Industry watchers predict that the use of transaction platform companies will more than triple within the next few years. The servers for SettlementRoom, one of the main service providers, are hosted in a national data center at 75 Third Ave. in Waltham (above) and managed by Cambridge-based InterNoded.
Buy a new jacket from L.L.Bean or Land’s End and you can track your purchase online. With the growth and gaining popularity of transaction platforms, brokers and potential buyers can now do the same with buildings.
Industry watchers predict that, within three years, more than half of all commercial real estate brokers and buyers will be tracking deals online.
“It’s the thing that will streamline the industry the most,” said John “Jack” Peckham, executive director of the Real Estate CyberSpace Society in Boston. “It will save a tremendous amount of time – not to mention a lot of trees – so that brokers will have more time to be out selling.”
Transaction platforms began cropping up on the Internet about four years ago; today, there are a handful of main providers. Peckham said that about 5 percent to 10 percent of agents and brokers use the sites, a number that experts say will rise as high as 80 percent within the next five years.
By using the transaction platform sites, brokers are able to create a page for buildings under contract. Those involved in the transaction can log in and track the deal and financing in addition to any documents associated with the sale, eliminating redundant phone calls and faxes. Information can also be automatically distributed via e-mail to all parties through the Web site.
Michele FitzGerald, director of information technology at Spaulding & Slye Colliers, said that consortiums consisting of some of the larger commercial real estate firms formed about three years ago with a goal of establishing transaction platforms for the industry as a whole. It’s still out there as a concept, she said, although a service site is yet to be unveiled.
“There’s definitely a cultural issue with it, ” she said, noting that commercial real estate brokers are not only hesitant about sharing information but also want a clear picture of the scope and purpose of a site.
Brokers at Spaulding & Slye use www.loopnet.com to post listings of properties the company is trying to lease. FitzGerald describes it as more of a multiple listings site system for brokers rather than a full-fledged transaction platform.
‘Growth Curve’
One of the main transaction platform providers, SettlementRoom, based in Washington, D.C., was founded in 1999 and has since survived several consolidations and shakeouts in the industry. Its servers are hosted at a national data center at 75 Third Ave. in Waltham and managed by Cambridge-based InterNoded. Jonathan Cutler, a builder, developer and title company owner for 17 years, founded the company after he found that the average transaction, from listing to closing, includes more than 20 steps and more than 150 phone calls. If everyone could refer to one Web site for information, brokers and agents would save time and effort, he decided.
Cutler also determined that with software designed for management of multiple transaction Web sites, users could access schedules, outstanding tasks and documents across all transactions – a useful tool not only at the agent and broker level but one that would also allow broker-owners, associations, office managers and coordinators to monitor all of the transactions in their office or organization. And by recording all relevant documents and communications on one central server, each user can archive all of his transactions on one compact disc, Cutler said.
SettlementRoom’s business has accelerated dramatically in the last 12 months; in the last six months alone, its business volume has almost doubled, now with more than 5,000 users in the United States, Canada, Guam and Australia, according to Cutler.
“Transaction management is like e-mail. While everyone knew about it 10 years ago, it only became a commodity and essential in the last two to three years,” he said. “This is where we are with transaction management – at the beginning of the essential growth curve.”
Cutler predicts that within five years, 80 percent of all brokers, commercial and residential, will have adopted a transaction management platform.
While transaction platforms are gaining popularity, use by commercial real estate brokers lags behind that of residential agents. Peckham predicts that, within 18 months, more than 50 percent of residential agents will be using Web sites like SettlementRoom. However, it will take twice as long before commercial real estate brokers reach the same level, he said.
“When it comes to the application of technology, the residential people got a much bigger jump because they had a structure in place,” Peckham said.
Multiple listing services and Web sites such as www.realtor.com, www.homes.com and www.homeadvisor.com fostered the sharing of information within the residential real estate industry. Commercial real estate brokers, on the other hand, are less willing to share information, Peckham said. Not only are residential agents more likely to share information over the Internet, there are also many more of them. In the Boston area there are fewer than 600 commercial real estate brokers.
But Peckham remains convinced that the commercial side will catch up once word of the service spreads and commercial brokers overcome a hesitancy to use the Internet for purposes other than research. On his company’s Web site, Peckham recommends transaction platforms as the No. 1 Internet Web tool for commercial real estate brokers.
“They have a mindset to overcome, but they will,” he said.
Kristie DiSalvo may be reached at kdisalvo@thewarrengroup.com.
