In the next five-to-10 years, Doma CEO Max Simkoff wants to make it possible for a homebuyer to sign a contract on their new home on a Friday evening and move in on a Monday morning.
“That is the end goal and what prevents that today is so much of the process being analog and manual,” Simkoff said.
So far his venture-backed title company has launched platforms that have sped up title clearance and title insurance acquisition, and they have their sights on expanding into the lending and appraisal space. But in order to overcome this challenge they, and other title companies with similar end goals, need the software to power this vision.
Pat Stone, a veteran of the industry and the founder of WFG National Title Insurance, does not think this will happen any time soon – and certainly not in the time frame Simkoff has targeted.
“As title insurers our business practices and our regulatory oversight are different in every single state,” Stone said. “So because of that you’re not going to have a uniform process for a long time. There are too many underlying regulatory issues and underlying databases and business practices that evolve differently.”
While Stone does not believe these hurdles will be cleared anywhere anytime soon, he too believes that software and technology are key to making a seamless homebuying transaction possible.
Nate Baker, CEO of closing software company Qualia, believes that his company and platform have what it takes to make this a reality.
“Buying a home is an incredibly chaotic, terrible process,” Baker said. “A lot of companies have tried to improve the real estate agent or lender experience, but what we realized is that basically no one had tried to fix the core problem of real estate, which we saw as the actual transaction infrastructure and we saw an opportunity to build a Stripe-like or Amazon checkout-like experience, and we felt that the title company was this forgotten central piece of the real estate transaction.”
One of the biggest challenges to creating a seamless checkout experience in homebuying, according to Baker, is that every party involved in the transaction has their own system, many of which do not communicate with other parties’ systems.
“If you’re a customer, what ends up happening is that your lender asks you for your name and social, and then the real estate asks you for it and then the title company does it and this keeps going, and it drives people crazy,” Baker explained. “So the core problem we are trying to solve is the coordination and communication among all the parties.”
Baker and his team at Qualia realized that, while real estate agents are shut out in for-sale-by-owner (FSBO) transactions and lenders get nothing out of cash deals, title insurers see every single transaction.
“If you start by being the core system for the title company, then you can really begin to solve this communication and coordination problem that exists between different constituents,” he said.
Qualia currently offers a wide array of different software and platform options, but central to all of them is the ability to share and send the necessary documents in a secure fashion. With wire fraud being a major concern in online transactions, Qualia has included two factor authentication in all of its software.
By focusing solely on software, Qualia looks to navigate through the regulatory issues Stone cited as one of the biggest obstacles for a $20 billion-a-year industry.
“The primary business of a title insurance company is title insurance, not software, so the software they are building out is kind of an afterthought,” Baker said. “At the end of the day, real estate is incredibly local and you have to be able to build tools that are able to handle that. We’re position well to do that because building that software is our primary business.”
In an industry that has been oft-maligned as antiquated, Baker believes that software designed to tackle industry specific problems, is the key to improving the title industry’s reputation.
“I think it used to be an industry that was behind in terms of investment in software,” Baker said. “But if you reinvent the title agent’s workflow, you can expand to the players around them, the lender, the real estate agents and the buyers and sellers, and you can actually transform their relationship with the title company. If you can do that, it’s actually a huge opportunity.”
One of the biggest changes in the closing process this past year has been the widespread adoption of remote online notarization.
“It is kind of the culmination of having the perfect streamlined customer checkout experience,” Baker said. “It is hard to say, ‘You filled out all this paperwork digitally, but by the way you need to come into the office and sign these additional documents.’ That isn’t what Amazon does when you buy something. Just a couple of years ago this fully in-app checkout flow seemed like an impossible goal, but now it is starting to happen.”