MReport March 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 25 FEATURE Real estate transactions and DLT sound like a match made in heaven–the peanut butter to the jelly sandwich. In March of 2018, Vermont completed the first blockchain-based deed transfer in the U.S. Look for other govern- mental recording offices to step up and embrace the concept of DLT for land records. If blockchain, DLT, and bitcoin don't already cause anxiety and confusion for nontechnologists, let's add the complementary concept of a "smart contract." No, this isn't a contract drafted by a lawyer from an Ivy League school, but rather a contract that essentially administers itself. Parties would enter into a smart contract by setting forth the parameters and conditions for an agreement (such as a transfer of property). Once the respective parties fulfill their obligations, the deal is consummated automatically, without the need for a third party (such as a title agent to record the deed and cut the checks). Smart contracts would essen- tially execute on autopilot once the requirements are met–and if they aren't? Well, a smart contract can enforce itself–for example, by automatically releasing a deposit as liquidated damages if a buyer fails to fulfill their obligations. E-Notarization and Remote Notarization Several companies are looking to take advantage of the growing list of states enacting legislation that allows for either electronic notarization (where the notary can stamp and sign digitally while still in the presence of the signer) and/or remote notarization (where the notary can participate online or remotely to effectuate an acknowledgment or attestation). Several stakeholders are carefully monitoring the risks and rewards associated with this technology— including title insurance companies and governmental recording offices and regulators. These regulations will lead the way to digital mort- gages and digital closings, where documents can be reviewed online and signed digitally to complete a real estate purchase, financing or refinance. Drones, Robotics and the Internet of Things (IoT) Can a drone deliver keys to a co-broking agent to show a property? Maybe– but why not just unlock the front door, turn the lights, and start the fireplace remotely, using devices that con- nect the smart home to the listing agent or homeowner via the web? That is the power of IoT. But there are probably a whole host of use cases in real estate in which robotics can change the way things are done. Can a robot conduct a home inspection? What about drones being used to assess the quality of a roof, chimney, or gutters? That technology already exists and will likely become much more mainstream in the years to come. Drones can be used to fly over sites and provide data for faster, more affordable and more accurate surveys and plans. The True Spirit of Innovation I often will present on cybersecurity threats to real estate brokers and title agents, or discuss my thoughts on the future of closings and title leveraging some of the technologies that I've discussed above. Many times, people will approach me afterward, shaking their heads in frustration. They ask me whether technology is just going to put them out of business. They share stories of how they do business the "old fashioned way." With the constant threat of wire fraud, lawyers and title agents ask me if it's "time to go back to cutting checks." The bottom line is that residential real estate is inherently a personal business. There are still plenty of customers that want to talk to a human, meet their loan officer, and sit with their broker to review deal terms. Technology will continue to develop and change the way we do business, but ultimately our responsibility is to our clients and customers. Listen to them and follow their lead, they will tell you what is important to them. Never stop learning: read books, take an online course, go to seminars and presentations, attend conferences for your industry, and use the same power of technology to train you and teach you about these new tools. I always stress the difference between technology and innovation. All innovation is not technology. And all technology is not innovation. Real estate innovation includes the adoption of micro-housing, the changing workplace and office space, and how we commute to and from work. Innovation ultimately is a new method, idea, product, or device. Innovation is about fresh ideas and new ways of looking at things (both existing and new). These are exciting times for the real estate, title, settlement, and mortgage banking industries. Small ideas and little changes sometimes have the power to change your mindset and the way you look at your business. Former General Electric CEO Jack Welch (aka "Neutron Jack"), and his wife Suzy Welch are quoted as saying, "So when you think about innovation, don't let it scare you. Don't let it be a buzzword that isolates 10 people in your company while the other 90 sit on the sidelines, waiting for the innovators to innovate. You've got to make innovation everyone's job, all the time." KOSTA LIGRIS (@kligris) is an experienced entrepreneur and CEO, and the founder of the Ligris Companies, a collection of professional services, real estate, consulting, and tech companies. Ligris has represented and consulted for some of the nation's largest banks and real estate companies. He also mentors, advises, and invests in startups in fintech, proptech, and blockchain—dis- rupting the real estate and title insurance verticals. Ligris is a mentor for MIT's Center for Entrepreneurship and the MIT Innovation Initiative. Learn more at Big data can be utilized in real estate to predict valuations, neighborhood development, and the overall trend and health of the housing market.

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