Faster is often better – but not always.
Modern technology has vastly shortened the time it takes to qualify for a mortgage and close on a home. The internet continues to streamline the real estate process with new programs that improve efficiency at a blistering rate. But there are still some real estate transactions where speed can cause an uncomfortable squeeze.
The need for speed is everywhere in real estate and finance these days. Quicken Loans’ Rocket Mortgage, for instance, advertises a loan approval in minutes. And the length of time houses are on the market gets shorter and shorter every year.
But does all that speed leave enough time for buyers to do what they need to do?
First, let’s look at the ever-shortening time spans.
According to real estate company Zillow, last year saw the fastest pace ever for house sales. A typical abode was on the market for just 81 days, with many markets coming in much quicker than that: 41 days in San Jose, for example, and 43 in San Francisco.
Ever-more sophisticated technology has helped speed things up, but the acceleration has mainly been caused by hyper-hot housing markets, where decent houses for sale are few and far between.
According to Zillow, “the fastest-selling month on record was June 2017, when the median valued home took 73 days to sell, including closing.”
“Tight inventory accounts for much of the crunch,” the firm reports. “The number of homes for sale has fallen on a year-over-year basis for 37 consecutive months, leaving fewer options for buyers – which contributes to higher prices.”
Many people in the real estate business are happy that things are speeding up so rapidly. Jonathan Corr, president and chief executive of mortgage software firm Ellie Mae, thinks the efforts of tech firms like his may shrink homebuying timelines even more.
Zillow pegs the average homebuying transaction as taking four to six weeks from contract to closing, but Corr says it could soon be even faster. He notes, “If you’re a consumer, you want the process to be shorter.”
No doubt sellers and real estate professionals are happy to be getting their money quicker. And borrowers refinancing their loans want to see their transactions close ASAP so they can lower their rates or tap into their equity right away.
But what about folks who are selling one home and buying another? Or merging two households into one?
They can usually only move so fast, no matter how quickly the lender is ready to hand over the money. And if they can’t get everything done in time, everyone else is stuck in neutral.
Until technology vendors devise an electronic way to physically move possessions from one home to another, for example, buyers are going to have to make their moves the old-fashioned way. And that can take time. Atlas Van Lines, for instance, recommends allowing two months to execute a move properly.
The company’s list of the myriad details involved can be a little daunting. Its recommended tasks begin two months before moving day, and cover everything from measuring furniture to be sure it fits in the new place, to turning utilities off in the old home and on in the new. You’ll also need to make arrangements for pets, get your deposit back if you’re a renter, and on and on.
In other words, most moves take time.
Still, technology doesn’t have to be the bad guy, squeezing you into an uncomfortably quick move, according to Joe Tyrrell, Ellie Mae’s executive vice president of corporate strategy. For one thing, it can help your lender be more efficient in ways that will benefit you.
Most lenders sell their loans off to investors in the secondary market, and the numerous investors who buy loans all tend to have different requirements. While that doesn’t seem to matter on the consumer side, buyers may be annoyed if they are required to fill out extra documents before closing because your lender switched to a different investor. But Ellie Mae, among others, has software that can remove that irritant.
Another Ellie Mae program makes for a more pleasant borrowing experience: It analyzes applicants’ behavior and predicts when they are most likely to initiate contact with their lenders. That way, lenders can make sure they are available at those particular times.
“This lifts [borrower] confidence, and fewer loans fall out of the pipeline,” Tyrrell says. “There are plenty of competitors in the mortgage space. If it’s not high-tech, people will go someplace else.”
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at email@example.com. Freelance writer Mark Fogarty contributed to this report.