Real estate transactions have gone largely digital as the pandemic has disrupted nearly every aspect of home buying, from house hunting to securing a mortgage, getting an appraisal, notarizing documents and signing the final closing documents.
Digital products designed to streamline the home-buying process are not new, but coronavirus restrictions have enabled some of them to finally gain a foothold. Eight months into the pandemic, many of New York’s real estate professionals believe that some of these tech solutions may be here to stay as buyers and sellers have become more comfortable with virtual transactions.
While some clients continue to prefer in-person closings, others are giving their lawyers power of attorney to sign the final documents for them or they’re executing closings on virtual platforms like DocuSign.
“In my experience, the majority of people are comfortable using DocuSign on their phones,” said Michael J. Franco, a broker with Compass. The pandemic has “really forced people to rely even more heavily on technology and I don’t think that’ll change going forward.”
Before the pandemic, video and 3-D tours were embraced by some brokerages and listing websites, but they were far from universal. By the time New York’s real estate market reopened in June after several months of coronavirus restrictions, most buyers were prioritizing virtual tours before reaching out for an in-person visit.
StreetEasy, for example,included virtual tours on its site, but 3-D tours weren’t available until April. Between the second and third quarters of this year, the number of sales listings with 3-D tours increased by 110 percent. And Zillow reported a 152 percent increase in listings with 3-D Home tours between this October and the same time last year.
Digitization has helped speed up the lending process in recent years. But as unemployment and layoffs have surged in the pandemic, lenders have had to invest more time in verifying potential borrowers’ employment status and history.
“The mortgage process has become a lot more scrutinized because we’re writing loans that have to perform or else we’ll have a financial loss,” said Michael Bensimon, a senior loan officer at Freedom Mortgage. “In the environment we’re in, the fear and concern that loans can go bad quickly is much higher.”
To streamline work flow, Freedom Mortgage uses a digital verification service called AccountChek to review the borrower’s income and employment information. Other mortgage-specific software includes Encompass by Ellie Mae, which Mr. Bensimon uses to originate loan packages, and SnapDocs, a platform that can be combined with Encompass to facilitate interactions and digital closings.
New systems designed to simplify the lending process for borrowers include Better and Morty, a mortgage broker that acts as a middle man between the home buyer and the lender, securing a package and then walking the borrower through the closing process.
Jeanne Casey, a principal at MetaProp, a venture capital firm focused on real estate technology, noted how QuickenLoans, one of the largest online lenders in the country, has helped catalyze these younger companies. “Having those digital roots is paving the way for the digitization of the overall mortgage industry,” she said. “We’ve seen so much activity and focus in the space.”
Traditional, in-person appraisals came to a halt earlier this year under the state-mandated lockdown in New York. Because appraisers are the “eyes and ears of mortgage lenders,” according to Jonathan Miller, of the appraisal firm Miller Samuel, what happens to this industry directly affects the lending industry. By the summer, as restrictions lifted, Mr. Miller found himself doing a mixture of in-person interior inspections, “drive-by” exterior appraisals, and reviewing photographs of a home’s interior.
Mr. Miller sees this hybrid approach as the new reality of his work. “Until there’s a vaccine,” he said, “we’re going to do all three.”
Since March 31, an executive order by Gov. Andrew M. Cuomo has allowed notaries in New York to sign documents using audio-video technology instead of signing and notarizing documents in person.
Dawn Pereyo, an underwriter and past president of the New York State Land Title Association, says this work flow is the way of the future. Twenty-nine states, not including New York, have already enacted permanent remote online notarization (RON) legislation. “The executive order has allowed us to start down the road of RON,” she said.
New and updated contract management systems have helped make wet-ink documents, faxing and messenger services obsolete in the contract-signing process. A platform like DocuWalk, which uses blockchain technology to record transactions through a decentralized network, makes it a quicker, more auditable and secure process.
Allen Alishahi, a broker and co-founder of SheltzerZoom, the creator of DocuWalk, said eliminating paperwork and multiple applications is like “going from a typewriter to a cellphone.” The software allows live remote collaboration on its smart contracts, including shared editing ability, tracked changes, and both blockchain signatures and e-signatures.
Similar platforms include: Dotloop, acquired by Zillow in 2015, which allows users to store, edit, share and sign digital documents; and DocuSign, a more widely used platform that the Corcoran Group, for example, has just rolled out to its entire company.
Pamela Liebman, president and chief executive of Corcoran, said it was critical to stay on top of emerging technology in order to stay competitive and streamline the transaction process for agents and clients. But she maintained that relationships still matter even if the pandemic has forced most of the process online.
“When it comes to important emotional transactions like purchasing a home,” she said, “there’s always going to remain that in-person touch.”
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