Real estate, put simply, often involves the largest transaction that any of us as individuals ever tackle.
Cheryl Gurz, vice president of product management for The Clearing House (TCH), told PYMNTS that given the fact that hundreds of thousands of dollars are changing hands, the process is antiquated and friction-filled — and that’s in the best of times.
It’s a paper-laden journey, and a lot of information is exchanged via email. Some deadlines loom; other deadlines are missed. Each day after a missed deadline means more days of interest and fees that accrue. There are scores of intermediaries involved, with complex, split payments, and taxes in the mix. All of it needs to get done during normal business hours, and there are any number of points of failure.
The conversation came against a backdrop where EMTransfer, which provides cash management services across its platform, is working with KeyBank to offer real-time payments functionality to the real estate industry across TCH’s RTP network. The joint efforts, through application programming interfaces (APIs), will help streamline and strengthen the security of transactions and interactions between title insurance, escrow companies and estate attorneys, among others.
Along the way, explained Gurz, manual, paper-based processes are brought firmly into the digital age, and reliance on intermediaries to initiate payments is lessened significantly.
Benefits accrue, too, to the title companies and escrow firms that have had to contend with manual, paper-based processes. Beyond the time savings, she said, these firms can save operating costs tied to generating paper checks — or revamping and re-printing paper deadlines if payment deadlines are missed (again, those deadlines are less of a risk if payments are done in real time).
“The efficiencies are there,” she said, in an environment where payments can be done 24/7 — and where East Coast/West Coast timelines need not impact the flow of business between counterparties — without the guesswork of when wire transfers will arrive and settle into receivers’ bank accounts and endless follow-up phone calls (confirmation comes within seconds with real-time payments).
There’s some evidence that real-time payments will see significant adoption in the months and years ahead in real estate. Real estate agents, Gurz said, “have been dipping their toes” in one-on-one payments in their online banking and treasury management portals. With the joint efforts between EMTransfer and Keybank, these forward-thinking stakeholders “are using their technology providers to bring RTP to them — front and center — and save customers money.”
Asked by PYMNTS about security — with the adage that faster payments equal faster fraud — Gurz said fraud screening is done in all cases, on the sending and receiving sides of the transaction, before payments are ever released. There’s also a “15-second clock” in place to make sure that payments are sent to the correct parties via secondary fraud reviews.
These measures, she said, “are required for all those banks that join our network. That’s why our network is connected to banks only — and their secure channels.”
The transactions themselves are done through a real-time credit push, so there’s no way for a would-be fraudster to insert themselves into someone’s account and drain funds. The RTP network helps eliminate any of the vulnerabilities of wire fraud.
Looking ahead, she said, as transaction limits are boosted beyond the current $1 million limit, and requests for payments are introduced, the receivables side of real estate will be revolutionized.
Technology and speed are set to make strides in transforming the pain points that have existed for decades, she said.
The changes will be welcome, for as she noted to PYMNTS, “many of us who have been through real estate transactions — buying or selling a home or condos — recognize it’s never easy.”