Though automated real estate transaction management systems will ultimately be adopted and will be good for the industry, there are a number of roadblocks to adoption, a recent study said.
“While it is clear that adoption of transaction management has occurred and will continue to occur, the pace has been slow,” said the authors of the WAV Group’s 2005 Transaction Management Adoption Survey.
To speed adoption, the study said, vendors need to make systems easy to learn and use, solve the biggest pain points in transactions, and show how transaction management can help agents help clients, among other things.
The study defined an automated transaction management system as one that allows a number of people involved in a real estate transaction to view, share and manage data through the entire process.
Industry observers point to transaction management systems as a way to streamline real estate deals, eliminate paper and improve communication among all parties.
There are 10 major hurdles to adoption, according to the survey, which was based on the responses of nearly 5,000 real estate agents and brokers across the U.S. in 2005.
Current, paper-based transaction processes are working well; agents and brokers believe implementation would be too much work; the value is not clear; a “killer app” has not been identified; many fear it will weaken their relationship with clients; there is a technology skills “chasm”; there is a lack of data integration; more participants are needed; different transaction systems can’t “talk” to each other; and the benefits are largely realized by people lower on the totem pole.
The biggest barrier to adoption, the study said, is “the perception that it takes a lot of time and pain to learn and implement a system.”
To address this, the authors recommended, among other things, that vendors create a transaction management “light” system that is easy to use and includes only the absolutely most important functions.
Vendors “may have missed the boat” because many of them built their systems without addressing agents’ and brokers’ needs, the study said. For example, the study said, internal document/auto forms products are one of the most important benefits to agents. Yet, many systems don’t have this feature.
Another major way to speed adoption, the study said, would be to solve the most immediate and urgent problems in the transaction, “so early adopters make the move while improving the industry’s understanding of the value proposition.”
Once early adopters start using the software, the study said, they will have an advantage over those who aren’t using it. This will motivate the others to adopt it so they won’t be disadvantaged, the study authors said.
Also, the study said, vendors need to understand agent’s motivations and show how participation in transaction management software can strengthen relationships with the client. “Since many current transaction management users are using their system for better client communications, there is an opportunity to use this as a key tool to drive adoption,” the study said.
Demonstrating the benefit to clients and using “world class tools” such as transaction management to recruit tech-savvy agents are other ways to speed adoption, the study said.
Another major tactic is to show what the time savings and cost savings are, the study said.
“Brokers need to see a clear return on investment and timeline to cost recovery to accelerate adoption,” the study authors said, and financial incentive must be demonstrated to agents as well. “In the end … if this technology does not reduce expenses or increase revenue significantly, adoption will not occur,” the authors warned.
Many of the points in the WAV Group study appear to be on track with those of an earlier study released in mid-August. That study concluded that real estate transaction management systems are slowly gaining ground in the industry. The study was done by Clareity Consulting, a real estate services company.
“The last five years have seen a slow but steady maturation and evolution within the space,” that report stated.
Of the nearly 5,000 people who responded to the WAV Group survey, 82 percent were agents. Of those agents, 40 percent worked at brokerages with 10 or more offices and 33 percent worked at brokerages with only one office. In a concrete demonstration of the slow pace of adoption, almost half of the respondents said they didn’t have transactions management systems. Only 23 said they did.
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