Taking Paperwork Out of Home Transactions
This isn’t going to come as a surprise to anyone who’s purchased a home: About 300 documents change hands before a buyer gets the keys.
Now a handful of online real estate ventures are out to move all this paper pushing online.
What’s known in industry jargon as a “transaction management platform” has replaced home listings compiled by local residential realty boards as the must-have item for real estate Web sites.
“We’ve reached a point where everyone out there now has comparables, home listings and neighborhood reports,” said Nate Smith, a producer of Yahoo’s real estate site. “What will be interesting now is to see how companies bring transaction services online.”
The recent acquisition of Cendant Corp.’s Move.com by Homestore.com drives home this point. A large part of the proposed $1-billion deal involves an agreement by several of Cendant’s operating units to use Homestore’s transaction platform exclusively for three years.
As part of the deal, Cendant will also make an equity investment in the transaction system that Homestore is currently developing with the help of other well-known backers such as the National Assn. of Realtors, GMAC Real Estate, Fannie Mae and Verisign.
Typically, promoters see these services providing home buyers and sellers with individual password-protected Web sites that they could use to track each step in the often frustrating and time-consuming real estate transaction.
Included on these individual Web sites would be e-mail links to each participant in the transaction and an archive of documents collected along the way. Eventually, a home buyer would be able to sign documents online using digital signature technology.
After the Internet raised speculation about them to new heights, paperless real estate transactions finally appeared attainable earlier this year, when President Clinton signed into law a bill giving electronic contracts the same legal status as a signature on a piece of paper. The law took effect Oct. 1.
Companies that are building transaction systems--there are few operating consistently online so far--say they will make the process faster and more efficient and save consumers time and money.
It remains to be seen if these systems can provide the personalized service required to guide consumers through what’s likely to be their largest lifetime investment.
“It’s still a question mark out there,” Smith said. “Does a consumer really care if their transaction is managed online, or do they just want to make sure that it goes right?”
Transaction management systems were the talk of a recent conference on real estate and the Internet in Santa Clara. The sixth Real Estate Connect conference, presented by Inman News Features, hosted 150 exhibitors and 3,000 attendees at the Santa Clara Convention Center.
Few executives who attended the conference had hard data on when transactions will actually be completed online--most said three to five years--but they agreed that eventually brokers, lenders, title companies, appraisers, and anyone else involved in buying a home would do business online.
In fact, about 56% of real estate agents who responded to a survey conducted by Gomez Inc. and Inman News Features said they expect to see paperless real estate transactions soon.
The companies that have transaction management systems available on the market today say it’s slow going to convince consumers that their information, including sensitive credit and work histories, is safe online.
“We all talk about paperless transactions,” said Kelly Pantis, president of Sacramento-based Realty Plus Online. “I prefer to refer to it as less paper.”
Realty Plus is rolling out its transaction system, dubbed www.CloseYourDeal.com, to local residential realty boards, who will offer it to their members.
Pantis said that the way Realtors and consumers have used her firm’s system since it was introduced this spring illustrates the step-by-step approach it will take to move complicated real estate transactions online.
The application consumers use most on the system is an option to e-mail various participants in the deal, Pantis said. The next most-popular function is document sharing online--such as viewing a pest report or appraisal, she added.
Questions about these systems abound, including how many transaction platforms are necessary. At a session at the conference devoted to the issue, Art Vidali, chief technology officer for Iproperty.com, said customizing platforms for each participant in the transaction will be the secret to success.
A Necessary Step
This may be necessary, experts said, so that real estate agents and other participants who have proprietary computer systems can share documents and complete other functions online.
Standardizing the process for the role each player has in the transaction also promises to be a challenge. Take, for example, the fact that each county in the nation uses its own documents for the formal deed.
Web firms that attended the Connect conference also displayed myriad new technologies designed to help real estate agents be more efficient while they’re in the field. Among these offerings is a service from Woburn, Mass.-based BYOBroadcast that allows agents to add sound to online home listings, virtual tours and Web sites.
Agents can dial a phone number provided by the firm, enter a password and record a voice message that will be uploaded to the Web site within five minutes, said Jeff Valentine, executive vice president and co-founder. No plug-ins or software downloads are required to listen to the audio feeds, he added.
“Hearing the Realtor talk about the property will help it to sell faster and for more money,” Valentine said.
Several firms are working to send information to consumers and Realtors wirelessly on personal digital assistants or mobile phones.
DataQuick Information Systems said it will make its real estate data, including comparables, available in a format designed for hand-held devices. Companies like CreSenda Wireless also demonstrated systems that allow real estate agents to receive multiple listing service data wirelessly, including pictures and direct links to listing agents.
Countrywide Insurance Services announced that it will offer quotes for homeowners insurance, home warranty protection and life insurance wirelessly.
“The industry is changing to be more about educating the consumer,” said David Espenschied, chief executive of Countrywide’s e-business division. “Now a Realtor with a personal digital assistant or a mobile phone can get a full quote on a loan in 45 seconds.”
