In the Amazon age, consumers are more pampered - and less patient - than ever. Tap your phone and, voilà - hot food from your favorite restaurant arrives in minutes. High-end electronics appear on your doorstep in hours.
However, the mortgage industry has yet to deliver anything like that level of instant gratification. The typical time from application to consummation of a mortgage is 50 days, according to ICE Mortgage Technology, a glacial pace compared to the swiftness of most other things in modern life.
"The mortgage space is many decades behind everyone else," says Chris Boyle, a longtime executive at mortgage giant Freddie Mac and now president of home lending at Roostify.
Boyle's company is one of many aiming to hasten the mortgage process so that closing times might someday be measured in days rather than weeks. Roostify is part of a new breed of property technology, or "proptech," companies that aim to pull home loans and property sales into the digital age.
Here are trends to watch in 2022.
1. Mortgages: Getting to yes faster
Digital players want to close your mortgage more swiftly – although even the optimists say the process will continue to unspool over a period of days and weeks, rather than the seconds and minutes used as benchmarks in other corners of the economy.
One obvious obstacle, according to Jess Kennedy, co-founder of Beeline: Mortgage giants Fannie Mae and Freddie Mac, who set the rules for most mortgages, have built-in seven day minimums for many of their processes.
While proptech companies acknowledge they won't be able to wire the money within hours of your mortgage application, they're focusing on a different goal – giving consumers a yes or no instantly.
Beeline, a lender that does business in two dozen states, promises to let borrowers know exactly where they are in the process at any moment. "We liken it to the Domino's Pizza Tracker," Kennedy says.
Roostify, which works to speed the mortgage process on behalf of lenders, has a similar approach. "You want to give the consumer certainty," Boyle says.
Roostify focuses on time savings by automating paper-intensive parts of the process, like verifying tax returns and pay stubs. Having an actual human look at every document adds days and weeks to the timetable, Boyle says.
But automation takes lenders only so far. The complexity of mortgage applications poses challenges for lenders that hope to fully automate their approvals.
Every application is unique, and loan applications from self-employed borrowers and real estate investors can stump even veteran loan officers. In other words, programming a robot to shepherd a $300,000 loan through approval ain't easy.
"Every single application is a snowflake," Kennedy says. "It's really hard to create a system that can account for every beautiful snowflake."
2. Home appraisals: Analysis goes virtual
The U.S. housing market is booming despite a chokepoint: There just aren't enough property appraisers to visit and evaluate all the houses changing hands and being refinanced.
Hoping to find at least a partial solution to that problem, the overseer of Fannie Mae and Freddie Mac will begin accepting more "desktop appraisals" in early 2022. The Federal Housing Finance Agency announced in October that remote valuations will take the place of some traditional appraisals, which require appraisers to visit properties that serve as collateral for mortgages.
Paul Ryll, founder of Oscar Mike Mobile Appraisals in Greenville, South Carolina, welcomes the change. By not visiting a property in person, appraisers should be able to crank out more valuation reports, he says.
"There's no reason an appraiser can't do that in 72 hours. It should drastically reduce the turn times," Ryll says. "As appraisers, we need to embrace the change."
Even if they don't tour homes in person, appraisers still will rely on a variety of data sources, including property photos posted in the multiple listing service.
3. Cash offers: New breed of firms wants to be your 'rich uncle'
During the coronavirus housing boom, bidding wars became commonplace. When sellers weigh multiple offers, they tend to favor the sure thing of a cash offer over the slightly less certain bid that's contingent on financing.
As a result, cash buyers often can score a slight discount compared with buyers who are relying on financing. And cash buyers might be able to drive a harder bargain around inspection contingencies.
That has led to a number of companies making cash offers on behalf of buyers who don't really have $300,000 or $400,000 in the bank. Companies such as Homeward, Ribbon, Unlock and Better.com make cash offers on behalf of borrowers who later finance their deals.
One of the new breed of "power buyers" has a catchy take on the offering. "Think about us as a rich uncle," says Adam Pollack, co-founder and chief executive of Accept.inc. "We want to turn every buyer into a cash buyer and every offer into a cash offer."
These companies raised millions in 2021, and they'll continue ramping up in 2022.
4. iBuyers: After a setback, still going strong
In 2020, as the pandemic first threatened the U.S. economy, iBuyers, or instant buyers, slowed their roll. Then, with the housing market booming, they became aggressive buyers of homes in Sun Belt markets. In 2021, Opendoor, Offerpad and Zillow Offers paid sellers premiums for their homes.
Skeptics wondered whether Zillow's generous offers and modest fees made business sense. In early November, Zillow conceded that it was paying too much for properties, even in a market characterized by soaring home values. Zillow grabbed headlines when it shut down its Zillow Offers unit.
Zillow, creator of the vaunted Zestimates of home value, seemingly learned the hard way that technology isn't always the answer to a brick-and-mortar business like flipping houses.
"They just got in over their head, couldn't scale, didn't understand the complexity," says Ken Johnson, a housing economist at Florida Atlantic University.
Yet the other iBuyers are still in business. Stefan Peterson, co-founder of Zavvie, a real estate technology company that works with brokerages to help sellers compare offers from iBuyers, says the remaining iBuyers will dial back the generosity.
"It's been kind of an open secret that iBuyers were making very strong offers," Peterson says. "They seem to be coming back down to earth, but they're still very close to 100 percent of (market value)."
5. Blockchain: Not coming to housing yet, but perhaps someday
Perhaps the hottest area of technology is blockchain, the innovation that underlies bitcoin and other cryptocurrencies. For now, the real estate industry is focused on more mundane tasks, such as shaving a few days off mortgage closing timelines.
But Geoffrey Thompson, chief blockchain officer at proptech firm Roofstock, sees a growing role for the hot technology.
"Purchasing a home is vastly different from owning a digital asset, and navigating the securities laws in this area can be tricky," he says. "In 2022, I expect new experiences to surface that connect blockchain to real-world assets and make purchasing real estate more seamless, efficient and possibly even fun."
He even sees non-fungible tokens, or NFTs, expanding beyond digital art and collectibles into old-fashioned real estate.
"In the short- or medium-term, it may be feasible to buy and sell real-world properties in the form of NFTs," Thompson says.