In real estate transactions, title & escrow companies are often seen as the “quarterback” of the closing process since they coordinate a variety of closing parties to provide a transparent and smooth experience.
Although escrow is a common practice, recent technology solutions are changing how title & escrow companies manage escrow accounts. For new title & escrow agents as well as experienced professionals looking to streamline their escrow process, adopting the right technology tools can improve homebuyer experience, mitigate security risks, and improve relationships with closing partners, especially lenders.
What is an escrow account?
Escrow is a way to enable fair ownership transfers and reduce the risk of internal and external fraud. A neutral third party (often a title & escrow company) manages an escrow account to help two or more transacting parties exchange funds or other valuables. In real estate, the “escrow transaction” typically occurs between the buyer, seller, and lender.
Technology considerations for managing escrow accounts
When assessing technology tools for escrow, title & escrow companies can leverage technology to manage and reconcile accounts, communicate with closing parties, and save valuable time for employees. Below are a few considerations title & escrow companies should use to evaluate different software providers.
- Does the technology create efficiencies? Managing escrow accounts can be a time-consuming process that takes away from other critical tasks, like communicating with clients and completing orders. The right technology tools can give agents more time to focus on core competencies.
- Does the system allow for secure document storage? Collecting and storing documents as part of the escrow process can be inefficient and open up security risks. Secure document storage helps prevent security breaches, such as unauthorized access to files with dormant funds and information about outstanding checks. Leveraging technology to store and share documents securely can help prevent security breaches and make documents more accessible for approved parties.
- Does the software allow for automated daily reconciliations? For title and escrow companies nationwide, the end of the month can be a busy and stressful time. Technology tools can help automate manual reconciliation processes (such as reviewing exception reports) and create workflows to help companies stay audit-ready.
- Does the provider partner with banks that specialize in escrow? Not all banks specialize in escrow. Some escrow accounting software providers offer bank partnerships and integrations so that title & escrow companies can gain efficiencies, such as automation of daily reconciliations.
- Does the technology enable the business to cut costs and grow? Time and cost factors can inhibit business development and make it more difficult for companies to grow into new states and regions. Dynamic workflows enable companies to scale teams by setting up different workflows for various states and regions, creating automatic task triggers, and ensuring that the entire company follows the same process for escrow management and other closing tasks. Additionally, as many companies look to reduce paper usage and provide remote closing options, technology can help facilitate this transition. For example, the law firm Dalton & Finegold reduced paper usage by 70% by switching to Qualia.
To learn more about Qualia’s escrow management solutions, click below to schedule a demo.
