Technology Transactionsby Peter G. Miller
Peter G. Miller
OurBroker®
It"s been a busy few weeks online, with a flurry of new sites designed to speed the realty transaction process. While it"s too early to know what impact such sites may produce, they do point to an interesting trend -- use of the Internet to automate real estate transactions.
In California, ezClose.com offers title and escrow services. "The closing process has always been fraught with paperwork and potential for errors," says the firm, "the typical closing takes six weeks, and involves over 30 steps and several hundred pages being exchanged between a dozen different parties."
Maryland-based Pinnacle Title & Escrow has started a "comprehensive, user-friendly web site allows Realtors, lenders, mortgage brokers and individual borrowers to request title orders on-line -- all at the touch of a button." In addition, says the company, "the site details title insurance, and real estate laws and regulations, explains necessary disclosure forms, and provides realtor and lender referrals."
These companies exist because buying and selling a home is a remarkably complex process and there is no single closing concept nationwide. ezClose Chairman and Co-Founder Nanda Kishore points out that "various areas of the country can handle closings quite differently. In fact, from county to county, there can be differences. And that"s a challenge for us. With that said, however, our goal is to be nationwide in less than three years."
How can online sites and automation improve the closing process? Here"s one example:
The Real Estate Settlement and Procedures Act (RESPA) requires on request that closing agents must provide buyers and sellers will all paperwork 24 hours before closing. His system, says Kishore, "can post the estimated closing costs earlier -- more than a week earlier in cases where one of the parties is out of town. Documents not only arrive at ezClose faster, but they can be posted online instantly for review." In order for this to happen, however, all parties including the mortgage lender must submit their information on time.
One reason behind RESPA"s 24-hour notice provision is to give buyers and sellers time to check paperwork for errors and have documents reviewed by an attorney. A system that gives consumers more time to review paperwork should be applauded.
It"s likely that we will soon see a number of emerging transaction acceleration sites, in part because there are so many local closing agents and so many unique closing requirements. As online competition builds, the result is likely to be quicker transactions, fewer headaches, and lower consumer costs whether closing online or off.
It"s the last item -- lower consumer costs -- that really counts. Just look at the difference between online stock brokers and their financial brethren, the nation"s bankers. Online brokers have been enormously successful because their cost savings have been passed through to consumers. Online banking, which is hardly known for great consumer benefits, is stalled. A study from SRI Consulting shows "a decline in the growth rate of online banking households, from 39 percent in 1994 to 31 percent in 1996 and 22 percent in 1998. Projecting this decline in the growth rate into 2000 to only 12 percent, the estimated number of PC banking households will be 8 million."
And what about stock brokers? According to Weiss Ratings, among the 131 full-service brokers tracked by Weiss, 23 firms, or 18 percent, now offer investors the option of trading online at substantially discounted commission rates. The survey also found an investor can save an average of 80 percent on a sample $10,000 trade with these firms by submitting it online.
"With more investors managing their own investments, full-service brokerage firms have been faced with the decision to either offer online trading at discounted commission rates or lose the business altogether," commented Martin D. Weiss, the firm"s chairman. "In response, major firms that had resisted deep-discount commissions for many years are now jumping on the online bandwagon."
The Common-Sense Mortgage
The latest edition of The Common-Sense Mortgage -- in its second printing since September -- is now available in bookstores online and off. In print for nearly 15 years and widely recognized as the standard consumer guide to real estate financing, it"s described by syndicated columnist Robert Bruss as "an encyclopedic, detailed summary of just about everything real-estate investors, agents, lenders and borrowers want and need to know about mortgages."
"On my scale of one to 10," says Bruss, "this superb book rates a 10."
"This continues to be the most, lucid, comprehensive treatment of the subject on the market," says The Real Estate Professional. "If you want solid, reliable information about residential real estate financing, written in a thoughtful, convincing style, this is your source."
For additional information, press here.
Question Of The Week
Q Is it possible for property to be worthless; that is, unsalable at any price?
A When once-thriving communities decline and become ghost towns it happens because there are no buyers for the property. So, yes, it"s possible for property to be worthless in a "can-I-sell-it-today?" sense.
And land can certainly be made worthless by natural disasters, mis-use and war -- think of volcanic eruptions, once-pleasant cottages near Chernobyl, the sacking of Carthage, or what remained after Tamerlane.
But in the general case, land entirely without worth is a rarity. The more likely situation is land which sellers value more highly than buyers.
Weekly Resource
Recent hacker attacks on leading web sites have made Internet insecurity more visible. Can your computer be hacked from the Web? You can find out quickly and without cost by visiting the Gibson Research site and using their "Shields Up" program.