The next big tech thing for homebuyers and sellers may be start-to-finish online real estate transactions, but industry experts said the Washington area is not ready to make that jump just yet. DotLoop is a new Web-based company that combines electronic signature capabilities with social networking and Web conferencing technology to take everything involved in a real estate transaction online. It is all done electronically, including signing the settlement documents.
“Already 95 percent of all real estate searches start online,” said DotLoop founder Austin Allison. “People in Generations X and Y have higher expectations. They don’t want to receive a fax.”
| Resources |
| dotloop.com |
| pria.us |
| realtor.org/library/library/fg921 (National Associated of Realtors Field Guide to Electronic Signatures) |
The service lets Realtors invite other Realtors, brokers, lenders, buyers and sellers into a “loop” where they all have access to online forms in real time. That eliminates the back and forth of faxing offers and addenda, in-person contract signing, and buyers and sellers sitting across the settlement table, pens in hand, at closing.
Under federal and state laws, these transactions are as legal as if everyone were all in the room together.
Congress passed the ESIGN Act in 2000, which facilitated the use of electronic records and electronic signatures in interstate and foreign commerce, making electronic documents as good as originals.
Sounds great, yet some lenders and Realtors “are not ready for prime time,” said John Frey, Circuit Court clerk for land records for Fairfax County and the city of Fairfax.
The state of Virginia redefined the meaning of “original documents” years ago, Frey said. However, “What most people are doing is taking a pen-and-ink settlement, scanning it and then sending it to our electronic filing system.”
The Property Records Industry Association reported the number of U.S. counties that are electronically recording documents passed 700 in September. The number increased 40 percent from April 2010 to September 2011.
PRIA defines electronic recording as the automated process in a land records office of receipt, examination, fee calculation and payment, endorsing of recording information and return of recorded electronic documents to the submitter.
Karla Campbell, a settlement agent with Dumfries-based DKS Settlement Group, said that in 2005 everyone was talking about going wireless and paperless as lenders were handling large numbers of closings. Then came the housing bust and, as cash dried up, so did talk of implementing new technology.
“American Home Mortgage went bankrupt and other lenders were struggling,” Campbell said. “All that talk went by the wayside. It cost money to buy software.”
Campbell concedes she’d love to go paperless.
“We are small. We only do 25 closings a month, but the amount of paper we go through is ridiculous,” she said. “Only one of the lenders I routinely work with even accepts e-signatures. Underwriters are hesitant to accept it. It’s the lenders. They will drive the use of this new technology.”
DKS does use digital closing documents, giving clients a CD with a link to a website where they can review all the documents before closing.
Both Campbell and Frey said negotiation platforms like DotLoop’s someday will be an industry standard; just not today.
“Some people are just going to be old-school,” Campbell said. “We offer them the CD and they don’t even want that. They just want the paper. So now you try to explain to them that all the documents are online and you can just sign this little electronic pad. Their heads will explode.”
