Why did title agencies become the major way to produce title policies? Because real estate records were geographically dispersed and it cost too much for one company to try to cover over 3,000 counties.
Moore’s Law (i.e., that computer capacity increases by 50 percent every 18 months) has done its work. No one is frightened by the computer any more. Over 50 percent of the people in the U.S. have Amazon Prime accounts. Virtually all brick and mortar shoppers look at the Web first. Conventional retailers are falling like dominoes.
Every major title insurer takes applications through a web portal and most have direct pipelines to major customers. Title data vendors now provide instant access to property and loan data in 3,100 counties. Projections are that over 50 percent of loan and real estate purchase closings will be e-closings by 2019. With fully realizable forward and horizontal integration, title underwriters can go onto the Web and perform every step of a real estate transaction from connecting with the loan application to conducting the closing without ever meeting with a single human.
You need agents for marketing, don’t you? Not anymore. Over 50 percent of U.S. adults bank online. Over 90 percent of home purchasers search on the Web. Loan applications are increasingly taking over the web, particularly for non-bank originators (who now generate over 50 percent of loans). Loan documents are delivered and signed using e-mail or web portals. Fannie and Freddie have turned into giant servers. Direct contact with the ultimate customer is now practical.
RESPA Section 8 and other controlled business regulations are huge barriers to forward integration, right? Wrong. Regulation is an ever weaker dam. Notice that marijuana is getting more and more legal?
You need somebody on the ground to root out fraudsters, do you not? No. Remote e-notaries in at least two states can do verifications using web cameras and Skype. Even if you can’t smell them sweat, you can certainly see them cringe.
No. We have Google Earth for physical inspection, and artificial intelligence to read and interpret documents.
In a world dominated by automation that vastly expands the span of control, all middlemen are being squeezed out of existence. If agents are to survive, they are going to need to develop an entirely new value proposition.
Isn’t this just alarmism? Don’t changes in the conveyancing system actually move at a glacial pace? Perhaps. But at the end of the day, Chicken Little had a point.
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