Robert Freedman is the former director of multimedia communications at NAR.
Closings With a Click
April 1, 2001
When Bill and June McFarland pulled up stakes in Silicon Valley last year to retire in Roseburg, Ore., they faced the same hassles that have always made long-distance moves so nerve-racking.
But to hear the McFarlands tell it, selling their old home in San Jose after they relocated to Roseburg went so smoothly you’d think they did it all from the comfort of their new home.
That’s precisely what they did, thanks to the Internet and a transaction management platform. Their real estate practitioner had set them up with a Web page from which they could monitor the status of their transaction and transmit closing documents and messages back and forth.
“I was surprised at how smoothly the whole process went,” says Bill McFarland, who, with his wife, picked Roseburg for retirement to be closer to his wife’s family. “There wasn’t a single glitch. When our salesperson received an offer, he faxed it via computer to our Web site. We reviewed the offer, talked it over with him, printed it out, signed it, and faxed it back; then the buyers printed it out from their site and faxed it back to our site.”
With at least a dozen companies sprinting to become the king of online transaction management, it’s a sure bet that buying and selling a home will increasingly resemble the McFarlands’ transaction. Indeed, industry experts predict that basic transaction management--the sending and receiving of documents online instead of by mail or courier--will be widespread within five years.
The good news for salespeople? Their central place in the real estate transaction is assured, because electronic processing puts a premium on the market analysis and negotiating skills that practitioners bring to the process, according to buyers and sellers interviewed for this article.
“What’s great about the Internet is that it lets you get much of the information yourself without having to commit to anything or take up a salesperson’s time,” says Doug McNeely, an employee at Indiana University in Bloomington who’s using an online platform in his home search. “But the real estate practitioner you work with is still key. Practitioners have their ears to the ground. They know what’s going on in an area, whether a road is being widened or whatever.”
They’re also the ones who negotiate the most expensive and complicated purchase of your life.
“For the final steps, we want to be able to look someone in the eye,” says Denise Wyatt, a financial aid officer who’s looking for a house because she’s moving to a new job at Indiana University.
Today most transaction platforms are still in the beta test stage, and those that have gone live are only in a limited number of markets. In addition, the live platforms still have a way to go before they offer everything their developers tout, such as seamless communication with lenders, title companies, and other vendors.
But even in this early stage, the services are impressive, say users.
“The ability to track our transaction has been extremely attractive,” says Megan Dunn, a homebuyer who also uses the Internet in her job as a relocation specialist. “For instance, we knew we’d been approved for our loan when we checked our status online and saw the lender letter posted there.”
Dunn worked with a salesperson at Century 21 Quality Homes, Alexandria, Va., which uses the Transaction-Management Network developed by Synteleos of Pleasanton, Calif.
For sellers, the biggest attraction of electronic processing is its speed and cost savings.
The McFarlands--who used a closing platform developed by Bridgespan Title Co. and provided through Christopher Silva of Silveira Realty Inc. in San Jose--closed on their sale in two weeks.
Silva set them up with a secure account on the Bridgespan site, enabling the McFarlands and participating vendors to view and post documents. That proved attractive to potential buyers, who could access various views of the account and see, for instance, the seller-paid home inspection report. “They could see what the shortcomings were and get an idea of what they could offer in price,” says Bill McFarland.
The sellers also saved quite a bit of money on long-distance phone calls.
“There was a significant difference between the out-of-pocket expenses we incurred when buying our home here in Roseburg and those we incurred when using the platform to sell our house in San Jose,” says McFarland.
“With all the long-distance calls we made buying the Roseburg house, our phone bills got pretty high.” As nice as those savings are, they’re peanuts compared with the money Silva’s expertise generated for them. “He helped us get $70,000 more for our house than what we thought it was worth,” McFarland says. “We’d never have gotten what we did if we hadn’t worked with him.”
Their practitioner also advised the McFarlands on showing the house, ran the open house, managed the marketing, and handled all the closing details.
In short, they got efficient, high-tech transaction processing as well as high-value, high-touch attention.
For buyers, the chief attraction of online platforms is the level of control it provides. McNeely used an iProperty Chorus site provided by Tracee Lutes, an associate broker with F.C. Tucker, REALTORS®, Bloomington, Ind. He liked narrowing his home search using highly specific criteria.
“It’s terrific having your own Web page that lets you specialize your search,” he says. “I’d get e-mail updates whenever a house that met my criteria became available. I could also get a level of detail about the house--sales history, taxes, structural information--that I could otherwise have gotten only by making a lot of calls.”
Using a Web site provided by a practitioner was crucial for Wyatt. “Normally, you’d drive all over town [looking for the right house],” she says. Instead, she’s using an iProperty Chorus platform to conduct her search and to get information on lenders.
When we talked with Wyatt, she hadn’t yet settled on a house or chosen a lender.
Diane Mintz, an office administrator in Sacramento, Calif., found it convenient to use the Bridgespan account set up for her by O.J. Vallejo, broker-owner of HumbleHome.com. “We applied for our loan, got title verification, and had all our questions about escrow answered online,” she says.
Despite the advantages of working with a transaction platform, the buyers contacted for this article say transaction management still needs to improve.
At the top of their concerns is privacy, which several buyers say makes them hesitant to disclose their financial information online.
“We know this information [gets] on the Internet somewhere,” says Wyatt. “More than anything, we want the ability to walk into the local [lender] branch to talk to someone if there’s a problem. We wouldn’t be comfortable buying a home entirely online.”
Input during contract negotiations is another concern. The current generation of platforms needs a structure for buyers and sellers to maintain open lines of communication during negotiations. Otherwise, they may feel shut out if the practitioner they work with doesn’t keep them in the loop.
“Our only complaint is that the details of the negotiations weren’t part of the platform,” says Dunn. “The negotiations took a month. If we could have gone online to know the status of the negotiations, it would have been good.”
With more buyers and sellers testing the waters, it’s just a matter of time before online processing is ready for prime time.
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Updated: August 11, 2020