Hybrid eClosings Deliver on Promise of Homebuyer Satisfaction and Efficiency Benefits

Pilot tests are proving that the potential benefits of eClosings are real


As the mid-point of 2019 arrives, the residential real estate industry has reached an inflection point in the digital transformation of the residential real estate transaction closing. Already this year, the industry has made significant strides toward delivering a real estate transaction closing experience that aligns with the digital home search and loan application experience that has become commonplace.

While there are several types of eClosings – hybrid, in-person, and remote online notarization – hybrid eClosings are currently gaining the most traction. Adoption of remote online notarization has been slower, primarily due to the still-evolving regulatory environment for remote online notarization and the recording of eSigned documents. In a hybrid eClosing, homebuyers can review and eSign multiple real estate transaction closing documents from a computer at home or on a mobile device in advance of the closing appointment, while some documents must be wet-signed in person at the appointment.

In late 2018, First American launched an eClosing solution and since then has been working with multiple customers on pilot tests, including 10 homebuilders. As of May 2019, First American has closed more than 500 hybrid eClosings with the company’s homebuilder customers across five states – Arizona, California, Colorado, Florida, and Texas. In the process, First American has uncovered some important insights that may enhance the progress toward broader adoption of hybrid eClosings.

Homebuyers Value Hybrid eClosing Experience

Homebuilders are laser-focused on homebuyer satisfaction. Advocates for eClosings have touted the potential homebuyer satisfaction benefits of an eClosing, including the added convenience of being able to preview and eSign many closing documents from home and shorter closing appointments. The industry can now see whether or not hybrid eClosings are delivering on their potential.

“After more than 500 completed hybrid eClosings, we’re consistently seeing closing appointments reduced to an average of 20 minutes and homebuyers are grateful for the ability to preview documents in advance and to have a shorter, more convenient signing event,” said Joe Tavarez, president at First American Title’s Homebuilder Services Division. “Homebuilders will appreciate that homebuyer reactions to the hybrid eClosing experience have been overwhelmingly positive.”

According to Tavarez, homebuyers have shared that the ability to preview closing documents on their own devices at their convenience allowed them to ask more questions prior to closing and, ultimately, helped them better understand the closing documents.

Shorter Closing Appointments and Increased Accuracy on eSigned Documents

Operational efficiency may be one of the few priorities on an equal footing with homebuyer satisfaction for homebuilders. Generating efficiency gains in the transaction closing process can help homebuilders more easily manage the rush at month end, quarter end and year end. First American has found hybrid eClosings deliver several efficiency benefits that homebuilders will appreciate.

“Homebuyers are wet-signing 10 documents instead of 40 at the closing appointment, so the closing appointment time is approximately 20 minutes instead of 45-60 minutes,” Tavarez explained. “When you consider how that can increase the capacity for closings in a single day, week, or month, the efficiency benefits start to translate into real value for homebuilders that are dealing with a high volume of transactions.”

Keeping a closing on schedule can be derailed by a missed signature on a closing document, forcing the escrow team to redraw a document amid the rush to close.

“Missed signatures on closing documents can delay a closing and are a real drag on efficiency, but hybrid eClosings have helped eliminate missed signatures on the closing documents that are eSigned,” said Tavarez. “The increase in accuracy on eSigned documents contributes to shorter closing appointment times on average.”

Eighty Percent Fewer Paper Documents

It’s true that hybrid eClosings still involve wet-signing the critical recordable documents at the closing appointment. However, hybrid eClosings significantly reduce the number of wet-signed documents.

“On the hybrid eClosings we’ve conducted, we’ve reduced wet-signed documents by 80 percent. Homebuyers appreciate having to wet-sign fewer documents, but there is also a significant boost in efficiency when you are printing 80 percent less paper,” said Tavarez.

Settlement-Driven eClosing Option

Many homebuilders and their lender partners are wisely examining a variety of options to securely and efficiently adopt eClosings, including engaging technology start-ups or other third-party software providers or investing in building their own eClosing solution internally. According to Tavarez, homebuilders are right to evaluate a variety of options, but many do not realize that settlement providers can help deliver a hybrid eClosing with minimal added costs.

“We can support homebuilders and lenders that prefer to use their own third-party eClosing solution, but we’ve found that many of the homebuilders we have spoken with are surprised to learn that we can deliver a hybrid eClosing experience with minimal integration and process changes as well as no additional settlement fees for the builder or the buyer,” Tavarez stated. “It’s an exciting time in the industry and fun to be on the front end of this evolution. We expect to aggressively ramp up hybrid eClosing transaction volume in the months ahead.”

First American Title Insurance Company, the largest subsidiary of First American Financial Corporation (NYSE: FAF), traces its history to 1889. One of the largest title insurers in the nation, First American Title provides comprehensive title insurance coverage and professional services for real estate purchases, construction, refinances, and equity loans.

First American Title’s Homebuilder Services division caters specifically to the needs of national and regional homebuilders, combining deep homebuilding industry expertise with leading technology to deliver a streamlined closing process both builders and homebuyers appreciate.

Brianna Fries is the Editor for Builder and Developer Magazine. She can be reached at brianna@penpubinc.com.

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