This article is part four of a multi-part series uncovering the benefits of delivering a differentiated closing experience. For part one of the series, “Real Estate Technology Businesses are Setting their Sights on Managing the Closing Process” click here. Or to see the full series click here.
Real estate is an interesting field with respect to customer experience and expectations. On one hand, most people only complete a few real estate transactions in their entire lives and so they are largely unfamiliar with the process. On the other hand, if consumers aren’t provided guidelines on what to expect, they inevitably come up with their own ideas about how things “should work.”
Over the past few years, lenders, real estate agents, and new players like iBuyers have started to realize this, and they have begun to define their services in terms of delivering a “unique” transaction experience. Think Uber two years ago versus now. Older versions of Uber allowed the rider to select a type of vehicle. Today’s interaction gives them that choice but also lets the rider select their desired temperature and whether or not conversation is desirable. The service did not change, the customer experience did.
Now, more than ever, competitively differentiating your business hinges on the transaction experience. Lenders, real estate agents, and new PropTech businesses like iBuyers are all racing toward solutions to deliver a customized, transparent, and efficient transaction. They are working to create a highly repeatable process that delivers improved communication and customer experience perks.
The collective consumer mindset is shifting
Historically, consumers had very generalized expectations about a real estate transaction. For example, maybe they just knew the amount of money they would be paying (or receiving) and the information they would need to provide before the closing date. If things didn’t go according to plan, they might tell their friends or neighbors not to use a certain lender or real estate agent, but beyond that, the client’s ability to offer feedback impacted a provider directly was quite limited.
Today, consumers expect a lot more from the homebuying process. This shift comes down to a few factors:
- Consumers have more public venues than ever to voice their discontent if things don’t go well from regulators like the CFPB to review boards like YELP or Google Reviews. With these forums, consumers can also get a better understanding of what to expect and which lenders or real estate agents they should work with.
- Marketplace competition. As new players emerge on the market and redefine transaction experiences, consumers have started to expect traditional players to offer the same. For example, in 2015, Quicken Loans launched Rocket Mortgage, the first completely online mortgage experience. It gave consumers the ability to input their information and get approved for a mortgage interest rate online. Before that point, mortgage lenders differentiated themselves by advertising lower interest rates; however, this didn’t often move the needle as rates are usually uniformly the same across lenders. Quicken did something new, they advertised a short closing time and a quick, convenient online experience for borrowers—this turned consumer expectations on their head. Email instead of fax communications, website, and app access to track the process in real-time—in a nutshell, Quicken offered a customer-driven experience with tech-enabled flexibility that no other lender had at the time.
- Financial literacy about the real estate market increased after the housing market crash in 2008. Regulators also required mortgage lenders and title companies to offer consumer disclosures (CDs) so that homebuyers would have greater insight into the fees they would need to pay at closing.
Additionally, marketers have started to shift away from traditional commercials and toward content marketing efforts to educate consumers on the homebuying process and give them greater transparency. Lenders and real estate agencies no longer rely solely on commercials about their services. Instead, they pen detailed blog posts about their processes, market factors, pain points in the process, and the way their companies solve them.
Not only do consumers gain greater financial literacy through these content efforts, but service providers can now tell their consumers what the experience will be. They avoid having their process defined by what happened when a client’s sibling or neighbor went through the process; however, they must deliver on the process they define.
Understanding today’s consumer—what do they want?
One simple way to think about consumer expectations is to consider how much transparency consumers experience during a simple $5 e-commerce transaction and then imagine that they might expect the same for a transaction in which their life savings are on the line. When I purchase something online I can see the moment the shipment leaves the warehouse, all the way to when it reaches my front door—all through my digital tool of choice.
In general, consumers expect the following from any transaction experience:
- Responsiveness (even if it’s just to acknowledge the receipt of a question). Consumers want questions answered immediately or at least an explanation for delay
- The ability to select a preferred communication method (text, phone, email) as well as preferences around how and when communication is delivered (live vs. automated vs. on demand via an app or portal)
- Visibility into the process via a portal or application
- Explanations of costs (and lower costs from businesses working at economies of scale)
- A single space or point of contact to access information related to a transaction
When it comes to the real estate transaction specifically, Qualia’s Homebuyer Sentiment Index found that homebuyers want the process to be easy, secure, and quick.
The answer to delivering on consumer experience isn’t another client-facing technology point solution
It’s easy to think about delivering on each of those bullets above by investing in some front-facing consumer technology solution; however, the real solution goes deeper than pixels on a screen. It comes down to your workflows and relationships. Real estate agents, lenders, and iBuyers need a more integrated way to work with their title & escrow partners. Without it, operations become disjointed during the closing process (creating a slower time to close) and baseline information about the transaction can’t flow to the consumer.
Let’s go back to the Quicken example. Other lenders saw the success of tech-enabled origination and followed suit. Soon real estate agents, title companies, and others did the same which created the problem we face today. Portals—lots and lots of portals each offering some enhanced version of a part of a larger process. Today’s challenge is finding a solution that enables all parties to work from a single unified space optimized for the convenience of the individual consumer.
To solve this challenge, many leading PropTech businesses, real estate brokerages, and mortgage lenders are “attaching” title & escrow to their offering. This doesn’t necessarily mean the business needs to go out and launch its own title operations or acquire a title company. Title & escrow services are not a zero-sum proposition and “attaching title” can also mean working with a network of tech-forward title companies through integrated technology (which you can read about here).
By attaching title, companies can meet the general consumer expectations outlined above, but also stand out by meeting more specialized requirements of their customer service offering. For example, iBuyers offer a unique instant buying process that touts quicker selling and closing timelines. With tighter closing operations, iBuyers can actually deliver on this promise through greater transactional efficiency.
By attaching title, businesses have the ability to not only offer greater transparency and responsiveness but actually deliver shorter closing times and even reduced costs through more efficient operations and economies of scale.
To learn more about how you can attach title to your offering with Qualia, click below to schedule a time to speak with one of our experts.