Most industry leaders have seen the writing on the wall. They know that smart, IoT, blockchain and other cutting-edge technologies make real-estate transactions more efficient than traditional methods. Yet, electronic closings (eClosings) haven’t become a widespread norm. Many lenders and their representatives refuse to adopt the technologies. Reasons vary widely, but often involve concerns about security, costs and implementation. In this guide, we outline the benefits of eClosings and our top tips for convincing lenders to adopt them.
Why Have eClosings Become So Important?
The pandemic revealed that face-to-face interactions can have deadly results. One of the most-important reasons to adopt eClosings (i.e. electronic rather than in-person handling of all documents) is to reduce the spread of infectious diseases. No physical handoff of documents means no physical spread of deadly viruses, bacteria or other germs during the transaction portion of a home sale.
From an entirely transactional perspective, eClosings outperform traditional methods in every way. Lenders may be hesitant to adopt eClosings because they simply don’t recognize that technologies make processes faster and more convenient.
Everyone involved in a home sale can review and complete required documents within minutes. They don’t have to deal with scheduling and rearranging appointments or error-causing distractions caused by racing to arrive on time while dealing with bad weather, road construction or rush-hour traffic. They merely need a working internet connection.
Additionally, direct sharing and transmission of documents in near real-time reduces errors and security risks. An error on a document that might have traditionally taken days to discover and update, followed by new documents sent via snail mail, can now be corrected online instantaneously. Documents are also less likely to become lost or stolen because of direct transmission and secure encryption.
Tips to Overcome Lender Objections
Lenders may be hesitant to adopt eClosings because no one has actually talked with them about adopting electronic technologies in ways that reduce their fears about technologies or change. To overcome their objections, it’s important to address pain points related to their most common concerns:
- Outline All Security Measures: Data theft stories are in the news daily. Make certain to work with an eClosings company that has top-notch security, and then provide lenders extensive details upfront about how their data remains secure before, during and after every closing.
- Provide Clear Pricing Details: Given that many eClosing providers offer subscription plans, a lender should never worry about the cost of adopting eClosing technologies. Implementation with the help of a Software as a Service company who meets all regulatory and transactional requirements can also help reduce costs.
- Choose a Training Package: Although some eClosing providers only offer setup and technical support, plenty of providers exist that also offer full training packages that make it possible for every staff member to quickly learn the tech inside and out.
- Provide Diverse Informative Resources: Lastly, lenders may be hesitant to adopt eClosings because of a lack of resources designed to answer their top questions. Offer them a variety of options that promote these technologies, such as an FAQ business page and an online demonstration.