Lessons learned in closing over 1,000 mortgage transactions online

In the summer of 2017, we made history. On a Friday in July, an Illinois resident bought a home in Texas using a Texas title company, a Michigan lender, and a Virginia notary. The buyer completed their closing online, saving thousands of dollars in travel, hundreds of sheets of paper, and days in shipping.

Notarize has done over 1,000 online mortgage transactions since then, and we’ve learned a few things. The most obvious lesson is that no two stories are alike.

We’ve helped a family in Hawaii sell their home in Texas. We enabled families in the midwest to refinance their home to build a pool for their kids. When an exciting job opportunity took one homeowner to Japan, we helped them sell their home from overseas. We’ve been humbled by the people we’ve met and the desire for a digital solution to an antiquated home buying process.

As we look to the next 100 thousand online closings and beyond, we believe these lessons will shape our path forward.

Buyers Crave On-Demand Experiences

Technology has impacted every industry. It’s now real estate’s turn.

Over 95% of buyers search for their dream home online, and nearly 43% of mortgage applications are submitted the same way. Consumers demand experiences that are fast, convenient, and cost effective. It’s why we choose mobile ordering for coffee, and ridesharing when it’s raining outside.

Home buying is experiencing the same fundamental shift in user behavior. In a world where you can buy a goat and have it delivered in two days, consumers expect technology that makes the home buying process simpler, too.

Consumers want to close on their home while on vacation, on their lunch break, or from the comfort of their own homes. Over the last year and a half, we’ve realized there’s a huge educational opportunity to empower buyers to choose to close online. Mortgage closings should be intuitive and seamless, completed on your terms, and similar to other experiences in your everyday life.

We have some work to do to bridge that gap, but we’re excited to help realize its potential.

Closing Sooner Has a Trickle-Down Effect

Home buyers have always wanted to close on their home faster, however, sometimes life gets in the way. Meters are left unfed, babysitters need to be coordinated, and closings might coincide with that vacation you’ve been planning for months. Closings have typically been booked when it’s convenient for the lender, not the buyer. Even worse, when people travel or can't make it to a closing, it has real cost implications: people must buy a rate lock for every 15 days the closing slips.

That’s why the average home closing takes 52 days.

Moving to online closings saves time and money for buyers, lenders, and title agents alike. Today, Fannie Mae estimates that the digital execution of a mortgage will save an originator $1,100. There are similar costs for title companies that average more than $5,000 in processing costs. When lenders and title agents save, those savings trickle down to the buyers. And technology is the key to unifying the real estate industry and leaving all parties happy.

We’ve been working hard to not only strengthen communication with all stakeholders involved in online closings, but to facilitate an experience that brings the industry into the 21st century.

Changing Habits Is Hard

Widespread acceptance is critical to maximizing the benefits of technology, but even total buy-in produces different results for different stakeholders. Realtors have benefited most from the early adoption of online closing technologies, thanks in large part to eSignature platforms and sites like Redfin and Zillow. Lenders, title agents, and other stakeholders experienced disparate offerings from vendors, creating a sluggish and disjointed experience.

Most of the traditional real estate transaction centers around hundreds of pieces of paper, FedEx, and physical travel time. Everyone wants to believe that technology will make these activities easier and more efficient -- but widespread change has been slow.

That’s starting to change.

In the last eight years, investments in technology companies serving the real estate industry grew thirteen-fold, reaching $22 billion globally in 2017. Industry leaders are now voicing their opinions on how to better serve their customers, even if it means overhauling the only business processes they’ve ever known.

Along the way, we’ve taken this momentum to involve key stakeholders to build experiences they love.

We’ve heard from our customers that a typical paper closing can have enough errors to cause financial headaches and closing delays. With Notarize, these errors are eliminated entirely. This has direct cost savings for both the lender and title company, but it also means that people buying and selling their homes can be assured their transaction is final; there’s no risk of needing to drive to a second closing to fix a document.

We also heard loud and clear that realtors, loan officers, and settlement agents want to join the closing to assist their customers and participate in the ceremony that is the closing. And we’ve learned that buyers and sellers often do have real questions to ask. That’s why we built Notarize Connect, as a way for the buyer, seller, and notary to click to call any of the parties to the transaction. That person doesn’t need to be tethered to their computer. The realtor can be out selling another property, answer their phone, quickly join the meeting to address any issues… and the closing continues perfectly.

We’re excited to continue building products and experiences that unify the real estate industry, and look forward to the journey ahead that will help us achieve this vision.

notarize ebook on the future of home buying