Earnest Money Deposit Payments Collection
Simplifying How Money Moves in Real Estate by Facilitating Money Transfers Online
Introduction
The Trusty team made the strategic decision to pivot from real estate transaction management software to payment facilitation software. This shift was driven by market research indicating a growing demand for a way to improve the payment process for real estate professionals. Our solution is an online payment facilitation platform that helps settlement agents collect earnest money deposits.
My Role & Responsibilities
As the sole designer on this project, my responsibilities spanned various areas, including leading the design process from research, ideation, visual design to prototyping. To ensure the success of the product, I also collaborated with the product manager and the engineer to define the product requirements, technical constraints, and user flows.
Tools
Figma, FigJam, Dovetail, Maze
Duration
May 2022 - Oct 2022
Research reveals the need for a more efficient payment process
At the beginning of this project, our knowledge of the regulations and processes surrounding real estate payments was limited. To bridge this gap, we engaged with settlement agents, who handle a majority of money transfers, to gain a better understanding of their pain points and challenges related to payments.
Through our research, we found that settlement agents...
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Use checks and wire as the primary form of payment
Most settlement agents utilize checks and wires for collecting and sending payments because they think these methods are more secure and meet regulatory requirements.
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Sacrifice efficiency over security
While acknowledging the inefficiency and outdated nature of these methods, settlement agents preferred for a secure payment transfer, even if it meant adopting an inefficient process.
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Are vulnerable to wire fraud
More than half of the settlement agents we talked to have experienced wire fraud in the past. Wire fraud feeds into settlement agents' need for security, leading them to take extra precautionary steps to protect the money.
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Are extremely busy
Settlement agents are usually closing multiple transactions at a time. Therefore, they constantly have many responsibilities on their plates.
🤔 Our research led us to ponder...
What if we could simplify the payment process and reduce the workload of settlement agents while ensuring a secure process?
A digital payment software for settlement agents to collect earnest money deposits
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Our hypothesis: By building a digital payment software, we can streamline the payment process and eliminate the manual work of sending and receiving payments through check and wire.
For the initial iteration of our product, our focus revolved around streamlining the collection of earnest money deposits, which is a deposit made to a seller that represents a buyer's good faith to make a purchase such as the acquisition of a new home. We recognized this as the first significant payment in a real estate transaction process, which often causes unease for settlement agents.
Prioritizing the needs of settlement agents and simplifying the payment workflow to create competitive advantages
To inform our design, I revisited our research interviews with settlement agents to gain deeper insights into the existing payment process. Synthesizing the research, we learned how the current earnest money collection process works. Here’s what it looks like:
Current Flow
Additionally, I conducted a comprehensive competitor research analysis to explore the user flows employed by our competitors. This step was crucial in identifying areas for improvement and distinguishing our product in the market before diving into the design phase.
Competitor Flow
From the competitive analysis, I realized 2 major pitfalls about our competitors' products:
❌ Involves unnecessary parties (ie. buyer agent) in the process
❌ Settlement agents have no control over the process even though they are the party holding the funds
With the insights obtained from our research, I collaborated with the product and engineering team to define the high-level user flows. Unlike other competitors in the market, which focus their software on serving the real estate agent, we wanted to prioritize the settlement agent as the primary user. This helped us to eliminate the back-and-forth communication between the settlement agents and the real estate agents. Hence, creating a more streamlined , efficient, and secure payment workflow.
Our Flow
After defining the high-level user flow, we further defined the user stories to facilitate the payment process.
Shipping the MVP
Leveraging existing components for a timely MVP launch
After defining the user flows and product requirements. I started on the design portion of the product launch.
To meet our internal deadline and expedite the product launch, I repurposed components from our previous Lease Commission Collection product. Although this approach might potentially impact the usability of the product, our team recognized the importance of quickly launching the MVP to validate its product-market fit and gather immediate feedback from settlement companies.
User Story #1
Settlement agent creates a payment request
User Story #2
Homebuyer receives a payment request email and make earnest money deposits
After shipping the MVP, we reached out to our research participants and asked for their feedback. The initial feedback we got from settlement agents was mostly positive. Many of them found the product simple, straightforward, and easy to use.
However, they also raised 2 significant concerns about the product:
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🤔 With the new insights, the next version of our product shifted to addressing the following questions:
1. HMW increase our system’s flexibility to accommodate the need for separation of duties in settlement companies?
2. HMW enhance the perceived credibility of our system?
Solution #1: Increasing Flexibility
We recognized that every settlement company has its own permission policies. To optimize our platform to fit their needs, we implemented a feature that enables settlement companies to create their own permission templates. These templates can then be assigned to different users within the company, providing a streamlined and efficient way to manage user permissions.
Solution #2: Enhancing Credibility
With this solution, we visually connect the settlement agent's brand with our software throughout the payment process. This allowed us to leverage the existing trust homebuyers have in settlement companies. In addition, we reduced the workload of settlement agents by enabling homebuyers to initiate payments directly from the settlement companies’ websites, eliminating the need for the agents to create payment requests.
Settlement Agents can configure their brand color on the configuration tab. Since the buyers are initiating the payments, the Settlement Agents can also customize what documents they want the buyers to upload to help them identify the transactions.
The settlement company’s logo and brand color will be used throughout the Earnest Money Deposit payment process.
🏦 Outcome
The lack of RTP infrastructure with regional banks hindered the growth of the product
Although we addressed the credibility and flexibility concerns with our system, our product's growth potential was hindered by the current state of national payment policies. Our solution utilizes Real-Time Payment technology to ensure non-reversible transactions, which is mandated by the Department of Financial Protection and Innovation's "good funds" requirement. However, at the time of this product launch, the many regional banks that settlement companies utilize have yet to adopt the RTP technology. Compounding the issue, as a new company, our payment processing vendor only permitted fund transfers up to $150K.
These constraints severely restricted the types and number of transactions our system could facilitate, resulting in a significantly low adoption rate.
Project Learnings
One key lesson I learned from this project is that design alone is not always the solution. Numerous factors beyond design, such as regulatory constraints and market dynamics, can significantly impact a product's success. As a designer, I must be aware of these constraints and take a holistic approach that considers the broader ecosystem in which the product operates. By embracing a multidisciplinary perspective, we will be able to better align design decisions with limitations, increasing the chances of success for future projects.
What I Would Do Differently?
Looking back, I wish that I had pushed back and asked for more time to research different third-party vendors and the real-time payment policies. At the time, we rushed to ship the MVP of the product such that we could demo the prototype on sales calls and generate more leads. Although this approach did help us attract more leads, many users soon realized that our product couldn't deliver on its promise.
Given the opportunity for a do-over, I would prioritize a more strategic approach, ensuring sufficient time for vendor assessment, policy analysis, and comprehensive testing. By taking these steps, we would have been better equipped to deliver a product that not only attracted leads but also met and exceeded user expectations.
What Happened Next?
The failure of one product paved the way for the success of the next product
With the lessons we learned from this project, we pivoted and created a new product that operates within the boundaries of current policies and technological constraints while still providing a seamless and innovative payment workflow- Wire Instruction Verifications. This product quickly emerged as our flagship offering, attracting the first wave of customers and moving our company forward.