20 Years and Counting: Still Waiting For Digital Real Estate Transactions

by Kevin Hawkins on July 20, 2016

DisruptIn the 1990s, it was called disintermediation. In the 2010s, we are calling it disruption. Back then, we talked about a “new paradigm” that would alter the real estate business forever. Now we talk about “new business models” doing the same. The names may have changed, but the bottom line is this: I am still waiting for digital real estate transactions to be a common practice, not the exception to the rule.


What has really changed?

Next month in early August, like many of my colleagues, I am heading to Inman News Real Estate Connect in San Francisco. It’s hard for me to believe that it has been nearly two decades – twenty years or more than 7,000 days – since the first Real Estate Connect in 1996. Brad Inman held the first real estate + technology confab at his family retreat in the Sonoma Valley.

That was in late September 1996. Several months later, I met with Brad in a restaurant next to the Hyatt in Bellevue, WA, listening to him tell me what I missed and what he wanted to do next: a full-blown Real Estate Connect conference at the Hilton in San Francisco. He had a goal of 800+ people in attendance, including the Who’s-Who of real estate and technology leaders, at a sold out exhibit hall and wanted my help.

Now I think back to 1996 and 1997 to what real estate looked like then and what it looks like today. Despite all the talk about disintermediation and the gust of wind that Internet 1.0 blew into the aggressive expansion of technology into the real estate space, and the current blitz of amazing innovations, I have to ask: What has really changed?

Fundamentally unaltered

It’s no longer Homestore that is the invincible giant: it’s now Zillow. But seriously, did Homestore add any real value to the real estate business? Has the consumer saved a dime because of Zillow? Or were both firms simply guilty of redistributing dollars and taking market share from someone else?

When I watch a real estate transaction today, I see almost exactly what I see when I bought my house on Bainbridge Island in 1996: the vast majority of folks still use a real estate agent, still typically pay a 6% commission, you still have to turn in a ton of documentation – more now than you did in 1996! – to get a loan, you still have to write a check for escrow (in Washington that’s the practice for a deposit with the Purchase & Sale Agreement, so that part is still NOT digital), and you still have to sign a bunch of papers until you can close your loan. It doesn’t take any less time than it did before, and in fact, because of TRID, for most folks, it is probably taking a bit longer than it did in 1996.

Will it ever really change?

For the first full-blown Real Estate Connect I wrote and issued a news release on PR Newswire, June 5, 1997. The headline was “Imagine Real Estate Tomorrow…A Paperless Real Estate Industry on the Horizon.”  The sad fact is I could write that same exact headline today and only now would I be more accurate.

Yes, everything about the combination of real estate + technology that the Brad Inman envisioned (arguably more clearly and earlier than anyone else in the business) is taking so much longer than anyone imagined. But will real estate ever really fundamentally change?

I believe it will. I also think it could now happen very suddenly, despite literally decades of slowly trudging towards significant change. What prompted me to consider all of this was another bold prediction from a story covered on CNBC “Retail bank branch is doomed, and banks don’t know it.”

I spent nearly a decade working for a big bank (now part of CHASE) and what I read here struck me to the core. The reason it was so jarring is as I thought about the last time, I was actually inside a branch. I realized that the only time I have been in my local BofA branch in the last two years was to solve a complex problem. I now do 95% of my banking online and for the majority of that, I perform it on the BofA app, which is probably one of the most valuable smartphone apps I actually use. The other 5% is done at an ATM. I have absolutely no desire to walk into a branch and I used to originate loans inside a bank branch for a couple of years.

That BofA app – and their online website – fundamentally changed my banking behavior by giving me the ability to save a considerable amount of time by doing everything at my desk. I see the potential for the same thing to finally happen in real estate.

The biggest obstacle I think has been the ability to deliver true value to the consumer. Not just saving them time, but something that seriously saves them money. That’s the big piece that is missing, that many technology companies are chasing. The 100% digital real estate transaction, from the escrow deposit, to the filing of the documents with the local government office, must happen. We still are not there yet. But once we do that, something even bigger, more thrilling and delivering something of remarkable value that makes people change their behavior because it really is a better way that could finally and fundamentally change real estate as we know it.

{ 7 comments… read them below or add one }

Kris Keener July 21, 2016 at 12:22 pm

But most people understand their banking transactions – depositing money, paying someone from their checking account, transferring money from one account to another.

How many people actually understand the basics of a real estate transaction – even just making an offer can be extremely complex? Skilled real estate agents know from experience how to make an offer more attractive. How does a seller receiving multiple offers really know or understand what is being offered? Then there are the negotiations? When we sold our house, there was a problem with the chimney. My agent made suggestions I wouldn’t have thought of or even known was possible that made the deal more palatable to us and yet still palatable to the buyer, enabling the deal to go through. It would have fallen through otherwise. I would never, ever submit an offer online without guidance from an agent or have any idea of how to manage it.

Real estate transactions are intrinsically personal and products of that particular moment in time. You could have a deal with all the same parties and in five years have all of the exact same parties and same property involved and the deal would be different. People would change, the property would change, the laws change.

Consumers save money when they can manage the work themselves. Essentially they trade their time for dollars. That’s what’s happening in banking. We spend our time doing the steps to transfer money from one account to another rather than pay a bank teller to do it. We were standing there anyway so doing it ourselves doesn’t save us time, but can save us money. What specific actions of an agent or a brokerage do you see that consumers can do themselves just as well as an agent or a brokerage that doesn’t cost a consumer time for which they could then retrieve the dollars? Am I going to enter my home in the MLS? My agent does that now while I grocery shop. Am I going to receive offers and decide if they are complete and even meet the legal requirements? My agent does that while I work. Am I going to pay for an ad or flyers without any guarantee that the home will sell – my agent does that for me now. Why would would I ever accept that expense upfront when I can defer it to when the home actually sells in the form of a commission to the agent?


Kevin Hawkins July 22, 2016 at 7:48 am

Great comments Kris. But what I really am talking about isn’t making the process like buying a plane ticket. As you so poignantly note, this transaction is far more intricately complex, emotionally driven, and a financially, the biggest investment/purchase for almost everyone. I am talking about the process — from eliminating the escrow check to filing at the county, every step for the consumer AND the real estate pro should (and I believe eventually will) be 100% digital, sooner rather than later. We all shouldn’t have to wait another 20 years.

If BofA can simplify my entire banking experience by creating an iPhone app, which only requires my fingerprint to access, and if we can put rockets into deep space, then certainly we do this.


Ben Caballero July 21, 2016 at 2:52 pm

Very insightful as usual!


Mary O’Neil July 23, 2016 at 9:29 am

I think you’re right on the money. There was a company that meant to do just this which cropped up in 2015, but quickly got swamped by the different laws in different areas; I can’t recall what the name was, but I think that the technology is there: but the legal nonconformity is what will make it impressively difficult to get off the ground.

Anyone who’s familiar with machine learning developments in the last 5 years should be aware that computers will quickly be able to evaluate complex risk vs. value situations (even in homebuying situations) and to make approximately the same decisions (and possibly better ones) than real estate agents. And since computers won’t need to make that 3%, they’ll ultimately be more true to the consumer’s interests. I’d estimate tools like that might arrive on the scene within a decade.


John August 17, 2016 at 1:14 pm

Very helpful article. I’m new to this topic and this definitely helps me learn!


Jason August 23, 2016 at 12:55 am

Great article. I really enjoyed the subject.


Portiqo April 24, 2017 at 2:48 am

Nice article, it is intriguing to understand as to why this sector hasn’t gone digital completely when it is ideal to do so.Now is the right time to push for complete implementation of digital transaction in this sector as it eases the problem for both investors and sellers.


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