Poking holes in paperless transactions
Letter to the Editor
By Inman News, Thursday, December 18, 2008.Re: 'Say goodbye to paper documents' (Dec. 17)
Dear Editor:
The idea of paperless transactions has great appeal to me from an economic and environmental standpoint. From a practical standpoint there are a few things that most have failed to realize or understand.
For many activities, such as getting news, viewing advertising and shopping, paperless is absolutely the way to go.
The problem in the real estate transaction, as I see it, is that we real estate professionals are the FIDUCIARIES of our clients and therefore are responsible to them for the many and complex documents they are expected to read, understand and acknowledge.
It will not suffice that we can verify that we e-mailed the documents and that they received them. I have spent substantial time as an expert witness in standard-of-care cases where the key point was the amount of time the agent spent explaining the varied and many complex documents involved in the real estate transaction.
Simply delivering them has never been considered the adequate standard of care. How do we complete this very important and necessary element of our function if we are simply transferring documents electronically? I would submit that many agents today are not fulfilling that responsibility, but that must be corrected rather than accepted as the norm.
Real estate transactions are not simple. Most people do not understand all of the details involved and, unless we are going to change the position of the real estate practitioner from fiduciary to simply scribe or messenger, the practicality of paperless remains an issue.
Allan Bernardi
Broker, CEO
RE/MAX Dolphin Real Estate
San Mateo, Calif.
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Submitted by Chuck Hormel on December 18, 2008 - 2:54pm.
I think a good agent will find it as easy to go through the documents with a client on electronic files as they would with a printed copy. You simply explain to them that you are sending important documents and ask them to call you when they receive them. When they call you open the file and ask them to do the same and go through it as you would a paper file. I have not found it to be different or difficult.
Submitted by Ron LaMee on December 18, 2008 - 3:29pm.
You are right Allan; using transaction management (TM) to shortcut interaction with clients is unwise. It’s not only poor risk management, but undermines important relationship building. However, TM systems can actually free brokers and agents from tiresome paper-shuffling and allow them to pay more attention to these essential activities.
A good TM system reduces risk by making office procedures more consistent and transparent. It alerts key parties when critical events are pending and creates a secure, unalterable log of all activity. TM systems help build client relationships and foster trust – documents can be accessed 24 hours a day and there are fewer escrow-signing “surprises.” It seems amazing to me that people can buy and sell stock, pay bills, and buy nearly everything under the sun, yet not be able to use the Internet to check the status of a major event like buying or selling a home.
After just eight months, our association’s TM member benefit accounts for 38% of all AAR members. I estimate that over 15% of all the listings and closings in Maricopa County move through AAR TM… and the number is growing.
Submitted by Jay Thompson on December 18, 2008 - 3:30pm.
We use electronic contracts almost exclusively. We don't just email them to the client and say, "Click here, click there." We still go over the documents line-by-line. That is as easily done on a screen as it is a piece of paper.
Jay Thompson
Broker / Owner
Thompson's Realty
Blog: www.PhoenixRealEstateGuy.com
.
Submitted by William Metzker on December 18, 2008 - 8:37pm.
Allan,
In my opinion, we need to put the issue in perspective. Electronic documents have the advantages you say and many more, but you raise a couple of issues. The first is the extent to which an agent ought to be explaining pretty complex documents. He or she might illuminate the intent of the text, but to explain much more than that is to give legal advice, which agents absolutely should not do (this is one of my long-standing complaints about the roles of real estate agents, some of whom may have a GED and maybe not even that).
Second, if you were to sue someone for, say, oil migrating from a tank, and your attorney e-mailed you a 52-page document and said "sign here," would you do it? Of course not.
But there's no reason a client couldn't electronically sign a listing agreement document and lots of others. I can't imagine an agent who wouldn't consult on the documents, even highlighting the places where attention was especially needed.
That said, you raise some very valid points, and the issue of e-signing and e-documents need serious discussion.
Submitted by Deede Wockenfuss on December 19, 2008 - 10:23am.
Deede Wockenfuss
CybrSold Concepts
A Frugal Virtual Real Estate Company
480-248-9500
http://www.CybrSold.Com
I think some of you are missing the point of paperless transactions. Bottom line, it is what most buyers and sellers want. They want the freedom to review offers, addendums and listing paperwork privately, and contact their agent via email or phone with questions. To suggest that the agent just fowards the contract and gets it signed unread is preposterous. No offense, but buyers and sellers have SOME responsibility to read and understand their contracts. We have a legal 'explanation' of our contract from our state association that I also send with the contract. It answers most of the questions that may come up, and pinpoints areas where they DO have questions.
My new company, CybrSold Concepts, uses the internet for EVERYTHING. This does not mean that I don't have a great working relationship with my customers and clients. I use Top Producer 8i and use their 'email stationary'. This has my picture on it, many ways to contact me, as well as tab links to my website, listings, etc. I have had customers tell me that they felt like they really 'knew' me just from our first email contact. I have one listing (that was originally with another office agent) that we have had for two years.(seller didn't get it) I had never met this man, but had pages of emails and lots of phone conversations. When the original agent got a full time job, I took over the listing as a short sale. When I met this man, we hugged like two old friends! I got a short sale offer on his home in two weeks and we are now awaiting closing. We are doing EVERYTHING via the internet. He travels extensively, and loves this concept. The ONLY reason I went to his home to meet him, was to get new photos and personally answer his questions about short sales. I don't expect to go to the home again until it closes and I pick up my lock box.
Guys, this is the future of real estate. Don't hang onto old methods and condone them by saying we are not properly 'servicing' the client. We are servicing them even better and doing it quicker, more efficiently, and professionally.
Submitted by Ned Carey on December 19, 2008 - 11:11am.
One of the problems with most realtor supplied contract is the unnecessary wordiness and legalese. Twenty five pages of disclosures discloses nothing, because no one reads it.
Not only would shorter and easier to understand contracts be more conducive to electronic delivery, they would be easier to explain over the phone or on the screen.
Ned Carey
http://baltimorerealestateinvestingblog.com/
Submitted by Cheryl Bower, Realtor, GRI, ABR on December 20, 2008 - 9:43am.
I've been handling paperless transactions for almost 2 years. As others have commented, agents can be just as thorough in going through the contracts with clients by phone as in person (or working together in person with laptops).
Technology certainly doesn't/shouldn't replace the relationship building aspect of the transaction (there are other opportunities where that will still happen not just during the transaction but hopefully continue after the transaction is complete).
My clients really appreciate the ease and convenience of going paperless. Not only is the print quality better but the whole process is more efficient & organized in addition to the various environmental benefits.
Cheryl A. Bower
Realtor , GRI, ABR
Zephyr Real Estate
215 West Portal Ave., SF 94127
Cell 415.999.3450
Cheryl@cbower.com
www.cbower.com
Blog: http://lifeineabu.blogspot.com/
Submitted by Richard Fisher on December 22, 2008 - 10:05pm.
We have had paperless transactions available to our clients since 2003 and our office is completely paperless. How paper or paperless transactions is handled is in the hands of the Management and the Agents. In both cases paperwork or paperlesswork can be processed without any understanding or it can be processed with detail explainations. We require all correspondence and notes to be included as part of our TM, TransactionPoint. In either case where the agents have made detailed notes and problems have developed these notes are one of the most important determiners of whether proper representation was performed. So far it has not mattered whether the correspondence was performed in the office in person or over the telephone and Internet. It is mainly a matter that it was done and the agent represented their client whether it be Seller or Buyer. We represent overseas clients and California clients buying in other states and it is all the same. Did we represent our client properly and with Agency.
For those agents who are members of CAR, California Association of Realtors, I would recommend looking into e-Pubs on WinformsOnline.com. This program is the first attempt I have seen, to give agents the ability to give their clients a better understanding of the contracts they are signing. More of this type of detail, written by attorneys who have written the contracts, is needed whether the transaction is paper or paperless; in the office face to face or over the Internet with never having met the client.
The best recommendation is to apply the same level of standards in any transaction and this is basicly up to Management of what they require.
Richard Fisher
Designated Broker
Western Heritage Enterprises
rfisher@MorroBayRealty.com
805.772.6590 x 18