Digitised bridging funding is set to shake up the property technology (proptech) ecosystem by accelerating deal closures, unlocking liquidity and eliminating manual processes by speeding up and simplifying the process of securing bridging finance.
This is according to industry players who note that for sellers, digitised bridging funding provides the funds needed to pay unexpected expenses.
Michael Lenz, CEO of TransBridj, a digitised bridging funding solution, says realtors, who only get their commission upon successful registration of the property at the deeds office, can access commission bridging funding to avoid cash flow issues while they wait for their payment.
He adds that platforms like this are redefining bridging funding by offering a paperless, fully-digital solution.
In this way, these solutions eliminate the inefficiencies and manual bottlenecks realtors and sellers traditionally encounter.
Often, during the sale and transfer of a property, there are unexpected costs, notes Lenz. He explains that these can include rates, taxes and levies, and compliance certificates, which are usually built into the sale of a property, but it’s impossible to access this money while a property transfer is happening.
“The average person isn’t buying and selling property all the time, so they are easily caught off-guard when unforeseen costs come up and have to scramble to come up with the money.”
Time-consuming processes
To cover these expenses, many apply for bridging funding to improve cash flow, says Cindy van der Ree, a realtor at Jawitz Properties.
She points out that there is also a need for bridging funding with either deceased estates or assisted sales when there are no funds, but money is still owed to the bank.
While traditional bridging funding, or gap funding, has been around for ages, it typically requires a lot of paperwork and is slow and time-consuming, which can ultimately delay the transaction and even put a sale in jeopardy.
“These transactions are usually very time-sensitive, so when something happens that delays the process, it puts unnecessary pressure on everyone,” says Lenz.
From a conveyancing perspective, one of the primary frustrations in securing bridging funding lies in the unpredictable turnaround times, agrees Carol Coetzee, an attorney at Carol Coetzee and Associates Inc.
“Despite the urgent nature of most property transactions, traditional funding mechanisms can take days. These delays can seriously jeopardise transaction timelines, particularly in high-value deals.”
Delays in funding often have a ripple effect on client satisfaction and deal completion. “In the property space, time is money. When funds are not available when promised, it places undue pressure on conveyancers and creates a perception of inefficiency – despite the cause lying outside of our control,” Coetzee adds.
The business case
In the situations outlined above, the administrative burden is considerable, says Coetzee. “Repeated requests for documentation, FICA compliance delays and manual paperwork can leave clients feeling overwhelmed, and can erode the trust we've built with them.
“In my opinion, using a tech-driven platform is the only way forward,” says Van der Ree. “Digitised bridging funding will help realtors, attorneys, and most importantly, the seller by providing a seamless and hassle-free journey.”
The big win with digitised bridging funding, says Lenz, is that the entire process happens on one platform. By automating the process, someone can apply for funding, submit all the necessary documentation and have the funds dispersed in as little as 24 hours.
This kind of innovation is a welcome addition to a sector that has traditionally lagged behind global markets, in terms of adoption of technologies, and investing in new and emerging innovation, Lenz continues.
Digitised bridging funding is not just about digitising an outdated system; it’s redefining how property transactions are funded and closed by speeding up the process and minimising friction and delays.
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