Why does our industry still transfer money with paper checks?

While the real estate industry has witnessed the introduction of a number of spectacular and innovative developments in recent years, we are still (sometimes unfairly) labeled as ‘old fashioned’ or ‘conservative’. This is especially true on the financial services side when it comes to moving money for real estate.

There really is no experience like buying a home. Let’s face it. Whether you are a seasoned real estate investor or a first-time home buyer, this is a big financial transaction. That doesn’t even take into account the emotional impact.

Thanks to a number of fairly recent advances, buying or selling a home is becoming much easier. A process that once involved a lot of manual paperwork has made a pleasant, if partial, transition to a number of online conveniences. Today you can research and even meet your real estate professional, post your listing or find your dream home (filled with virtual tours, funky music and voiceovers!) and get pre-approved for a mortgage loan from the comfort of your own laptop. .

Yet there remains a dark cloud over the general perception of the part of the process that occurs somewhere between signing the sales contract and exchanging the keys to the house – the mortgage approval and settlement process. /fencing. This is where we have some work to do, although there is more going on behind the scenes than meets the eye.

Why is the industry still moving money the old way?

It’s certainly a question that’s been asked by consumers who are used to buying their lattes with their smartphones, receiving their paycheck by direct deposit, and paying highway tolls with a car transponder. If one can fund a college education or a car, fairly important processes in their own right, on their iPads on the backyard patio, why do they have to line up at the bank for a cashier’s check or anxiously wait for transfer instructions (hoping that these instructions are not actually from a cybercriminal)?

In what other industry is the preferred method for moving a large sum of money—say, consideration for buying a home—a cashier’s check or wire transfer? In how many other industries do the professionals involved in completing the transaction, such as the real estate agent representing the seller, have to wait for another professional to deposit a handwritten check in the mail to be compensated?

This is just the beginning. Our industry is an industry that is only scratching the surface as a prime target for electronic fraud. And it’s already costing consumers, banks and lenders, and even service providers hundreds of millions of dollars a year.

There is an answer to this question, of course. When it comes to using wires, it’s speed! Period. Due to the complex timing of closing imposed, in part, by a web of regulations and laws, it is important not to have to wait 24 or 48 hours for the purchase price to appear in the seller’s account. However, why are we still sharing routing and account numbers and exposing ourselves to undue risk?

Why do we still scribble on written checks for things like deposits or commissions, and then rely on the USPS or even a courier service to deliver them safely to their recipient? The answer leans more towards “this is how we’ve always done it” or “I don’t have time to research and improve my way of doing things”.

The use of multiple disparate or even siled technologies or other means of communication between real estate professionals, service providers and mortgage lenders does not help matters.

“The way we’ve always done it” is the sworn enemy of improvement

The continued use of archaic means to transfer funds across our industry will continue to undermine process efficiency and the consumer experience. The collective justification for the use of these means will no longer appease the consumer. Not when you don’t need a wallet or even a credit card to make a purchase elsewhere.

There are technologies already on the market, such as electronic payment platforms, that could quickly make paper checks nearly obsolete in our industry. These innovations not only speed up the process; they also add security features against fraud encumbrances that our previous system lacked.

So it’s time to ask the question. Why are we still writing checks and sending wiring instructions again?

Jason Doshi is the CEO and co-founder of Paymints.io.

This column does not necessarily reflect the opinion of the editorial staff of HousingWire and its owners.

To contact the author of this story:
Jason Doshi at [email protected]

To contact the editor responsible for this story:
Sarah Wheeler at [email protected]

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