Editor’s note: More big companies, trade groups and entrepreneurs are investing in technology platforms, back-end systems and software to automate the real estate transaction, but most consumers are still closing deals the old-fashioned way. In this three-part series, Inman News eyes progress on the paperless front. (See Part 2, “Real estate plays catch-up with e-signatures,” and Part 3, “Standards, regulation in place for electronic closings.”
“It’s about as complicated as peace in the Middle East,” is how one industry leader described digitizing the paper-laden real estate transaction.
But thanks to a load of new technologies, some push from organizations within the industry and a group of forward-looking brokers who are gung-ho to try new methods, the paperless idea is spreading in practice.
Two and a half years ago, Rick Dubord began testing a transaction management system that would enable his agents to update transactions from virtually anywhere. He had the technology custom built and has since integrated software from VREO that enables documents to be signed and delivered electronically.
Dubord is one of a group of real estate brokers who are tossing paper — and the costs, man hours and inherent inefficiencies associated with it — to the wind in favor of electronic systems that streamline the process of buying and selling a home into a more manageable experience. Removing paper also has some cost-saving and productivity benefits for running a brokerage office, brokers say.
After much testing, Dubord rebuilt his Vancouver-based HomeLife Benchmark Realty office around the concept of operating free of paper and today is proud to oversee an operation he says is more efficient, more mobile, and less restrictive.
“We’re pretty sure we’re the first paperless office in Canada where we can actually take the offer from the online Web forms through a digital application” and onto the closing process, Dubord said.
His office uses electronic forms and Tablet PCs to digitally sign and deliver the forms. The system also automatically converts any faxes that come in to electronic documents and e-mails.
“What’s really unique is we’ve been able to set up the integration so all of the board data is broadcast into our system on an hourly basis,” Dubord said. That means that the property details are taken directly from the listing information and the agent doesn’t have to re-enter any of it when creating an electronic deal sheet.
Transaction documents are sent to the closing attorneys electronically and also returned electronically back to the office administrator.
Additional paper is cut from the process when the office administrator records the sale information into the accounting system and commission checks are deposited electronically into the agents’ bank accounts, Dubord said.
The time savings are huge, he said, adding that because documents can be bounced back and forth for signatures and review via e-mail, there’s no lag time in waiting for people to cross town to sign something.
Paperless processes also remove the hassle created by unexpected phone calls seeking missing files or missing signatures, he said. For instance, an agent may be at home on a weekend and receive a call from the closing attorney who needs a certain document. The agent can just log onto the Internet, access the protected file and pass it along to the attorney without having to go into the office.
“It gives (brokers) diversification,” Dubord said. “You could have salespeople in completely different areas than where your office is,” he said, and that could eliminate the need for branch offices while still enabling brokers to have greater presence.
Dubord also sees great revenue opportunity for brokers. “We’ve lost the data aspect, we’ll lose the transaction next,” he said. The fear in Dubord’s market is that the title attorneys and companies will take over the transaction and invite brokers and agents in while charging them a fee to be part of it.
“Everybody’s trying to get a piece of the pie,” he said.
Dubord said he’s already started licensing the technology he’s created to other brokers in Canada. He believes that brokers will have to be the ones to push major adoption of these processes into the industry. “We have to control our overhead and provide more mobile services,” he said.
He also noted the transparency that using a paperless system can bring to the transaction for consumers. “Real estate is no longer this magical process. People are now invited in to participate and they know more of what’s going on,” he said. Transaction systems enable consumers to log on and view the status of their sale.
Streamlining his brokerage into a paperless system has given Dubord a lot of freedom as a business manager, too. He can manage the office from anywhere and sign commission checks and other documents without having to make a trip to the office.
When paperless offices work, they work well for the brokers and agents. But it’s not going to work for everyone, according to Brian Boero, who is the chief executive officer of VREO, the company that produces the Real Estate Dashboard software that enables electronic signing of documents, among other things.
“We do see paperless (adoption) picking up, but there are a couple of wrinkles,” Boero said. With the slowing market, many brokers don’t have much money to invest right now and they often hesitate because typically only 10 percent of their sales force would understand and adapt to the technology, he said.
Many brokers have a large portion of agents who work only part time or only close a few deals a year so it wouldn’t make sense for them to purchase technology that wouldn’t get much use from these agents, he added.
“Our growth has been working with those top 10 percent of agents who understand the technology and do enough business to be able to afford it,” Boero said.
VREO’s Real Estate Dashboard software enables users to sign documents electronically using a digital stylus pen, and send the documents electronically either via e-mail or e-fax. The software automatically backs up all documents to a secure electronic vault when the user connects to the Internet.
Boero said that VREO’s software is meant to be a complement to transaction management systems, which enable agents to track, store and process real estate deals in one digital system.
In a time of slowing markets and shrinking margins, brokers need to be able to increase productivity and cut costs, he said, adding that the old model of recruiting as many agents as possible to get the number of office deals up seems to be straining a bit.
When brokers find a way to make a paperless office work, they can cut down on the costs associated with housing a bunch of agents in a cubicle farm. Several brokers have told Boero that they’ve downsized their office because of the VREO technology, getting rid of several fax machines and vast cubicle space.
The old way of operating a brokerage is not only inefficient, it’s counterintuitive to productivity for a real estate sales job where sales agents need to be out in the field, Boero said.
The downtown real estate storefront with listings in the front window and rows of cubicles in the back is an anachronism, he said.
Jeff Moore, broker/owner of Realty Executives of Nevada, also believes that every real estate office of the future will be paperless. He’s been testing paperless document processes at his brokerage and expects to have it perfected by the end of the year so he can pull the plug on old paper-laden methods.
“We’re in the process of having all agents switch to Tablet PCs,” he said, which will enable them to be more mobile and deliver signed documents to the office electronically.
However, Moore recognizes there is a generational gap among his agents, and that some agents who may be looking to retire in a few years are not going pick up the new paperless process. To bridge the gap, agents will still be able to create paper documents and fax them to the office system, which will convert them to digital, he said.
Going paperless will tear down a lot of boundaries, Moore said, including having to deal with physical document storage and retrieval, time lags and immobility.
What he’s learned in the process is that there is no out-of-the-box solution to creating a paperless brokerage. Brokers have to figure out which parts they need and which technologies best serve each part of the process for their employees and agents.
Moore said he finds it amazing to be able to transfer a document to and from anywhere in the world.
“When I started in real estate we carried a roll of quarters,” which were used to make calls at pay phones, he said. Then agents adopted pagers and eventually moved on to cell phones. Even with those vast changes in communication technology, Moore believes that paperless processes will be one of the greatest contributions of change the industry will ever see.
***
Send tips or a Letter to the Editor to jessica@sandbox.inman.com, or call (510) 658-9252, ext. 133.
