The Next Real Estate Frontier: Relieving Buyer Anxiety

Few life events bring such trepidation, anxiety, and stress than purchasing a home. The process is complex and littered with vocabulary and legalese that makes even the most intelligent person feel like a child. From the perspective of the buyer, the process seems to be an endless stream of disjointed tasks, many of which have potential to derail the entire purchase. Add the financial implications and fear brought on by the previous housing crash, and it’s easy to see why buyers are waiting longer than previous generations to purchase a home.

OBSERVATIONS FROM 2007-PRESENT

I am currently in the midst of my second home purchase, and I can attest that many of these same feelings still exist despite having some knowledge of what to expect. And while technology played a bigger role this time in our home search, little progress has been made to assuage the feelings described above. By comparison, when I was searching for my first home nine years ago, the availability of handheld real-estate tools was fairly limited. The process in 2007 largely mirrored how my parents would have bought a home: you sign with a realtor, provide them with your home requirements and price point, then drive around looking at houses the realtor selected from the MLS listings. There was some accessibility to internet based MLS searching, but the ubiquitousness of this via handheld devices or native apps was largely absent.

This time around I was able to leverage real estate apps and tools to my benefit, and bypass the initial need for a realtor. I primarily used Redfin to discover homes (many times before the realtor would have even contacted me) and get instant notifications when new homes entered the market. We signed up for an open house via the same app, reviewed the purchase history, and went to see the house without realtor representation the following day. We contacted a realtor that night, made an offer the next day, and signed all of the documents electronically in less than a few hours.

In terms of discovering and viewing potential homes, the quality of tools and immediate access to listings on mobile devices substantially changed our search process and introduced a new sense of efficiency. Unfortunately, the benefits of the technology largely end here, before the core challenges of the home buying process have begun. While our realtor is very good at being communicative, the use of interactive experiences and digital communication to shape the overall experience is underutilized and unleveraged. Whereas technology and ubiquity of information played a role in the pre-offer stage, the post-offer stage still feels antiquated and disorganized.

POST-OFFER BLUES

Regardless of having gone through this process before, I still felt the post-offer journey presented a substantial number of steps which were difficult to anticipate and track. During this stage the house is appraised and inspected by numerous third-party contractors (lawyers, loan underwriters, HVAC inspectors, septic inspectors, structural engineers, appraisers, home insurance agents, etc.) who generate separate documentation and costs back to the buyer. Knowing which of these tasks are required or optional and which costs are included in your closing is a major challenge to the buyer. As a result, without a clear journey map or centralized repository to manage the communication noise and documentation, this stage creates a heightened sense of anxiety over money and buyer control. Not to mention, since each of these steps could potentially reveal a barrier to closing the deal, the buyer is in a perpetual state of uncertainty on whether or not they will actually buy the house.

Thus, even though I have a more informed perspective and immediate access to the same data as realtors, the anxiety around “what’s next?” still exists.

WHAT MAKES THIS PROCESS SO CHALLENGING

Stepping back from my recent situation, when you consider the time between average home purchases (around 13 years) and the overall uniqueness and legality of mortgage loans, are these feelings all that shocking? The average American will only purchase 2-3 homes in their lifetime. By the time most home buyers are 30, they have traveled abroad, changed careers, been to Disney, and learned more languages than the total number of homes they’ll ever purchase. The reality is that most people simply don’t go through this process very often so anything they might have remembered from the prior experience is forgotten or potentially inapplicable.

One key factor for first-time home buyers is the lack of transactional reference points. From offer to close, the uniqueness of the home buying process in duration, loan type, and number of coordinated parties is unlike any digital-based Bitcoin/Venmo/Debit transaction they’ve made. In the case of millennials, the transfer of ownership or funds from peer to peer can be as simple as a few touches on a handheld device. Maybe they’ve obtained a student loan or purchased a car, but those entire processes from origination to obtainment can be completed in less time than it takes to do a home inspection.

DESIGN LESSONS FROM TAX-PREPARATION TOOLS

By comparison, filing taxes is the closest anxiety-ridden, periodic transaction most first-time home buyers have encountered. Both processes are painstakingly detailed, confusingly multi-faceted, legally challenging, and financially stressful—yet, filing taxes has become a considerably less painful process through the mediating role of technology. The digital tax landscape has spent considerable effort designing user-focused solutions that focus on highly catered, highly customizable applications that step the taxpayer through the minutiae and legal requirements for their specific situation. It doesn’t eliminate all burdens of the tax process, but it does help to prioritize transparency, reduce anxiety, and make a highly complex process more accessible or comfortable.

Similarly, the home buying process will always be burdensome, but there are some important lessons organizations could learn from the advances in digital tax-preparation. In many tax preparation tools, emphasis is not placed on restructuring a fairly sequential and detailed process. These tools focus more on educating the taxpayer within the process of filing their taxes. User education isn’t an external task completed prior or competed off site—user education IS the tool.

This is the one aspect that makes some of the tax preparation software so successful. The filing, tax education, and user’s overall path is one and the same—the design of these applications does not necessarily focus on simplification (in the sense that required steps are altered or eliminated or that complexity is avoided) but in being transparent about the overall journey through a well-architected, approachable interface. The user’s placement within the process, within each step, and within the journey are always understood.

Tax preparation software focuses on the mediating role that design and technology play in making a complex process approachable. Within the context of user advocacy and improving the overall home buying process, the design challenge is how digital mediation can prepare a buyer for what’s ahead—to provide services and tools that focus on alleviating apprehension around the unknown.

WHAT WE LEARNED FROM RECENT FIRST-TIME HOME BUYERS

Most first time home buyers aren’t as worried that they won’t find a dream home; they’re worried because they didn’t know their mortgage is composed of their principal, variable interest rates, homeowner’s insurance, property tax rates, and possibly mortgage insurance—all which effectively change the homes they should target. Yes, they could educate themselves on some of this prior to performing a home search, but given the relational variability of these components, understanding this in the moment of the search (rather than as a reference point pre/post-search) is critical to eliminating misunderstanding.

They are frightened by terms like closing and disclosures and the pages of legal-sounding documents they are thrust to sign. They don’t understand that after they make an offer on a house it must be appraised, and if that appraisal comes in low, they might not be able to purchase this home unless the front the difference in cost. And most importantly, they don’t know the questions to ask because they just don’t understand the process.

Unfortunately, most real estate applications primarily focus on the exciting and emotionally satisfying aspect of the home buying journey—finding homes. Like some form of real estate Tindr, there’s emphasis on that discovery process. “Let’s get you matched up with your dream home!” While this is obviously a critical and necessary aspect of the process (you can’t close on a house until you find one), it sets first time home buyers up with false expectations. Given the inordinate amount of attention and education on home discovery, the user is left to think that they’ve completed the “difficult” and stressful part of the process once they’ve made an offer. Arguably though, they haven’t even started the most challenging and unknown aspect of the journey and they have little in-process guidance, education, or realistic expectations for what lies ahead.

MOVING FORWARD

This is the problem we discovered in our research, and I continued to experience in my second home purchase. The greatest need lies in making the messy, laborious aspects of the post-offer less of a burden to the user. To most of the younger, savvy, digitally minded generation, you can go online to any number of sites and find a house. What you can’t do is use that same digital landscape to aid you in the post-offer complexity to provide assurance and clarity for what will happen next (and the various consequences from those steps).

Months ago, long before I was ready to start this process again, we conducted some user research with first time home buyers that validated these thoughts. We found that the single greatest issue within this process was anxiety, trepidation, and a lack of access to institutional knowledge at key or time-sensitive moments after they found a home. Based on that research, we began to explore a series of vignettes and design ideas that address some of the feedback we heard.

We don’t envision design and technology eliminating the complexity around the home buying process, but we do firmly believe it could make the process more approachable, more predictable, and less uncertain. And daresay, in that approach, we might also make it enjoyable.

We focused on exploring this space because we see a huge opportunity for design to improve the overall emotional impact and experience for first-time home buyers. The problems outlined in this article could be dramatically reduced through an intelligent, research-based design strategy. Similar to Intuit changing the way people viewed tax filing, we predict major user retention and adoption for the organization who integrates this approach into their offering. To read more about our design strategy and interactive design vignettes, check out our new design exploration, From Hassle to Harmony, Reimagining the Home Buying Process.