On today’s show we’re talking about a technology company that looks to upend the back office work associated with real estate transactions.
Real Estate closings haven’t changed very much in the past 20 years. In fact, I can say that a large percentage of real estate transactions don’t close on time. Sometimes it’s the fault of the lender who request additional information at the last minute. But often it’s the result of missing items or mistakes in the preparation of closing documents.
I can also tell you that I know of several instances when a corrective deed needed to be recorded because of mistakes in the closing process. In addition to improving productivity, these back office automations also improve quality and compliance with county recorder processes and rules.
Real estate transactions are still completed at title companies using a paper process that hasn’t changed much in decades. There are a number of companies looking to disrupt the real estate closing table. In truth, there’s no reason that real estate closings can’t be modernized. The leader in this space is a company called Qualia.
As of earlier this week, the company is the latest unicorn. The term unicorn is used to describe a company that has grown from startup to a valuation of $1B. The digital real estate startup, Qualia, raised $65 million in a Series D financing round, increasing its total funding to $160 million and valuing the five-year-old company at over $1 billion.
Qualia’s aim is to digitize the home buying and selling process so that it is easier for everyone. The company’s platform acts as a virtual deal room, allowing consumers to review and sign paperwork remotely from the safety of their own homes or on their phones.
The pandemic has been a “tailwind” for Qualia, as all real estate parties involved needed a way to conduct the transactions remotely. The pandemic has been a bit of a forcing function to break past the legislative barriers that have prevented electronic closings up until now.
Documents that are recorded are generally required to be notarized. The slow movement has been legislative and at the state level. The United States truly is a union of 50 states each with their own rules as to how real estate closings are to be performed.
I would ask your title company if they’ve implemented electronic closing for their closings, and if not, what is preventing them from implementing a fully electronic closing table solution.