First American, a global provider of title insurance and settlement services, is over 132 years old. Meanwhile, Homelight, a software startup that provides digital tools for real estate agents, is just under 10 years old. Both businesses are operating in a dynamic industry where technology is massively changing the homebuying game day-to-day and even moment-to-moment.
At Qualia’s Future of Real Estate Summit, Paul Hurst, Managing Director of Venture Investments at First American, and Drew Uher, CEO of Homelight, joined Qualia’s Director of Product Marketing, Priyanka Srinivasan, to discuss how their businesses approach innovation in a rapidly changing industry.
How do longstanding institutions and startups think about innovation?
Hurst works within First American’s Venture Investments division to help define and accelerate innovation at First American. He outlined First American’s approach to building innovative solutions:
- Build tech in-house for First American’s core business to digitize escrow, automate title decisions, and drive innovation in the funding flow for escrow.
- Invest in innovative partners who have expertise in areas outside of First American’s core business, including mortgage, brokerage, home appraisal, and other parts of the digital transaction.
Overall, Hurst acknowledges that the homebuying transaction is not fully liquid and the approach to innovation should not assume it will be. “I think a lot of people will say let’s make homebuying as simple as buying a stock,” he said. “That’s aspirationally correct; however, I feel it’s more about how to bring people and tech together.”
Uher’s company, Homelight, works on a different side of the homebuying transaction to empower real estate agents with digital tools. “The real estate market, which for hundreds of years was relatively unchanged, is now being upended by technology,” he said. “We give agents top tools to succeed and win in this new world.” Now, Homelight is extending its platform to deliver end-to-end software to facilitate the modern real estate transaction of the future. “We want to be the essential platform that top agents need to deliver the best possible outcome for their clients,” Uher said.
How First American & Homelight are adapting their short and long-term investments after the pandemic
Uher said that COVID-19 caused the country to step back and reassess “what home means to me.” He added that home sales data reflects that Americans value home more than ever after spending a year in quarantine. Homelight adapted its strategy to enable homebuyers to safely search for and buy a home. The company launched its Move Safe program whereby Homelight “would qualify our agent partners to make sure they were using safe practices… so our clients could be reassured,” he said.
Homelight also launched its Trade-In product right before COVID hit. “This is going to be a long-term success for us, but also during the pandemic, it was perfect timing because it allowed the homeowner to get out of the home before showing it,” he said.
Hurst explained that the pandemic didn’t alter First American’s long-term innovation and investment strategy. “The pandemic didn’t really change consumer preferences around digital transactions, it just brought them forward 3 to 5 years,” he said.
“We’re advancing investment a lot [in online real estate transactions] in our core business and the technology we’re deploying internally as well as the rate of investment in our venture portfolio,” he said. “There’s been a lot of capital raised in the last 12 months in the digital real estate ecosystem and that’s been exasperated by this belief that we’ve already brought consumer expectations forward 3 to 5 years.”
End-to-end transactions—the only way forward?
Hurst and Uher both agreed that the real estate transaction of the future is not about delivering a “one-click” event. “[Purchasing a home] is a low frequency, high severity event… so it’s not about speed, it’s about having certainty and transparency in that transaction,” Hurst said. He added that “choice” will be the most important component in driving forward the real estate transaction of the future.
Uher agreed that it’s a low-frequency event, but added that it’s also a “highly emotional” event in which homebuyers want and need a knowledgeable real estate agent to guide them through the process. “We focus our entire model around top agents, and really helping those top agents to supplement their local expertise with technology that makes the process simple, certain, and satisfying,” he said.
Uher added that he believes owning the full transaction experience in-house is the way forward. “To create certainty in the transaction, you need the full stack of brokerage, title & escrow and lending,” he said. “Our vision there is to eliminate contingencies in real estate forever.”
Hurst has a different point of view than the emerging narrative of “the only way to improve the real estate ecosystem is to put everything under one roof.” While he shared that one seamless experience across the home search, lending, and title process is “exactly what the customer needs,” he leaned away from a belief that an all-in-one approach is the best way to achieve innovation—namely because each of the verticals (mortgage, brokerage, title) is so complex. First American’s approach is to empower mortgage, brokerage, and other partners who share First American’s vision by investing in them, while also continuing to innovate in-house on their core area of expertise.
To hear more from Hurst and Uher on their approach to innovation, click below to watch the discussion in full.