Before you leap, learn what this technology can do and how the top players want to provide it to you.

by Amy E. Lemen  Imagine for a moment a transaction without faxes, overnight packages, or couriers. No phone tag with clients, title companies, or lenders, either. From contract to close so quickly, you barely have time to put a contract pending rider on the sign.

These dreams are the stuff of transaction platforms, where everyone is on the same (Web) page with access to the information and documents needed to keep things moving.

Sound too good to be true? Some think so. But transaction platforms are gaining momentum as agents and brokers search for a more efficient way of doing business that will empower consumers while simplifying the homebuying process.

As consumers go, so must agents
An estimate by online analysts Gomez Advisors puts the total Web population who shop for homebuying, selling, and mortgage information at more than 41 million users. The fact is, people are online, and to stay competitive, REALTORS® must be, too.

"The REALTOR® community has had to become very tech-savvy in the last few years," says Steve Cook, NAR vice president of public affairs. "We are seeing a dramatic increase in their use of the Internet, e-mail, and other technical skills."

REALTORS® who are Internet-savvy also make more money. In a 1999 NAR member survey, real estate professionals who used a computer earned $22,600 more than their colleagues who didn’t. Michael Bray, president of the Greater El Paso Association of REALTORS® and member of the Texas Association of REALTORS® Technology Task Force, says REALTORS® need to be comfortable with using technology.

"The ones that don’t know the basics will be lost a year from now," he says. "Real estate is not a nine-to-five business anymore, and we need to be ready."

What is a transaction platform?
Ready or not, the number of online real estate sites has proliferated in recent years, with REALTOR.com, HomeAdvisor, HomeGain, and others carving out their share of the marketplace. Consumers are of the instant variety these days and want to shop for a house when it suits them, so it’s no surprise these sites have seen some successes.

But the transaction platform takes the online experience one step further–and could be a real plus for REALTORS® and consumers. Basically, it’s a generic term for a Web-based environment that enables agents, buyers, sellers, title companies, mortgage companies, pest control services, inspectors, appraisers, and other service providers to share documents, track progress, and communicate with each other. With the passing of e-signature legislation, the plan is that parties will even "sign on the dotted line" on the Web. Other features offered include the ability to bid on repair and redecorating jobs, coordinate utility services, synchronize agents’ contact managers, integrate forms software, and more. But beware. There are a lot of applications out there calling themselves transaction platforms –and they’re not. Some so-called transaction platforms provide only pieces of the entire process, such as transaction tracking services.

"Don’t run before you walk," says Allan Weintraub, research director at the Gartner Group in Stamford, Connecticut. "(Brokers and agents) need to evaluate transaction platforms as to how they’ll help their business. How do they enhance the user experience so you can increase your business? It’s all about customer service for REALTORS®."

In this password-protected safe haven, documents can be posted online, saving courier charges and allowing for instantaneous review of timely materials; messages can be relayed to private individual Web pages specific to buyer and seller; and there is an open flow of communication among all parties.

"I think this is the way all transactions will be handled by REALTORS® in a few years," says Bill Stanberry, owner of Austin-based Stanberry & Associates, a brokerage that’s been using Expeditrix’s SmartClose transaction platform for the last several months. "It will be like the fax machine used to be. Everybody’s got to have it."

With more and more people heading online in the name of convenience, that’s a possibility. But for now, a lot remains to be seen. The idea of a transaction platform seems to mean different things to different companies–and there are a lot of companies doing this–not all of which have commercially viable offerings.

"Vendors are seeing this as an opportunity in these vertical markets, and they’re jumping on it," says Bill Eisele, an electronic business strategies analyst with the Hurwitz Group, located outside of Boston. "It’s a hot market, but the fact that there are so many systems and vendors–we’ll definitely see some consolidation there in the future."

The players
So who are the players in the transaction management game? An attempt to pinpoint the companies deemed viable by analysts and other third parties is a bit challenging, because there just aren’t many that fall into that category.

"There are literally 40 or 50 companies launching their technology right now," says Nick Karris, an analyst with Gomez Advisors. "I think a lot of it is vaporware–it just hasn’t been proven yet."

Five companies seem to have emerged, however, as leaders on the transaction management field. Chorus (iProperty), eREALTOR.com (HomeStore), Realty Desktop (HomeAdvisor), SmartClose (Expeditrix), and Transaction Management Network (Synteleos). But the question of who’s on first will remain for a while, especially as others attempt to make their mark.

"I think there will be a small number of firms left standing," says Karris. "I don’t think one firm can service the industry efficiently."

Chorus (iProperty.com) — Indianapolis
The people at iProperty.com call their Chorus product a "real estate management engine," not a transaction platform, because they say it manages the entire real estate process.

"It’s not just a window that will let you see what’s going on, but it lets the user participate in the transaction," says Robin King, spokesperson for iProperty.

Sites are launched for each buyer or seller. King says agents can also conduct their own searches off the MLS after entering search specifications, set up searches within the password-protected site, and leave notices for other parties. Buyers can also use Chorus to apply for a mortgage. After closing, the site stays up so the agent can maintain contact with the homeowner, sending them neighborhood information or data on the current value of their home. King says consumers will remember this extra level of service.

"When the consumer gets to the point of looking for a home again, they’ll look at iProperty instead of a national portal–and a brokerage they’re already familiar with," she says.

For a consumer to use the system, a brokerage has to have signed up for the Chorus application. The revenue model consists of several options. The most popular is an up-front fee paid by the brokerage that includes marketing activity, customer support, and on-site training. There are also separate packages that involve a per transaction fee per user within the brokerage. There’s also a "private label" product that involves customization of the software, so the brokerage can use the platform as its own product.

George Stephens, who owns ERA Stephens Properties in Houston, has been testing Chorus for the past few months when the Houston Association of REALTORS® signed an agreement to provide data licensing, so it can offer the product as a service to REALTORS®.

"When a REALTOR® signs the agreement to use Chorus, they provide them with a list of their favorite service settlement providers," says Stephens. "IProperty then contacts them to let them know the REALTOR® is using the transaction platform, and they’re charged a fee, depending on the service that’s being provided, for each transaction that’s successfully closed."

Basically, iProperty pays HAR for access to the MLS; they make their money by getting contacts from REALTORS® and soliciting fees for each transaction. While the REALTORS® aren’t paying for the service, Stephens says they’ve been slow to embrace it–mostly because there are only four brokerages in Houston that are using it– and they have yet to process a transaction. Keying in the information is also an issue.

"If one agent or participant isn’t on the transaction platform, the agent that’s on it must key in the information twice to allow for other people to use it," he says. "The contract is the key element in a transaction platform, so the issue becomes how effectively is any platform able to integrate the contract information without someone keying it in. We don’t have time to key it in."

Stephens says they’re "road testing" Chorus right now and looking to partner with another office in Houston that’s using it to really see how it works.

Chorus is targeted to key brokerages and regional offices around the country.

eREALTOR.com (HomeStore.com) — Thousand Oaks, California
HomeStore has partnered with NAR to launch the eREALTOR.com transaction platform. With the endorsement of NAR and partnerships with established real estate industry players such as GMAC Real Estate and GMAC Mortgage, Fannie Mae, and subsidiaries Top Producer and Wyldfyre, the venture’s director of product strategy says they’re spending the time and money to build a REALTOR®-centric product that works.

"This is definitely a multiyear project, and not because the technology isn’t there," says Errol Samuelson of HomeStore.com. "We have a broader vision and more aggressive goals than some of our competitors, and that takes time and money. The adoption curve is also a factor–we want to make sure agents are ready for this."

Samuelson gave the example that though the percentage of consumers using the Internet to buy a home jumped from 2% in 1995 to 37% in 1999, it did take four years to get there.

"Critical mass is the issue," he says. "We’ll see early adopters first, then people will get excited. But the process will take a while."

The eREALTOR platform has three distinct parts: a workflow engine that details tasks that need to be completed, a service ordering function for core closing services, and a communication piece to report status.

"It encompasses a quicker close, a sense of transparency for the consumer, and vendor and transaction management for both the broker and the agent," Samuelson says. "The platform is focused on the buying and selling process, but it’s not a silo; it can integrate with MLS systems around the country."

Integration is important, specifically because re-keying information is not an issue when data can be directly transferred from the MLS into the platform for use by the brokerage–on a permission basis, of course.

"We have the technology, but need permission from the MLS to get the data," Samuelson says. "We can also transfer customer information from the agent’s contact manager to integrate with the platform."

The platform also allows for integration with the forms software currently provided to REALTOR® members in Texas (ZipForm), so that transferring information from the form into the platform is also possible.

The application’s revenue model is still in development because, Samuelson says, their primary customers are everyone on the platform. Still, making everyone happy will surely take some research. HomeStore has conducted focus groups with brokers and agents who have suggested they pay a fee to HomeStore, or make the platform free to users but charge a reasonable fee to the vendor for facilitation of the order.

"It needs to make sense to brokers and agents before they’ll use it," says Samuelson. "Maybe the right answer is a hybrid between the two, but how we charge for it is going to be a function of what the market prefers."

Realty Desktop (HomeAdvisor.com) — Redmond, Washington
Microsoft’s foray into the world of real estate has resulted in HomeAdvisor.com, which recently begat Realty Desktop, a Web-based "customer and transaction management solution" to help brokers and agents manage customer relationships and build loyalty.

While still in beta stage, Realty Desktop has a strategic alliance with Interealty, which provides full-service MLS solutions to 84 of the leading MLS services in the U.S. and Canada. Together they have developed a product called MLXchange, an MLS software package, and are including it with Realty Desktop to sell to Interealty’s MLS customers.

"Realty Desktop allows transaction management from start to close," says Matt Hines, product manager for Realty Desktop. "There’s an average of 60 different partners a given REALTOR® is working with, and it’s confusing to keep track. Realty Desktop puts it all in one place, acting as a checklist and document exchange."

The company began nearly two and a half years ago as HomeAdvisor.com, then spun off from Microsoft to form HomeAdvisor Technologies about 10 months ago. HomeAdvisor Technologies is also developing a mortgage origination package called Mortgage Tools. The eventual goal is to build Realty Desktop into Mortgage Tools.

"Mortgage Tools is similar to Realty Desktop, but it’s for lenders and borrowers," says Hines. "We see all these tools working together in the future."

Realty Desktop’s revenue model consists of selling the service to brokers–the target market is the top 500 brokers across the country, as well as MLSs nationwide–and company representatives are confident that the Microsoft name will give them a competitive advantage.

"Brokers tell us that they trust Microsoft, and we are Microsoft at our core," Hines says. "A lot of companies are doing this, but people need to look at a proven track record and the technology. We are building tools that will affect their bottom line."

SmartClose (Expeditrix.com) — Austin
According to focus groups conducted at Expeditrix, the average closing requires approximately 400 phone calls and 70 signatures. The goal of founders Tim Ford and Vijay Sankaran was to ease the "pain" of closing a transaction by developing a platform that brings all the closing elements together.

"We enable a view of the entire transaction," says Ford, a former real estate agent. He says SmartClose also brings accountability to the process, because everyone knows who’s responsible for what. For example, say an escrow officer needs to set a closing date. Normally that person would be on the phone, trying to arrange a time that works for all parties. With SmartClose, the escrow officer can simply send an e-mail message to everyone who needs to participate.

"It’s about proactive communication and document workflow," says Ford. "The platform can store documents, handle updates and notifications through phone, fax, e-mail, pager, or PDA, and generally facilitate the entire transaction."

In terms of cost to REALTORS®, the Expeditrix revenue model charges a fee to the service providers involved in the transaction. The REALTOR®, buyer, and seller don’t pay anything. That was a big plus for the Austin Board of REALTORS®, which recently signed a joint marketing agreement to make Expeditrix its recommended source to REALTORS® for transaction management. Getting property information online was another concern for ABOR; with Expeditrix, the agent faxes the information and it’s then scanned and put online.

"The big key for us was we saw how easy it was for even the laziest of REALTORS® to get the data online," says David M. Foster, president and CEO of ABOR. "It just appeared REALTOR®-centric to us and had an attractive scalability."

Transaction Management Network (Synteleos.com) — Pleasanton, California
Synteleos started working on its product in 1996, a veritable old-timer considering most of the players in the transaction platform space began in the last two years. Synteleos started off marketing single-user client applications.

"Users could track multiple transactions at once and know who has to do what when," says Michael Colon, executive vice president for corporate development. "Title companies, escrow companies, and brokerages were our first customers in ’96."

Since then, the platform has morphed from a client-based application to a collaborative, Internet-based document management and communication/notification tool.

"We try to solve the communications component between the REALTOR® and the consumer," Colon says. "Once you educate people and give them access to information, their expectations increase."

Synteleos rolled out its platform in 1999 and has logged nearly 4,100 transactions since then. Its revenue model relies on agents who pay between $35 and $40 per transaction when the deal closes to use the system. In turn, Colon says they give agents the "freedom in an electronic environment to choose whichever vendor they want."

"What we don’t want is to be a technology provider that’s ultimately controlling the technology. Who is ultimately being served in that model?" Colon says. "The guy who has the money wins. If the agent isn’t investing any money, they’re not going to get served."

Synteleos partners directly with the broker–the target market–but Colon says the technology is on behalf of the agent.

"It’s the broker’s job to convince the agent," he says. "If anyone’s going to charge the agent, it shouldn’t be a third party; it should be the broker."

Synteleos is doing business in about 14 states so far and recently signed an agreement with Century 21 Canada, which handles about 18% of the real estate transactions there. Colon says, all total, they represent 6,200 offices and 43,000 agents, and handle more than a half-million transactions per year.

On the bench
Other kids on the transaction platform playground are also gearing up, among them Stewart Title (start2close, a platform for title companies); RealtyPlus (CloseYourDeal.com, a residential transaction platform); MLS Today’s Reliance System; NetUpdate (LoanUpdate, a transaction platform for mortgage originators); StreamLoaner (StreamLoaner, a software application/transaction platform for the commercial real estate industry); Zethus.com (Zethus.com, a Goldman, Sachs & Co. incubator that’s also developing a commercial real estate platform); iLumin Corporation (Digital Handshake for conducting end-to-end electronic mortgage transactions and loans); Cleanoffer.com (cleanoffer.com, a slow-growing California-based platform with national intentions); eRealty (they acquired a transaction platform in partnership with GeoTrac and are exploring options); and iStrategy (partnering with Homebid.com to create a transaction platform).

Needless to say, there’s a lot out there and a lot of room for skepticism. It’s often said in Texas that if you don’t like the weather, just wait a while. This sage advice could also apply to the world of transaction platforms, as the landscape and technology change into something workable for the transformational world of real estate.

Amy E. Lemen is a freelance writer in Austin.

Editor’s note: The TAR Technology Task Force has been studying transaction platforms and the surrounding industry issues to keep abreast of the opportunities and challenges this technology may present TAR members. The task force encourages members to forward input on this topic to info@tar.org.

Photo illustration: Joel Mathews; images by Corbis Images and PhotoDisc.

home   current issue    top 10    resources 

discussions   contact us   search

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.tar.org.