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Modernizing The Real
Estate Transaction
Process
Reengineering
The Consumer Experience
Travis Wright
POSITIONING STATEMENT AND PURPOSE
For years, the consumer experience in real estate transactions has been the consequence of a collage of
disconnected service providers, product vendors and regulatory agencies. Each of these entities inserts their
requirements and demands into the transaction process, often to the apprehension of the consumer and the
other participating service providers. Individually, many service providers make efforts to improve their ‘slice’ of
the consumer experience which falls within their control, but most often these improvements are
uncoordinated with efforts made by service providers in other sectors.
Now, a volunteer group of industry stakeholders seeks to enhance the consumer experience by approaching
the issue from another perspective. We believe that by galvanizing industry trade groups, data standards
bodies, private-sector industry market leaders, regulatory agencies and consumer advocate groups into a
collaborative voice with shared interests, that together we can design and promote the Modernization of the
Real Estate Transaction Process.
By re-architecting the transaction process, we believe the consumer will benefit from increased transparency,
process simplicity, and reduction of costs. Simultaneously, we envision transaction service providers
benefitting from improved operating efficiencies, regulatory compliance and risk reduction while serving the
consumer in the new process.
Transparent property rights are an essential component for prosperity and economic growth in the United
States. Given that, we acknowledge that there exists a number of standards organizations and trade
associations working to improve the real estate transaction experience, but that no single organization has the
scope or resources available to reengineer and modernize the entire real estate transaction process.
What needs to come about is a framework and unifying structure to provide common linkage among leading
standards organizations, trade organizations, and public and private sector leaders. This, then, becomes one
of the chief goals of this Modernization group.
STAKEHOLDERS IN MODERNIZED REAL ESTATE TRANSACTION PROCESS
1,000,000
Realtors;
900 MLS’s
300,000
Practitioners
150,000
Practitioners
24,000
Appraisers
3,600
County
Recorders
Da
ta &
Tra
nsp
ort
Sta
nd
ard
s fo
r
Pro
pe
rty L
istin
gs
Do
dd
-Fra
nk
Co
nsu
me
r Pro
tectio
n
Mo
rtg
ag
e, T
itle
,
Ap
pra
ise
r, R
eco
rde
r
Do
cu
me
nt S
tan
da
rds
Private Sector Providers
Trade Associations of Transaction Service Providers
TRANSACTION TRADING PLATFORM
§ 5 Million Home Sales
§ 8 Million Consumers
§ 2 Million Service Providers
§ $1 Trillion Gross Sales Value
§ $100+ Billion in Service Fees, Premiums, Commissions
Sta
nd
ard
s B
od
ies R
eg
ula
tory
Bo
die
sCONSUM
ER
ADVOCATE
S
MODERNIZ
ATIO
N
COUNCIL
NAR MBA ALTA AI PRIA
CF
PB
MERSMORTGAGE
FUNDING
TITLE
INSURANCE
PROPERTY
INSURANCE
MIS
MO
RE
SO
TECHNOLO
GIS
TS
PLA
TFORM
TRADIN
G P
ARTN
ERS
© Wright | Strategy | Advisors
REAL ESTATE
BROKERAGE
Realtor Commissions $50,000,000,000
Incremental Value of Loan Originations: 5% $40,000,000,000
Title Insurance $10,000,000,000
Appraisal Fees $2,000,000,000
MBS Trading Fees $3,000,000,000
Recording Fees $350,000,000
Transfer Taxes
TOTAL ESTIMATED FEES $105,350,000,000
RESIDENTIAL REAL ESTATE INDUSTRY
THE PRIVATE SECTOR CARES: $100+ BILLION
AND THE CONSUMER CARES
5 Million Home Sales
NEW HOMES
& RESALES
THE AMERICAN
DREAM
$1 Trillion
GROSS ANNUAL SALES VOLUME
$60B Spent After
Move-In
77M Monthly Internet Viewers
2 BILLION MINUTES:
REAL ESTATE IS LIKE A CABLE TV CHANNEL!
$13B Spent for
Online Ads
THE PROCESS NEEDS
SUPPLY CHAIN TRADING PARTNERS
Disclosures
Title
Search Title
Commitment Property
Information
Report
Report
$$$
Copies of
Contract
Purchase &Sale
Contract
Report
Disclosure
Packet
Inspection
$$$
$$$
$$$
Disclosure
Packet
Pest
Inspector
Roof
Inspector
House
Inspector
Other
Agent
Other
Agent
Client
Client
Seller
Buyer’s
Attorney
Listing
Agent Selling Agent
Title
Company
Appraiser
Property
Insurance
Agent
Other
Agent
Client
Lender
Seller’s Lawyer
County
Recorder
Inspector
Additional
Inspections
Buyer
?
Copies
of Loan
Documents
Search, Exam
Prelim
Recordable
Documents Title
Insurance
Policy
Loan
Documents
Inspection
Hazard
Insurance
Policy
Home
Warranty
Plan
Property
Information
Reports Report
Sign
Documents
© WRIGHT | STRATEGY | ADVISORS
WHAT IS SUPPLY CHAIN MANAGEMENT?
Supply Chain Management is management of a
network of interconnected businesses involved in the
provision of product and service packages required by
the end customers in a supply chain.[2]
Supply Chain Management spans all movement and
storage of raw materials, work-in-process inventory,
and finished goods from point of origin to point of
consumption.
SUPPLY CHAIN FUNDAMENTALS
• Real time demand inputs from point of sale back
upstream to suppliers
• Suppliers can then gauge demand and throughput
requirements
• Today, real estate participants do not communicate
demand, supply or logistics availability between one
another
• Result: ‘Hire Big, Fire Big’
SUPPLY CHAIN & DEMAND CHAIN
Real Estate Transaction Process
Supply Chain
Products Marketing Analytics
Demand Chain
Consumer Sales Service
THE U.S. REAL ESTATE TRANSACTION PROCESS IS
DISCONNECTED
Transaction Providers Are Not True ‘Trading Partners’
• REALTORS …the inventory
• LENDERS …the financing
• TITLE INSURERS …the guaranty
• SETTLEMENT AGENTS …close the transaction
• RECORDERS …legal, public notice
• SERVICERS…mortgage & escrow payments
• SECURITIZERS …new capital in the supply chain
• REGULATORS …prevent financial abuse or fraud
The Providers’ individual
supply chains are not linked
to a supply chain platform
Who should own or
manage the supply chain
platform?
WE’RE ALL IN THIS TOGETHER
Gov’t
Oversight
Consumer
Search Sites
eTransaction Platform (Data, Documents, eSigs) eClosing
eRecord
POS & LOS System
SMARTDocs
eDoc
Custodian
§ Closing Agent
§ Title Company
§ Attorney
County RecorderCourt House
Recorder | Assessor | Taxation
Mortgage
Origination
Sales
Contract
REALTOR
Loan App
Initial
Disclosures
GFE, TIL
Loan App
Loan Quote
Rates &
Pricing
Lock
VOE, VOI
Credit
MI
Appraisal
Title
Closing
Documents
eNOTE
Deed
eFile
Title Search,
Examination,
Curative,
Underwriting
eVaulting
LOAN
SERVICERS
eDisclosures
SELLER BUYER
Archive
eRecording
Paper
Documents
eVault
eVault
Property Search | Analysis | ContractOrigination | Appraisal | Title Exam |
Closing | Recording | Disbursements
MLS
PROPERTY
DATA
(RETS) Processing
Property
Listing
eSignatures
Electronic Audit & Compliance Trail
Real Property Transactions Mortgage & Title Transactions
Mortgage
Backed
Securities
(MBS)
§FANNIE
§FREDDIE
WALL ST.
INVESTORS
eDelivery
· MIN
· MOM Loans
Capital Markets Transactions
Securitization
Data Data
Data
Warehouses:
Analytics
Appraisal
UMDP | UCDP
UAD | ULDD
Brokerage
IDXSearch Portal
Syndicators
© All Rights Reserved
Wright | STRATEGY | Advisors
T h e S u p p l y C h a i n o f R e a l P r o p e r t y T r a n s a c t i o n sConsumers
Lender’s Back Office System
Realtors LendersAppraisers Title &
Closing
Attorneys Recorders Securitization RegulatorsInsurers InvestorsTechnologistsCredit
Agencies
Notarization
eNotarization
MERS as
Mortgagee
State Laws
SUPPLY CHAINS SHOULD HAVE CONNECTIONS
If You Believe In This Industry;
If You Believe In Housing Opportunity
For Our Kids And Our Grandkids;
If You Believe That The American Dream Is Alive And Well;
If You Believe Opportunity Should Not Be Limited
To The 1 Percent;
If You Believe That Housing Can Help
Get This Economy Back On Track Again.
Let’s Work Together.
Stand Up And Be Counted As Part Of Mba,
As We Rally Our Forces In Washington
David Stevens
President &CEO
Mortgage Bankers Association
Oct. 22, 2012
ON LEADERSHIP
“It is not up to the Government to
decide the future of the real
estate industry;
It is up to the Leaders of the real
estate industry to decide real
estate’s future.”
Ken Harney
Keeping Current Matters®
Speaking at the National Association of Realtors
Conference, Orlando, FL
11-11-2012
WILL YOU HELP MAKE IT HAPPEN?
Travis Wright
281-217-2789
