed companies leverage Qualia as well as companies of all sizes from local mom-and-pop shops to large national players. “Our goal is to help the lender, broker, buyer, and seller standardize the way in which they are interacting with the title ecosystem,” Baker said. “The only way we can do that is from the position of being a platform that’s across the entire title industry versus being a constituent player.”
By operating as a platform, Qualia can also enable the full ecosystem of closing service providers (such as digital title search or notary vendors). Qualia is integrated with national and local vendors across the country on Qualia Marketplace. Through this hub, title agents can seamlessly manage, pay, and reconcile vendor transactions without leaving their core workflow system.
Venture capital (VC)-backed companies are racing to enter title
Title is increasingly becoming an area of focus among VC-backed real estate technology companies who are looking to transform the homebuying experience. For real estate technology companies (such as tech-enabled brokerages and digital lenders), the market is ultra-competitive. These businesses are competing for the attention of consumers and real estate agents and have significant customer acquisition costs as a result. In order to remain competitive, Baker noted that these businesses are doing two things:
- Focusing on building the best consumer experience.
- Looking for ways to improve their unit economics by achieving high attach rates on their ancillary service offerings.
Both of these strategies hinge on the title process. In order to create a better consumer experience, these businesses must consider the final “check out” process. Today’s homebuyer values a fluid, digital experience— from the time they begin their home search all the way through closing. Meanwhile, to achieve better attach rates, many businesses are turning to title.
“[Attaching title] is a well-worn path at this point,” Baker said. “All the big names in real estate are doing this as well as all of the new players.” Many real estate technology businesses are taking this consolidation approach of vertically integrating title services. Qualia’s platform and API enable real estate technology companies to effectively attach title through a variety of strategies.
Baker predicted that smaller, local title companies will continue to be important players despite the current trend toward consolidation in the real estate ecosystem and emphasized the importance of ongoing investment in technology, education, and additional resources for this community. “Real estate agents, who usually help consumers select the title company, are very local. I think that means we’ll continue to have fragmentation of title companies because of these local relationships.”
What’s ahead for Qualia
“We’re just getting warmed up,” Baker said. “If we can reinvent that central node, [the title operation], it really changes the way we can enable the peripheral nodes and everyone surrounding the consumer.”
To do this, Qualia is focused on building an “engineering-first, obsessive culture” to attract and retain the best talent who can build complex solutions.
Over the coming months, Qualia will release a number of new products for different parties in the real estate ecosystem that will all improve the interconnection back to the title company. “We want to make the closing simple and easy. We want to make that inch of paperwork go away and we’re well-positioned to make that happen.”
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