Companies seeking to use technology to add transparency and reduce friction in the homebuying process are particularly useful now, experts said during an Inman Connect Now virtual event.
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Realtors and brokers should align with companies that use technology to reduce friction in real estate transactions, a pair of entrepreneurs working in the industry said Thursday.
Homebuyers have seen a rapid shift in the market, from rising mortgage rates to inflation and high home prices. Transparency in financing a home is now much more important than it was six months ago.
To generally make the process as easy as possible, agents and other professionals involved in homebuyer transactions would benefit homebuyers by pairing them with tools that give access to helpful information, after finding the best financing plan.
“If you’re a Realtor or broker operating in the industry right now, I think aligning yourself with an ecosystem of companies that you know have a digital strategy…to bring costs down over time, that’s probably a good place to be right now,” said Burns, whose company acts as a third party to conduct title search, policy, settlement and escrow for buyers.
No company can make anything but incremental change in the industry right now, Burns said, but with so much rapid change in the market, real estate professionals can find ways to adapt and provide meaningful value to their clients in the current landscape.
“There’s not just one story here like rising interest rates,” Burns said. “We also have high and rising inflation. We have fast moving changes to home price appreciation. And we have a lot of changes in the way the homebuying process is happening.”
That’s putting more of a burden on Realtors, brokers and back-end service providers to help homebuyers navigate a challenging time.
“If you’re a first time buyer, you probably haven’t been through an environment like this before,” he said. “Being able to provide a bit of perspective and a bit of that more adviser consultant relationship is key now if not more than ever certainly more than 12 months ago.”
The changes in the past 12 months have been drastic. Rates have more than doubled. Home prices have, by and large, remained high. So companies that try to peel back the opacity and give homebuyers more transparency in the entire transaction process can be particularly helpful right now, Boyaggi said.
“When rates were at all-time historic lows, many people were looking at the difference between a 2.5 percent, 30-year fixed rate mortgage and a 3 percent, 30-year fixed mortgage and just candidly not really caring. The difference was negligible. Therefore they went with the first lender that they were referred to,” he said.
In the current environment, homebuyers are more wary of the costs of financing homes that have reached record prices with mortgage rates that have spiked as well.
“They’re no longer just accepting the first referral to a lender that they’d worked with in the past,” Boyaggi said. “Instead they’re being hyper-vigilant about where they get their mortgage and what the rate and closing costs are.”
Companies like OwnUp and Spruce are looking for methods to introduce technology in meaningful ways to reduce friction in real estate transactions, he said.
They won’t be able to provide new financing products or ways to make homes meaningfully more affordable, he said.
“One of the ways in which you do that for the consumer is through the transparent display of data,” Boyaggi said. “The asymmetry of information is what creates anxiety for consumers.”