Two years ago, Tennessee Title Services completed the state’s first fully-digital closing. Josh Terry, Partner at Tennessee Title Services, knows first-hand from this landmark experience that transitioning from traditional closings to digital isn’t as simple as flipping a switch.
Qualia’s Director of Partnerships & Integrations, Max Lamb, sat down with Terry at the RESPRO Fall Seminar held last week in Charleston, to discuss the planning and strategizing that went into Tennessee Title’s decision to lead the state’s first fully-digital real estate transaction. Together, they unpacked the necessity of consumer choice in digital closings and the coordination required to deliver a streamlined digital experience.
Challenging the “Status Quo”
Lamb and Terry kicked off their discussion with commentary on the “status quo” in closings and what led Terry to consider taking the plunge in digital closings. “The pain points associated with traditional closings were creating a stacking effect for us,” Terry said. “It wasn’t just one or two incovenient processes, but rather a laundry list of small inconveniences that added up.”
Terry observed that although his team is quite flexible, the scheduling of all closing parties at a specific location created rigidity for his team and his clients. Additionally, small tasks such as scanning and printing documents, recording documents promptly, and other post-signing activities added up to a lot of time and inefficiency. “I believed with more digital processes, we could repurpose that energy into other functions,” Terry said.
Lamb added that much like Tennessee Title, many title & escrow companies across the country are now well-positioned to take the dive into digital. “The rapid pace of technology advancement in this industry is delivering a lot of opportunity for title & escrow businesses,” he said. “On top of that, legislative changes around Remote Online Notarization are making fully-digital closings a possibility.”
What Do Home Buyers and Sellers Really Want?
Regardless of the possibilities new technology presents, Lamb noted that homebuyers still expect some level of human interaction. “Recent surveys from PWC indicate that further upstream in the loan origination process, homebuyers still expect most of their digital interaction to involve some form of human contact,” he said. “In the case of digital loan applications, consumers want a real person to respond to their inquiries or for someone to contact them after a loan application is submitted.”
Terry agreed that digital advancements don’t necessarily mean fully-digital, automated experiences are the best route forward. In the case of fully-digital closings, his team still delivers a personalized experience for clients. Again, he noted that digital tools allowed his team to repurpose the energy typically spent on tasks such as scheduling, scanning, faxing, and shipping to deliver an exceptional customer experience.
One Size Doesn’t Fit All. When is the Right Time for a Digital Closing?
Although Tennessee Title is equipped to deliver fully-digital closings, Terry and his team recognize that this type of experience isn’t ideal for every homebuyer. “Some people want speed and efficiency while others want the in-person experience at the closing table,” he said. “Being able to offer both gives us the advantage of providing the optimal experience for any customer type.”
Terry and his team have witnessed a few trends when it comes to preferences around digital closings. While there’s no way to predict preferences with 100% accuracy, he believes title & escrow companies can collect and look at their own data to anticipate which customers may want a digital experience. Terry has noticed the following trends with his own set of clientele.
- Repeat buyers (investors and people buying a second, third, fourth, home) tend to feel more comfortable with a digital closing experience.
- Vacation homebuyers who are purchasing a home out of state tend to prefer digital closing options which eliminate some of the complications around out-of-state homebuying.
- “Digital natives” or homebuyers who have grown up using technology tend to be less intimidated by digital closing options.
- Homebuyers who have interacted with digital tools further upstream are less frazzled by digital closings. If you’re working with tech-forward lenders and real estate agents, they may have better-prepared the buyer for a digital experience at closing through an integrated digital experience further upstream.
Taking the Step Toward Digital. Solving the Coordination Challenge
The opportunities around digital closings are enticing for title & escrow businesses looking to level-up their customer experience; however, the decision to provide fully-digital closings requires buy-in from underwriters, lenders, and real estate agent partners. Lamb and Terry broke down a few best practices for managing the coordination challenges associated with a streamlined, digital closing experience.
“Lenders and real estate agents are looking to the title or escrow company for direction,” Terry said. “This gives title & escrow companies the opportunity to lead the digital conversation.” Terry recommends that title & escrow companies position themselves as experts by understanding the unique needs of each closing party and tailoring the digital experience to meet their needs. This approach ensures buy-in and a streamlined process.
For example, Terry understands that his real estate agent partners often want to be the “hero” of the real estate transaction (i.e. the one who has ushered the homebuyer from offer to close.) With this in mind, Terry and his team can customize the digital process to encourage conversations between the homebuyer and real estate agent.
Lastly, title & escrow companies can lead the charge by ensuring the entire digital experience is buttoned-up from start-to-finish. This requires investment in best-in-class software, research around the legality of Remote Online Notarization, and an understanding of county-level acceptance of digitally-recorded documents. (For more on the components that must align for an eClosing, click here).
Making the Change Internally
To close out the conversation, Lamb and Terry discussed the importance of internal team alignment for digital-closing-success. “It’s important to be strategic in your roll out and to master the process before bringing digital closings company-wide,” Terry said.
Tennessee Title started small in one office. Terry identified an internal champion who was passionate about digital tools to lead the change. From there, all of the small details of a digital closing were ironed out at a micro-level before the changes were introduced company-wide.
In addition to attention around the small details of a digital-closing, Terry also understood that he needed to engage the broader team with a big picture vision around the value of digital closings. “For us it was about helping our teams understand that going digital meant less paperwork pushing and a focus on new responsibilities around customer experience and reputation-building,” he said.
Lamb agreed that internal change management is a key component of any digital transformation. “At Qualia, we’ve integrated Qualia University for our customers,” he said. “This is a digital learning platform that helps title & escrow businesses train their employees on Qualia’s software and digital processes.”
Leading the Change
Tennessee Title’s shift to digital didn’t happen overnight, and many of the best practices Terry can now share were not documented anywhere for him when he started the journey two years ago. Regardless, Terry forged the digital path forward.
Technology advancements are encouraging the real estate industry to think critically about real estate transactions of the future. Title & escrow companies are uniquely positioned to lead this conversation— as the primary stakeholder in every real estate closing, title & escrow companies have an unmatched expertise and the ability to bring every member of the closing party together for a streamlined experience.