Since the start of the pandemic, there has been an enormous push for end-to-end virtual real estate transactions. While there is no fully automated virtual real estate transaction system, we are closer to that goal. Today, prospective buyers can shop for homes, order an appraisal, notarize documents, become approved for a mortgage, and execute closing documents without traveling to a traditional bricks-and-mortar closing office.
This trend is not entirely new, but it has rapidly expanded in recent years. Even before the pandemic began, many real estate agents used online tools to help clients sign documents. The pandemic merely cemented these trends. Instead of going away, virtual real estate transactions are sure to remain and are considered the “new norm.”
While many clients enjoy filling out their paperwork online, some prefer having in-person closings. DocuSign makes the execution of closing documents simple, and most people are already used to accessing DocuSign from their mobile devices. Because clients already have experience using DocuSign, transitioning to this technology is straightforward for most clients. People uncomfortable with this online technology can always give their lawyers power of attorney to sign paperwork for the transaction.
To make virtual real estate transactions easier, DocuSign has even created DocuSign Rooms for agents. The agent can group all of their listings and information in these rooms. Once someone is ready to buy or sell a property, the DocuSign Rooms can easily send out all final paperwork.
Each state has rules about what can and cannot be performed online. On March 31, 2020, notaries in New York were officially able to start using audio and video technology for notarizing documents. Twenty-nine other states have passed permanent remote online notarization (RON) legislation other than New York, which may have been the catalyst for the virtual real estate transaction. Because of this, many clients can get documents notarized without leaving the comfort of their homes, thus the commencement of the virtual real estate transaction.
Virtual tours have been used in real estate for years. Many listing websites used video tours to increase the odds that buyers would become interested in their listings. While this was a fairly common trend before the pandemic, it was not universally adopted.
Now, buyers prioritize listings that include virtual tours. Zillow, StreetEasy, and other sites encourage virtual and 3D tours. In 2020, Zillow even released data that showed 3D tours had increased by 152 percent from 2019 to 2020.
At the forefront of the virtual real estate transaction, Smart contracts make managing contracts simple. For instance, DocuWalk uses blockchain technology to record different transactions. This technology fulfills audit requirements and ensures document security. Because of the technology, messenger services and faxes have essentially become obsolete.
By removing the physical paperwork, DocuWalk makes finishing a transaction as straightforward as possible. Each user can edit the contract and track changes. Other than blockchain signatures, the contracts can be completed with e-signatures.
In 2015, Zillow acquired a similar program known as Dotloop. Users can store, share, sign, and edit their documents through this platform. Meanwhile, DocuSign is broadly used for signing all kinds of documents.
Appraisals are necessary for mortgage lending, but the pandemic temporarily halted appraisals. Thankfully, appraisers found alternative ways to view properties. Today, many appraisers use a hybrid approach that takes advantage of exterior appraisals, photographs of the property’s interior, and routine interior inspections.
The pandemic temporarily changed the mortgage market. Because unemployment became more common during the pandemic, banks had to spend more time researching a borrower’s job history and employment status. Digitization has simplified some aspects of mortgage lending, but banks are still required to complete their due diligence.
Banks have resorted to using Freedom Mortgage and similar platforms to offer mortgages a little easier. This platform has a digital verification service known as AccountChek. Through AccountChek, banks can look at an individual’s employment information and income.
There are other platforms available as well, which in many ways support the virtual real estate transaction. For example, SnapDocs works with Encompass to speed up digital closings and other parts of the transaction. Meanwhile, Ellie Mae’s Encompass is designed for originating loans.
Meanwhile, Better and Morty are both useful for mortgage brokers and borrowers. These systems help buyers secure a loan package with the lender. Then, the platforms guide borrowers through the entire closing process. Because of how popular these digital platforms are, more innovators will likely step into the lending industry to improve virtual transactions.
To stay competitive in today’s marketplace, agents must know how to use virtual real estate transaction tools. Emerging technology continues to appear that can streamline all aspects of the transaction. Today, buyers can use virtual platforms for touring a home, originating a loan, editing documents, and signing closing papers. While the in-person touch will always remain an essential part of the real estate marketplace, virtual transactions will continue to play a significant role in upcoming years.