Transaction Management Grows Up

Title News Magazine
January Issue 2003

(Please scroll down, discussions about SettlementRoom are shown in blue for your convenience).

During 1999-2000 a number of companies launched similar products, creating a new product category loosely defined as transaction management systems (TMS). Their systems integrated communications and document management and work-flow capabilities in order to improve the efficiency of the residential real estate closing process and make it more transparent, particularly for homebuyers and sellers. Their eventual goal was to support a paperless online closing that eliminated the blizzard of phone calls, faxes, and courier trips characteristic of the traditional closing process.

Despite producing award-wining products, many companies could not survive the industry's long adoption cycle and were swallowed up by the industry's traditional technology suppliers. Realty Plus Online and its Close Your Deal platform were acquired by First American. Fidelity National Financial affiliate FNIS purchased no less than three separate platforms: iProperty's Chorus, Reez.com's product originally called Reez.com and the Expeditrix's eRealtor project, later dubbed DealTrack, did not survive the company's restructuring and has never seen the light of day.

Feature Convergence

Out of this period, a handful of national players have emerged to compete in the category. This group includes two of the surviving new entrants, SettlementRoom and Realty-Assist with its partner Stewart Title Co., and several established technology providers: RamQuest, FNIS and First American's SMS subsidiary. The systems currently available or expected to be relaunched shortly by these companies have matured into a legitimate product category.

Along with the maturation of these products has come a convergence in their basic functionality. Online order entry, status tracking, and online document delivery are core features of these products. Most systems provide task checklists that are customizable for each company's unique workflow. These checklists are an important tool allowing all transaction participants to monitor progress and make sure that the deal closes on time.

Two key features for title and escrow companies to look for are:

Automatic Notification. Many Participants in a transaction may not be 'active' in the sense of logging into the system frequently. However, the automatic notification activated, the TMs will update all participants via e-mail, fax, pager or mobile phone of important status updates. These 'passive' users will probably represent the majority of system users until agents and service providers have time an the motivation to really learn the system. (SettlementRoom does this nicely, comment added).

Activity Log. By recording transaction events, the activity log helps title and escrow companies and their real estate agent and broker customers make sure all regulatory requirements such as disclosures are met. This information should also be valuable in any legal action.
(SettlementRoom does this nicely, comment added).

While system functionality is similar, the terminology used by each vendor to describe their products can be very different. The glossary on the next page is provided to define major product functionality and establish a common basis for comparison.

All these systems are Internet based application service provider (ASP ) platforms meaning they require no client software other than a Web browser and an always-on Internet connection such as a DSL line or cable modem. For most offices an expensive T1 is not required, making TMs implementation much more affordable.

Different Design Philosophies

Although there is substantial functional similarity between these products, the design philosophy behind them is surprisingly different. First-generation products like Close Your Deal and SmartClose were meant to be open platforms with all transaction participants able to assign task, upload documents, and add new participants. This revolutionary approach to empowering consumers and agents made some companies and lenders uneasy and may have contributed to their relatively slow adoption.

RamQuest. Ram Quest was awarded the 2002 Discovery Award at Nasscon for its paperless Closer. It is the kind of incremental solution that many title companies prefer as it represents primarily a Web interface to the Complete Closing Enterprise production system. This seamless integration between transaction management and closing application was very appealing to Dallas-based Safeco Texas Land Title, Inc. According to Vicki Rutherfod-Cearnal, chief operating officer, "Paperless Closer fit our need because it was fully integrated with our title production system, eliminating rekeying information, was Web based, and offered the client a choice. Use it or not, the information is there 14/7."

Although most tile companies experience relatively slow adoption by their clients, Rutherford-Cearnal said usage has been strong, "From our go-live date in February, over 3,500 documents have been published for printing from the site. No paper. No fax. Digital retention of the documents and pertinent data retrieval via the Internet will become the new standard, and we will already be there."

RealtyAssist and Stewart. Like RamQuest, Stewart expects the adoption of its private-label version of the RealtyAssist platform, branded SureClose, to be driven primarily by the title company. Current user Sandy Cappel, president of Stewart Title of the Vail, Colorado, says, "SureClose has given Stewart Title the ability to be proactive with customers, providing access 24 hours a day, seven days a week to real estate transactions. It is very important in the competitive business of title and closing products and in the escalating world of technology to continue to improve all aspects of our business."

SureClose makes transaction management features available to agents and consumers and is fully integrated with Stewart's title production system, AIM. This is natural since the SureClose product is based on the RealtyAssist platform developed by California-based RealtyAssist in which Stewart has an equity investment. RealtyAssist sells its products independently of Stewart to both real estate brokers and title companies. It has been on the market since September 2000, and Stewart officially released its version, SureClose, in November 2002.

SettlementRoom

The focus at SettlementRoom is on delivering a simple, highly customizable transaction management solution. President Jonathan Cutler believes this exclusive focus on its TMs product is essential, that "choosing a transaction management system is not something to be lumped in as an extra feature on the software. Transaction management takes some time and effort to get started, so you want a system to grow into."

The ability to customize a solution to the title company's individual needs is what attracted Jim Brown of Commerce Title, a subsidiary of Dallas, Texas based homebuilder, Centex. According to Brown, "the staff at SettlementRoom worked closely with our various branch-level staffs and we have been able to customize the system to do exactly what we wanted. SettlementRoom has proven flexible enough to handle the wide range of order types we close and versatile enough to be used in all different parts of the country."

FNIS. FNIS' work flow and communications platform, Paragon TransactionPoint, was named at the November NAR Conference as a new Realtor VIPSM Program partner of the National Association of Realtors. "TransactionPoint enables Realtors to create transactions and to-do lists, update activities, upload documents, open escrows and monitor the entire closing process," Bob Goldberg; NAR senior vice president of marketing and business development and head of the Realtor VIPSM program. "TransactionPoint offers Realtor a unique discount off regular retail prices an is available to brokers for bulk purchase with even more discounts through the Realtor VIPSM program," Golberg said This powerful endorsement should help FINIS, which sells TransactionPoint to real estate brokers and the StatusPoint application of the TransactionPoint platform to tile and escrow companies. StatusPoint allows closing companies to communicate electronically with their customers who are the TransactionPoint platform. Effective January 15, 2003, RealEC Exchange network clients will have the connectivity and interoperability with TransactionPoint. SoftPro users will be able to fulfill orders through Real EC to users of TransactionPoint.

SMS. It remains to be seen how different the relaunched version of Close Your Deal-now branded SMS ClosingTracker.com will be from the original. ClosingTracker.com is expected to hit the market in early 2003. SMS president, Larry Davidson say ClosingTraker.com will closely reflect the needs of the company's SteamLine and VISION production system customers. "Our customers have told us they want a system that provides their clients with eth ability to enter orders, view status, and receive automatic notifications 24/7, while keeping the title or escrow company firmly in control. And that's what we're going to deliver. Simplicity, ease of use, and tight integration with production systems is what will propel SMS into a leadership position," Davidson said.

Usability and Integration

And individual agency's adoption rate for TMS product depends greatly on two related system attributes: overall usability and integration with an agency's existing title production system. While the basic features offered by these productions are similar, the way they are implemented varies widely. Ultimately all the little differences ad up to determine the usability of each product and their suitability for an agency and its customers.

For customers, the more powerful the platform and the greater its range of functionality, the steeper the learning curve. If an agency is targeting the TMS to its most technically sophisticated and demanding customers, a substantial learning curve may be a price worth paying for highly valued functionality. If an agency wants to service all its customers, then the company should select the simplest product that may only support online order entry, status tracking, and automatic notifications.

For employees, nothing is more important that deep integration with the existing title production system (TPS). Generally, the tighter the integration, the less additional work required of agency employees to fully utilize the product. A truly seamless integration would mean that employees virtually never leave their production software to log into the TMS. All information regarding tasks, documents, and participants should flow between the TMS and TPS. A loose integration is likely to result in double data entry and manual performance of various tasks to update the TMS. This could diminish potential productivity gains.

TMS products offered by existing TPS vendors like RamQuest and Stewart provide very tight TMS TPS integrations. Vendors like SettlementRoom that do not sell a TPS product will develop a customized integration for their customers. Often, though customization integrations require assistance from the existing TPS vendor, which may not be forth coming if that vendor offers a competing TMS product.

Business Benefits

TMS vendors point to numerous benefits of using their systems. Chief among these are increased productivity related to decreases in status calls and faxes, enhanced customer service and competitive advantage as a result of being an early adopter in their market. The opportunity to realize productivity gains may be substantial. A study by October Research conducted in May 2001, for Expeditrix, the developer of SmartClose, identified large gains. "The research indicates that title companies realize increased productivity and efficiency, including an over 20 percent reduction in the number of outbound calls and almost 30 percent fewer inbound calls," explained John MacFarland, then executive vice president of October Research corp. In addition the number of faxes decreased by 55 percent and courier costs by 28 percent. As a result, direct and indirect (i.e.,labor) costs were reduced by $69 per file.
While this research may overstate the gains available since not all participants are likely to use one system for all their transactions, substantial additional benefits can also come from increased customer satisfactions. Providing customers with the ability to place and track orders on a continuous basis may be a sufficient value to justify the price of a TMS, Particularly if the companies in the local market decide to offer this service.

Pricing

Pricing for these products varies with most including a per order or transaction component. Expect to pay extra fees for setup and training. (Not with SettlementRoom! SR Staff)This structure make sense since it implicitly recognizes that TMS adoption by real estate agents, lenders and builders will flow slowly and title companies should only pay for transactions that utilize the system.

For its SR Enterprise product, SettlementRoom pricing . . . declines to under $5 per transaction after 100 transactions. The lite version of this product SR Express which offers transaction support limited to 30 concurrent transactions is priced at $149.95 annually, (or under $1/transaction). Users can purchase multiple blocks to increase its capacity.

RealtyAssist pricing also starts at $19.95 a transaction and falls to $9.95 based on concurrent transaction volume. RamQuest's Paperless Closer Version 5.0 is provided at no additional charge to users of its Complete Closing Enterprise production system, but users of its Asp production system, WebCloser, pay $15 per closed transaction for Paperless Closer. SureClose's monthly fee varies based on the number of locations using the application, starting at $350 and office up to $650 total. No per file, per user or per transaction fees are charged by Stewart.

Direct Operations

For direct operations, the major underwriters are planning company-wide rollouts of new Internet-enabled title production systems that offer many transaction management features including First American's FAST product family and Fidelity's Net Global Solutions under development by FNIS. Unlike First American and Fidelity, Land America has chosen not to provide title production or transaction management systems tot eh independent agency community. Instead Land America is integrating its TitleWave.net service with production systems offered by SoftPro (a wholly owned subsidiary of FNIS), Title Soft, TitleExpress, Closer's Choice and DisplaySoft. TileWave.net is a back-end service-ordering product allowing agents to seamlessly order and receive title work from LandAmerica service centers using their existing title production system.

In addition, the company rolled out its transaction management system, the LandAmerica Connection, for its direct operations in Michigan, California, Colorado, and Texas last year. Janet A Alpert, president of LandAmerica, estimates a minimum operational savings of $20 to 30 per order for the company. "The cost savings" Alpert explained, "are a direct result of fewer copies being produced and sent out via courier. Customers have online access to their orders and fined products 24 hours a day, 7days a week." Alpert explains further, "Customers having the ability to get order-status information anytime, online, is very convenient. Customers are able to enter the orders them-selves. This self-service on the part of the customer allows staff to be freed up for other customer service activities."

Looking Forward

Historically, the industry is slow to adopt new technology. It took more an five years for Internet-based property listing to enjoy widespread usage. Bringing the transaction online is likely to take just a s long, but the good news is we're now nearly three years into the process. The innovative TMS products discussed in this article, along with the several other credible products targeted at geographic or industry-specific niches such as GAC's GATORS, TG Express and Closing Counsel, are beginning to find traction in the marketplace. Market-leading title and escrow companies are using these products to provide a new level of service to their clients and business partners and driving this next stage of our industry's evolution.

Stephen Bedikian is a consultant with Los Angeles-based Real IQ Consulting, Inc., which provides technology marketing and e-business strategy consulting for the real estate industry.