Today, homebuyers can tour homes, see the neighborhood, and research the history of a property all from the comfort of their couch. Technology has streamlined the front end of the purchase process, but the actual closing remains largely stuck in the past. Research from the National Association of Realtors shows that nearly 40% of home buyers rank understanding the closing process and the related paperwork as the top challenge. Tech savvy consumers who have looked at homes and even virtually furnished them with a smartphone are confronted with a mass of old-school paperwork and disconnected procedures when it is time to buy.
15 Degrees of Separation
In a typical real estate transaction, there are approximately 15 different players, including an appraiser, a title examiner, a home inspector, a buyer, a seller, buyer’s and seller’s agents, a lender (which includes the loan officer, processor, and underwriter), a seller’s attorney, and a closing attorney (including paralegals). With such a large line-up, it can be hard for buyers and sellers to keep the roles straight let alone understand all of the intricacies of the close. Further, the communication between these various parties typically took place at best via email and sometimes still through fax! To an ever-connected society, this can feel like a painful experiment in time travel.
In an industry that is designed to help consumers participate in the American dream, the closing process is a nightmare.
Painful, Intense, Taxing and Inefficient
As a long-time closing attorney in Massachusetts, we suffered the same pains as many in the industry. Consumers were confused and we were buried in tedious inefficient closing functions performed on multiple platforms. For example, we ordered a title abstract by email and then received the abstract from the examiner by PDF attachment or written report in the mail which had to be scanned into our server.
We had to draft a separate form to order a tax certificate from the municipality. We used real estate software to draft the title commitment, then used the title company’s system to obtain a required Closing Protection Letter (“CPL”).
An intern or junior admin copied the property’s existing legal description by typing up a new Word document. To obtain seller documents and schedule the closing, we emailed the seller’s attorney or paralegal and attachments were sent to us by…