At Patch of Land, we often hear a line of defensive questioning from traditional real estate lenders who are unfamiliar with crowdfunding and our overall process. This line of questioning is eerily similar to that of brick-and-mortar bookstores prior to the rise of Amazon. While some individuals remain resistant towards change, technology has continued to affect industries all over the world and will continue to create new marketplaces we thought were never imaginable. Ultimately, the evolution of our traditional business models will force companies to adapt this new technology, or else face major setbacks, if not imminent disaster. In more ways than one, traditional hard money lenders operate like a brick-and-mortar bookstore, conducting their business and selling their products in the same old-fashioned methods of yesterday. Their rigid methods have become even more regulated in recent years, making it difficult for them to break the mold and appeal towards consumer preferences. This has given rise to a new generation of real estate financing portals, who are quickly finding an upper hand by holding specific advantages over more traditional players. A large part of the success so far is due to the fact that E-commerce funnels money easily and quickly, with technology built to combine efficient use and an enjoyable experience. This technology eroded the need for inefficient, laborious practices. It also made consumers question the justification of higher fees and costs which didn’t add up. As a result, crowdfunding at portals like Patch of Land have led the march towards freeing the information exchange highway for capital exchange. E-commerce also places great importance on data security and customer protection. The high level of scrutiny towards the online lending industry has helped create a marketplace in which companies have worked hard to provide more protection for their clientele than ever before. Successful lending platform operators understand the necessity for intensive care and in-depth investigation when it comes to vetting their offerings. In addition, powerful communication and information-sharing channels, along with the collective strength of a community working towards the same goal, have become a massive barrier against fraud. In essence, fraud prevention is now being indirectly crowdsourced by the group of people who have a vested interest together. This helps make deviant practice easier to detect, and the consequences are extremely swift! Once caught, operators have the ability to restrict a fraudulent source from being able to conduct business on that platform, and in some cases online, ever again. But the real key here is the advancement, and proper use, of technology. The application of technology and data science to the real estate financing process allows for automation and streamlining of the loan process. This starts with sourcing and performing due diligence, all the way to underwriting, servicing, and beyond. In fact, technology has enhanced the process of identifying high quality loans and has made performing transactions more efficient. Consequently, the data collected will help us understand which loans embody lower risk and are of higher quality. Borrowers, in turn, benefit from decreased risk and costs, while enjoying a more expedient, standardized, and pleasant customer experience. Overall, the implementation of high quality data science into our real estate crowdfunding model will go a long way towards improving our company’s future scalability. As it stands, Patch of Land aims to be the Amazon of real estate lending. We believe we can do this by using technology and innovative crowdfunding methods which allow both borrowers and investors to easily connect on real estate financing transactions. When it’s all said and done, we’re able to lower transactional costs between the two parties and provide them with unparalleled customer service that they might not find from our traditional counterparts. In the end, it’s a win-win for all parties involved!
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