Sankaran was interested in relocating to the semiconductor-rich "Silicon Hills" of Austin, TX. Like many others flocking to this southwestern technology town, Sankaran found himself in the market for a new home. Despite all the high-tech innovations springing up in Austin and the real estate industry, Sankaran discovered that buying a home is still a slow, tedious and paper-and-communications intensive process—especially during closing. The inefficient and error-prone practice of reviewing documents, scheduling appointments and meeting deadlines astonished him.
Sankaran's "pains" soon turned into innovation. Sankaran drew upon his expertise in creating workflow solutions for the semiconductor manufacturing industry to design a technology platform for managing residential real estate transactions. He pitched this plan to his tech-savvy Austin real estate agent and neighbor, Tim Ford, who was very familiar with the tedium of closing on a home after 18 years in the residential real estate industry.
Ford was immediately intrigued by the promise of a more efficient homeclosing and the two partnered to finalize the concept, combining Sankaran's technical expertise with Ford's extensive knowledge of real estate, mortgage, and title processes. They officially joined forces in July 1999, to create ExpeditrixTM Corporation. By the end of the summer of 1999, the two co-founders secured funding, hired employees and within one year they introduced its first product, SmartCloseSM. SmartClose is a Web-based service that links participating title and escrow companies with their clients and other local service providers to streamline and accelerate the real estate closing process for all parties.
More Efficient Closings
Lori Naylor, president of Commonwealth Title-Austin, works with buyers like Sankaran on a daily basis. With approximately 400 phone calls and 70 documents per closing, she sees the impact a stressful closing can have on all of the transaction participants, including the agents, title or escrow company, buyer/seller, mortgage companies and attorneys.
Naylor wanted to find a more efficient way to service her customers and looked for a solution that would allow her company to provide leading-edge service and have a competitive advantage in a hot real estate and technology market.
"Buyers and sellers are demanding instantaneous information, which they haven't had in the past," said Naylor. "We needed a service to streamline the closing process and enable our personnel to focus on providing the best customer service instead of fielding status-inquiry phone calls from other participants in the process."
Multiple parties—Realtors®, title or escrow companies, buyers/sellers, mortgage companies and attorneys—must work together to complete each real estate transaction and research shows the Internet could save participants up to $60 billion that is lost annually to restructuring deals, rescheduling closings, inadequate notification of affected parties and duplicating work efforts.
Several companies have created Web-based services to alleviate the pain points in the real estate industry by providing checklists and shared online folders for the main participants. However, these types of solutions serve only as an intermediate placeholder for documents and do not deliver long-term work-flow solutions. With many transaction participants, it can be difficult for one business to act as the glue and bring all of the parties together. In order to truly streamline a residential real estate transaction, a complete work-flow solution must be utilized because each transaction is unique. The business rules and security requirements of each transaction must conform to the needs of the title or escrow company providing the service to their clients and other participants involved.
Another solution that has been utilized to address the problems inherent in a multiparty transaction is a set of Customer Relationship Management (CRM) tools. While these tools store information about customers, the actual work flow of business transactions has been primarily managed offline on the telephone and with paper trails, making this solution less than ideal.
The only solution that combines all of the necessary elements is a neutral entity to connect the parties —a transaction management platform that allows multiple parties to participate and adheres to real estate business rules and processes. "After looking at all of the options, we chose to select a Web-based transaction management platform," commented Naylor. "From a competitive and economical standpoint, an online platform offered an integration into our existing computer systems and quickly allowed us to have instant access to the parties involved in the transaction. Choosing to partner with Expeditrix and its proven transaction management platform, SmartClose, saved us time and money; it was a smarter decision than trying to develop our own system."
Choosing A Transaction Management Platform
In general, a Web-based transaction management platform can address the needs of the residential real estate industry by simplifying the closing and allowing all participants to be more informed and productive. Not all transaction management platforms are created equally; it must include all of the following necessary components to serve as a complete solution.
The ideal system would enable businesses to collaborate by integrating with existing technologies—computers, mobile phone, e-mail, fax, and personal digital assistant (PDA)—to increase efficiency. It is also important that the transaction management platform include proactive communication—automatic updates distributed to participants—and the tracking of those interactions. This allows users to manage and monitor all closing-related documents, tasks, deadlines, and exchange communications with a complete audit trail.
Transaction management services for the residential real estate industry must focus on incorporating functions that ensure the transaction context is appropriate for each potential individual business role. In addition, a successful transaction management platform must contain document security requirements and be designed to be extremely modular and flexible to support a wide range of business transactions and individual client needs.
"After evaluating several transaction management services, we found that Expeditrix's SmartClose best supports our current business model and allows us to stay ahead of our competitors," remarked Naylor. "The executive management team at Expeditrix has a deep understanding of the real estate industry, so the SmartClose service was created to offer our escrow officers and customers a better closing experience. Not only that, SmartClose integrated with our title production software to provide us a more efficient way to manage documents and process transactions. Plus, SmartClose was the only product we reviewed that offers proactive notification and archival of all interactions which allows for improved communication, a complete audit trail and thus better customer service."
Expeditrix's SmartClose Service
SmartClose is a Web-based service that automates time-consuming and complex multiparty transactions for the residential real estate industry. It enables existing time-tested business relationships to collaborate online without leaving the comfort of familiar communication devices or the comfort of their homes if they choose. No more late night trips to the office before closing day; agents, buyers, sellers, title, and mortgage companies can access the progress of each transaction anywhere, and at any time.
When important documents are added to the system, participants receive instant notification through their preferred communication device—e-mail, phone, fax, pager, or personal digital assistant. This exclusive feature of SmartClose allows the participants to keep abreast of each and every aspect of the transaction and increases accountability between the participants. Now, all of the participants know and participate in the status of each closing document. "The accuracy that SmartClose brings to the multiparty residential real estate transaction makes the process of contract to closing more efficient, which provides participants more quality time to spend with customers at closing and less stress with last minute mistakes," said Steve Pittman, CEO for Expeditrix. "SmartClose also alleviates the confusion involved with closing. There will be no more ‘Has this been ordered?' or ‘When can we expect it?' types of phone calls. All of these multiparty tasks are automatically assigned and easily tracked in the secure system." After Naylor determined SmartClose was the right option for Commonwealth Title—Austin, Expeditrix provided training to all of the Commonwealth Title—Austin closing professionals. Furthermore, as Pittman points out, with the Web-based model, the only significant requirement for a title or escrow company employee to use SmartClose is Internet access and a Web browser. "There is no software to purchase or special system requirements, and we provide training and customer support, so the service is easy to initiate and easy to maintain. In fact, once a Realtor® , lender, home inspector, or other service professional has entered contact information and preferences into SmartClose, they are easily accessed for each new transaction," he said.
By utilizing SmartClose to add, update, view, or print relevant closing documents, Commonwealth Title—Austin's closing professionals will decrease the hundreds of phone calls and status inquiries that are part of a traditional closing transaction. An escrow officer can now set up each transaction by adding the closing participants and their respective tasks. SmartClose then adapts intelligently to each step of the closing process according to the transaction and the documents involved. Naylor believes that SmartClose has provided a win-win situation for everyone. The buyers and sellers have that instantaneous information, and the agents have a stress-free closing because the title company they chose has a service that helps further the relationship between the agent and the client. "We actually have had agents request that they use Commonwealth Title—Austin because we offer SmartClose," she said.
Just as title companies like Commonwealth Title—Austin are realizing the benefits of transaction management platforms, the industry is already buzzing about the next big technology change.
How Digital Signatures Figure In
A Web-based closing service may not revolutionize the residential real estate industry in quite the same way that Gutenburg's printing press galvanized book publishing, but adding digital signatures to the Web-based service, will make reality seem more like science fiction. The passage of the e-signatures act by the House and Senate has ignited the process of establishing a uniform standard for electronic transactions that would take the place of handwritten signatures. Because of its digital imaging and universal document acceptance features, SmartClose is poised to take full advantage of digital signatures for residential real estate closings. "The passage of the digital signature bill in the House and Senate is just the beginning of this next phase in online collaboration with legal agreements," said Pittman. Whereas people once relied on a word of honor, a handshake or even a wax seal, the consumer of the future may rely on a secret code or even an electronic thumbprint to complete transactions. But whatever the manifestation of the digital signature may be, Expeditrix remains focused on maximizing its potential for the settlement services industry and the home closing work flow process. Through transaction management platforms and eventually digital signatures, technology is revolutionizing the residential real estate industry. Agents, brokers, title and escrow company representatives, and vendors can finally enjoy desktops cleared of thick, manila folders as they view, collaborate and approve (with their digital signature image) all of the documents in a multiparty residential home transaction. And, this technology will allow Commonwealth Title—Austin and other title companies around the nation to alleviate closing inefficiencies and finally give consumers a "pain-free" home buying or selling experience.
Lori Naylor is president of Commonwealth Title—Austin. She can be reached at email@example.com or 512-346-0044. Steve Pittman is CEO of Expeditrix Corporation. He can be reached at firstname.lastname@example.org or 512-306-1112.