Twenty years ago, buying a car was a gnarly multistep process: shop for the car, haggle painfully, then plead for the financing, which meant a separate loan application, arrogant loan officers, aloof and often invisible loan committees and endless waiting. All of which created anxious and angry customers. Buying a car was a nightmare.
Now, the process is one step in one hour: shop online, come prepared, buy and finance together. Sixty minutes, no loan committee, centralized paperwork, get it done, get it over with and drive it away now.
What exactly is under the hood of the car–and under the hood of the process–is not completely transparent. But at least you know what your monthly payment is and you know what you get for it. And most important, it is quick and seemingly cheap. Bluntly: it is simple.
What about real estate?
Almost 10 years ago, I put a stake in the ground about ending the 120-day home-buying nightmare. Unfortunately, the process is still hell for too many buyers, but there are clear signs that the process is improving, which is wonderful news for the consumer, the agent, the loan officer and the housing market.
Smarter buyers, easy loan qualifying, volume efficiency by high-volume agents and technology are finally changing the arcane process of buying a home. Add service bundling, digital post office signatures, Realtor and vendor competition and electronic documents and you can actually see the light at the end of the transactional tunnel that has been dark for too long.
Soon, an average home sale will take no more than an afternoon, and the documentation, while hefty, will be easier to breeze through. Packing and moving will still take the perquisite 30 to 60 days but the paperwork on a home sale will move in a single day if not hours.
Much like the auto industry, consumer pain spawned industry action.
I recently considered buying a new property, for which the agent e-mailed me a digital file the evening after I visited the property. The file included all the disclosures, including all public record, seller correspondence and other relevant title and loan documents. This was upfront, not after I made the purchase offer. The agent was smart on two fronts: full disclosure quickly established her and the seller as eager for a sale and as honest. But most important, it expedited the makings of a transaction by instantly putting critical information onto my desktop where I make most of my financial decisions.
Moreover, it made the offer process more efficient because it was based on fact, not speculation or later discovery. The digital delivery was smooth and useful. The mystery was removed and trust was established. In the end, intense consumers create responsible agents.
Transparent Internet competition for leads has spawned some of these responsible habits, but productivity tools generally have sparked smart agent behavior that speeds up the process. Plus, competition created by lead generation services helps to make agents smarter at both grabbing and closing business. The instant nature of the Web lead tends to get everyone busy quickly and efficiently.
The increased efficiency of the loan qualification process has been dramatic as well, neutralizing the number 1 contingent in most home sales. Here again, digital documents are further expediting loan decisions and funding. And the integration of call centers and online mortgage origination and delivery is way ahead of where it was just two years ago.
Next is offer management, widespread use of U.S. Post Office certified signatures, more in-house closings, better transactional management tools and a logistical approach to escrow and closings generally.
We have much more work to do to end the nightmare, but technology, leadership and innovation are going a long way.
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