Fintech Adoption Accelerating among Real Estate Professionals, According to First American Real Estate Sentiment Index
SANTA ANA, Calif.--(BUSINESS WIRE)--Nov 27, 2018--First American Financial Corporation (NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released First American’s proprietary Real Estate Sentiment Index (RESI) for the fourth quarter of 2018. The RESI is based on a bi-annual survey of independent title agents and other real estate professionals, providing a unique gauge on the real estate market using the crowd-sourced wisdom and expertise of real estate experts.
Chief Economist Analysis: Real Estate Professionals Embracing Fintech to Enhance Home-Buying Experience
“Throughout 2018, we’ve seen many trends that set the groundwork for the acceleration of financial technology (fintech) adoption,” said Mark Fleming, chief economist at First American. “It has been a strong seller’s market across the top U.S. metropolitan areas. With inventory low and house prices at historic highs, prospective homebuyers felt pressured to settle deals quickly before opportunities fade away. Additionally, the largest group of prospective homebuyers, millennials, expect greater efficiency and convenience in their home-buying experience,” said Fleming.
“Given these factors, as part of our bi-annual Real Estate Sentiment Index (RESI), we surveyed title insurance agents and real estate professionals across the nation for their perspective on how fintech can improve the home-buying process. Three key innovations stood out: secure collaboration and communication portals, eClosing and remote online notarization, and chat bots,” said Fleming. “We anticipate that 2019 will bring increased adoption of these innovations.”
Is Fintech the Answer to Rising Fraud in Real Estate Transactions?
“According to 45 percent of the title agents and real estate professionals surveyed, the most important financial technology that helps potential homebuyers accelerate transactions is secure collaboration and communication portals,” said Fleming. “Survey respondents indicated that buyers would greatly benefit from a secure platform that allows them to correspond with lenders, real estate agents, escrow officers, and other parties involved with the real estate transaction. The emphasis on security does not come as a surprise, given that one of the major trends affecting the real estate industry, real estate professionals and consumers is the rise in wire fraud.”
eClosing and Remote Online Notarization Poised to Transform Home-Buying Experience
“eClosing and remote online notarization capabilities are also poised to make their mark in the industry. 34 percent of title agents and real estate professionals surveyed believe that remote online notarization and eClosings will have a large impact in helping home buyers close their transactions faster and more efficiently,” said Fleming.
“Remote online notarization allows a notary to notarize documents remotely over the internet via tamper-evident digital tools, sophisticated fraud prevention technologies and live audio-video conferencing. This technology has already been accepted as an alternative to traditional in-person notarization in several states, and we anticipate seeing further uptick in 2019,” said Fleming.
“Similarly, eClosing, the electronic execution of mortgage loan closing documents in a secure digital environment, is a faster and more efficient alternative to the traditional paper-based real estate closing,” said Fleming. “eClosing can also reduce the risk of manual errors in the closing process, improving loan quality alongside efficiency.”
Enter the Chat Bots
“Finally, 18 percent of title agents and real estate professionals indicated that tools that help with process efficiency and automation, such as customer service chat bots, would help deliver a more efficient home-buying experience,” said Fleming.
“With more and more prospective home buyers searching for homes and information online, chat bots can help real estate agents engage potential customers in real time as they are browsing online listings, at any time of day,” said Fleming. “This technology has great potential to serve the real estate industry.”
The Tipping Point?
“Title agents and real estate professionals are keenly aware that fintech is transforming the industry, and plan to take full advantage of specific technologies for faster and more efficient transactions,” said Fleming.
“35 percent of title agents and real estate professionals anticipate needing software support for remote online notarization, and secure collaboration and communication portals, in the next 7-12 months. Nearly as many (30 percent) title agents and real estate professionals indicate they will require software support as soon as 3-6 months,” said Fleming. “Collectively, 65 percent of respondents intend to adopt these technologies in the next 12 months.”
“Streamlining time-consuming processes, as well as delivering an improved consumer experience, is top of mind for real estate professionals,” said Fleming. “Fintech is here to stay.”
Purchase Market Outlook Dips
“Despite the positive outlook for the potential of fintech, optimism about the housing market decreased among title agents and real estate professionals this quarter. This is likely due to rising mortgage rates and high house prices,” said Fleming. “Until now, rising rates had only impacted the outlook for the refinance market. However, this quarter, in addition to the impact on buyer’s affordability, rising mortgage rates reduce the incentive for existing homeowners to sell their homes. Those who don’t sell, don’t buy either and that is contributing to the decline in sentiment.”
“Title agents and real estate professionals expect residential house prices to increase by 2.2 percent in the next year. The outlook for residential price appreciation is down 2.1 percentage points from the second quarter of 2018, and 1.2 percentage points from the previous year,” said Fleming.
“Changes to house prices in part reflect the relationship between supply and demand. As housing supply increases relative to demand, price appreciation slows down,” said Fleming. “In the current state of the market, rising prices and increasing mortgage rates have reduced affordability, discouraging some first-time home buyers from entering the market. Additionally, rising mortgage rates have reduced the propensity of existing homeowners to sell, which also prevents them from becoming buyers. Survey respondents expect that reduced demand will slow house price appreciation.”
Fourth Quarter 2018 Real Estate Sentiment Index
What Do the RESI Number Values Mean?
Title insurance agents and real estate professionals are experts in their local real estate markets and have valuable insight. First American’s proprietary Real Estate Sentiment Index is based on a bi-annual survey of independent title agents and other real estate professionals, providing a unique gauge on the real estate market using the crowd-sourced wisdom and expertise of real estate experts.
The next release of the First American Real Estate Sentiment Index will be posted in June 2019.
The methodology statement for the First American Real Estate Sentiment Index is available at http://www.firstam.com/economics/real-estate-sentiment-index.
Opinions, estimates, forecasts and other views contained in this page are those of First American’s Chief Economist, do not necessarily represent the views of First American or its management, should not be construed as indicating First American’s business prospects or expected results, and are subject to change without notice. Although the First American Economics team attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. © 2018 by First American. Information from this page may be used with proper attribution.
About First American
First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; banking, trust and wealth management services; and other related products and services. With total revenue of $5.8 billion in 2017, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2018, First American was named to the Fortune 100 Best Companies to Work For® list for the third consecutive year. More information about the company can be found at www.firstam.com.
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CONTACT: Marcus Ginnaty
First American Financial Corporation
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: PROFESSIONAL SERVICES REIT BANKING FINANCE INSURANCE CONSTRUCTION & PROPERTY COMMERCIAL BUILDING & REAL ESTATE RESIDENTIAL BUILDING & REAL ESTATE OTHER CONSTRUCTION & PROPERTY
SOURCE: First American Financial Corporation
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PUB: 11/27/2018 07:00 AM/DISC: 11/27/2018 07:01 AM