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Real estate buyers and sellers face the daunting task of lifting
heavy boxes of clothes and furniture.
Unfortunately,
those aren't the only backaching things they have to haul to their
next house.
Buyers and
sellers also must move piles of escrow papers.
Many
may wonder: Will these paper-intensive transactions ever be automated?
That goal has been promised since the heady days of the dot-com
boom - and subsequent bust.
Now
software makers and analysts see traction in this software market,
as brokers work to reduce transaction costs and buyers demand a
better way to follow and close deals.
Called
transaction management systems (TMS), this work-flow software aims
to help real estate agents document and track deals.
Pricing
varies based on features, number of users and transaction volume.
SettlementRoom Systems, one of the companies offering the software,
charges $5 to $20 per transaction, depending on volume.
No
one knows for sure how much such software might trim escrow costs.
But any relief is welcome. Bankrate.com figures escrow and title
fees averaged $2,748 in 2005.
The challenge
will be to get people to change how they work. Also, widespread
use of these systems will require that they integrate with forms
software, share information easily with other transaction software,
and enable electronic filing of paperwork to lenders and county
recorders. Electronic signing and notary services are already available.
"Today,
we're probably around 400,000 paid (TMS software subscriber) seats,
but probably less than 100,000 realtors are actively using their
(TMS) accounts," said Joe Kazzoun, a senior consultant with
Scottsdale, Ariz.-based Clareity Consulting Inc. "But that
is increasing rapidly, and we're hitting the steeper part of the
adoption curve now."
Kazzoun says
the more than 1.2 million realtors in this country are potential
users of the software.
Spurring them
along are their clients, who want more transparent transactions.
If escrow is done online, buyers and sellers can access the transaction
data more readily.
"You can
track your package delivery online," Kazzoun noted. "Why
can't you track the most important high-dollar transaction of your
life?"
Inman News,
a consulting and real estate news group based in Emeryville, Calif.,
has put together a consortium of software makers, brokers and others
to try to speed the move to TMS software.
"Paper
is like comfort food; people are more comfortable with a lot of
paper around," said Brad Inman, the group's publisher. "We're
trying to change that."
"We think
consumers will help drive (the adoption of TMS products),"
added Todd Costigan, senior manager of industry relations for the
Center for Realtor Technology at the National Association of Realtors
in Chicago. "The people who use technology in their daily lives
have come to expect others to use it - their realtors as well."
Who's in this
software game? Clareity says a half-dozen companies participate
in the market, with three firm leading the charge: Instanet Solutions
in London, Ontario; First American Residential Group in Santa Ana,
Calif.; and SettlementRoom Systems of Vienna, Va.
The fact that
companies active in title insurance such as First American Residential's
parent have built technology units to participate in this market
is somewhat controversial. Some observers fear the software will
be used to build the title business and control and mine real estate
transaction data.
Kelly Pantis,
senior vice president at First American Residential, says this criticism
is old and is a marketing tool used against the software divisions
of title companies by independent software makers.
"Back
in 2001 or 2002 those question were asked, but now I rarely see
that question raised," she said. "It's actually a great
benefit to have a large stable company managing this technology.
(Clients) want to have a national network that can install this
kind of a product. And we are very careful to separate our title
company from the rollout of our software."
Another marketing
strategy: integrating TMS products with forms software that generates
contracts, counteroffers and other standard documents. Instanet
Solutions claims to have the edge in this area.
"We've
been doing online forms since 1998, and we've built a transaction
manager with integrated forms, which is unique to the marketplace,"
said Martin Scrocchi, In-stanet Solutions' chief executive. "Last
year, realtors did 4.5 million contracts with our forms product."
Other software
makers say their TMS products work with forms software made by third
parties.
All the companies
share one strategy: moving products to the market through state
real estate associations and multiple listing services.
Celeste Starchild,
vice president of SettlementRoom, touts deals with the Massachusetts
Association of Realtors and Keller Williams Realty. Instanet has
deals with realtor groups in Georgia and Florida.
First American
has been courting multiple listing services across the country.
It recently signed a deal with RE/MAX International Inc.
"Adoption
rates are picking up and are pretty breathtaking," said Starchild
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