3 Ways a Virtual Deal Room Facilitates the Sale of Real Estate
Date: 26 August 2019 Share on Twitter Share on Facebook
Technology is transforming the way we do business, including the way we sell and purchase real estate. Tools like virtual data rooms make it possible to streamline real estate transactions, which ultimately reduces stress and delays while also maintaining security and transparency.
Real estate has lagged behind other sectors in adopting new technologies, says Louisa Xu, an investor at IVP. Despite being the largest asset class in the world, real estate’s transactions are often conducted in outdated ways, including the use of physical paper and physical deal rooms.
Virtual deal rooms stand to transform real estate transactions by moving these physical artifacts into a digital space. Improved security, transparency and efficiency await real estate professionals who embrace virtual deal rooms to facilitate real estate transactions.
A VDR Makes Transactions More Efficient
Traditionally, real estate transactions have been inefficient, time-consuming processes.
Virtual deal rooms, along with other tools, are helping to change this dilatory and often frustrating feature of real estate, says Chao Cheng-Shorland, cofounder and CEO of ShelterZoom.
“Now, thanks to the cloud and better data management applications, the entire process can be streamlined for both commercial and residential purchases — right down to electronic signatures,” Cheng-Shorland says. “What once took weeks or months can now take just days.”
In the past, parties to a real estate transaction and their representatives had to coordinate schedules in order to meet at a physical location to store, share and sign documents. Today, a virtual deal room allows parties to perform many of the same tasks from the comfort of their own homes or offices, no matter how much distance separates them.
Expand Your Virtual Offerings
Virtual deal rooms aren’t the only virtual technology transforming real estate. Virtual reality tools are helping buyers make decisions about properties without having to visit them in person. These high-resolution, interactive systems allow buyers to experience a property and even start making decisions about architectural changes or design elements before closing, says Brian Davis, director of education of Spark Rental.
When virtual reality tools are combined with the security of a virtual deal room, buyers and sellers can complete real estate transactions with confidence from anywhere in the world. Real estate’s location-specific nature becomes more flexible for those interested in investing or selling their holdings.
Take Advantage of Additional Time-Saving Technologies
Virtual deal rooms also offer a simpler, more secure way to take advantage of tools like e-notarization and remote notarization. While not all jurisdictions allow documents to be notarized electronically or remotely, those that do have created a tool to simplify and streamline an otherwise inefficient step in many real estate transactions.
E-notarization is just one step toward a digital future for real estate. “These regulations will lead the way to digital mortgages and digital closings, where documents can be reviewed online and signed digitally to complete a real estate purchase, financing or refinance,” says Kosta Ligris, cofounder of Stavvy.
A VDR Keeps Communications Secure
Real estate agents and brokers like to stay in touch with their clients. A study by the National Association of Realtors (NAR) found that 93 percent of Realtors prefer to communicate with clients via text messaging or telephone calls, as Jessica Lautz, vice president of demographics and behavioral insights at NAR, and fellow researchers note.
SMS and chat apps aren’t ideal for commercial real estate deals, however, because unauthorized third parties can access those channels with relative ease. Security is a must in real estate deals, and the rise of digital transaction tools has brought with it a corresponding rise in concern for digital security.
“Over the past several years, the vulnerabilities that come with interconnectedness have become more and more obvious,” say PwC’s R. Byron Carlock Jr. and fellow members of the PwC Global Real Estate Leadership Team in their 2019 Emerging Trends in Real Estate report.
To cite just one example, in May 2019, First American Financial Corp leaked millions of mortgage-related documents by placing them on an unsecured server accessible to anyone with a web browser, says Brian Krebs, a former Washington Post reporter and the author of the security news blog KrebsOnSecurity. First American shut down the server while it conducted an internal investigation, but the company did not immediately have an explanation for the leak.
Enter the secure data room. Deal rooms offer best-in-class cybersecurity, ensuring that their contents won’t leak. Administrators also have a greater level of control within the data room itself: Access to particular documents or folders can be tailored to each individual user, making it easier to ensure that each participant sees only the information they are entitled to see.
A VDR Improves Transparency and Business Intelligence
According to Deloitte’s 2019 Commercial Real Estate Industry Outlook report, more than 80 percent of commercial real estate executives believe their organization “should prioritize the use of predictive analytics and business intelligence,” say report authors Surabhi Kejriwal and Saurabh Mahajan.
One way to use virtual deal rooms in pursuit of this goal is to use them in conjunction with other business intelligence software, such as a CRM. For instance, PwC describes one client whose upgraded CRM helped alleviate the burden on their legacy systems and inspired new ways to handle real estate and other transactions, PwC partners Ian T. Nelson, Erica Yung and Joe Demmler write.
Whether paired with other digital tools or used alone, virtual deal rooms also offer greater transparency. For instance, a deal room can automatically track which individuals log in, which documents they view and how long they work in the deal room.
For real estate professionals, this information can provide insights into each participant’s needs and concerns. For instance, a party that spends significant time reading a particular document may be signaling interest in that document’s subject matter or may have questions that a real estate professional can easily answer.
Customers are increasingly interested in virtual real estate transactions, as well. For instance, customers who use secure online deal rooms or portals can communicate more effectively with their real estate agent while also feeling more engaged in the process as they make offers, review documents and participate in negotiations, says Bill Lyons, cofounder and chairman of Greendoor.
As the nature of real estate sales change, so do the tools required to perform these transactions. Virtual deal rooms can provide the flexibility, security and transparency required to remain competitive in today’s real estate environment.