I recently closed on a real estate purchase.
If there was one area of life that screams for the web, it has to be this one.
I’m not talking about sites like
Realtor.com (yawn),
Trulia,
Zillow, or
hotpads, these are all OK for armchair looking, I’m talking about the process itself:
the process is so *intensely* paper based, I’m quite convinced that half the Amazon rain forest was consumed in my transaction alone.
Let’s start with the offer process. I offer X. My Realtor prepares a 37 page offer. I sign here, initial there, and he faxes it to the seller. Naturally the seller counters. His Realtor prepares a 40 page counter. You can see how this goes on and on. Of course through all this faxing, the initial copy becomes unclear, necessitating a completely new contract. I’ve finalized $10 million dollar offers by e-mail. Why I can’t even make an offer on a piece of property that way boggles my mind.
Next is the lending process. I started on Lending Tree. You fill out a 10,000 screen on-line questionnaire and then what? You start getting e-mails. To get actual information from these lenders, you are immediately *faxed* 10 pages of paper that must be physically signed, and faxed back, with a copy in the mail. So I’m already up to a potential 40 pages of paper, just to get a squishy maybe, maybe not, commitment of an interest rate. Why can’t this be done on-line? Beats me. Must be the lawyers.
I ended up not using a Lending Tree lender, and chose Carteret Mortgage instead. Now here was a company who at least understood my pain. A simple on-line form, leading to a quick loan qualification letter. Really the only thing I had to sign were two simple forms stating that the information I’d provided them on-line was correct.
Once you choose a lender, then the fun really begins. Because I’m self employed, I’m a five headed hydra to most lenders. Can I give you a screen shot of my on-line banking balance? Oh no, we need your bank statement. Well now most banks don’t even give you paper statements any more, and none of my choices for savings even produce statements – that’s why they can pay a higher interest rate. Does it matter that these very same banks write mortgages? Nope. Find some way to get it on paper. The coup de grace was when my accountant was required to fax in a letter stating that he had prepared my 2005 and 2006 tax returns. It didn’t matter that he had signed my tax returns, and that I had sworn to the IRS that he had done so. Apparently banks are a higher authority than even the IRS. This is simply a small snapshot of the amount of paper that had to be generated simply to get the loan. Needless to say there is a well worn path from my front door to my mortgage broker’s front door.
So finally the day of closing comes. Can this be done at least by fax with signed pages in the mail? Oh no. It must be done in person (plus $45 in dubious “courier” fees). Why is this? I have no EARTHLY idea! I’ve been practicing law for 17 years, and have closed over 20 transactions of up to $200 million. How many of these have been in person? Zero.
So what can we all learn from this experience, which almost all of us have had? First is that many of us in the Internet industry live in a bubble. Some of my pain would have been lessened if I owned a scanner. I don’t. Why? I don’t really need one. My clients don’t want more paper (or pseudo paper), their customers don’t want paper, the only people who do? Lawyers. Indeed, I believe that there is a special place in hell for lawyers who FedEx me DMCA complaints in 10 pound boxes.
Second, let’s get off our addiction to the paper format. How about a New Year’s resolution to decrease our use of the .pdf format 50%. The receiving party either has to print the file out, or make their comments by e-mail, which generally have to be printed out to be understood. I remain unconvinced that sending everything in .pdf form leads to fewer changes/comments. A “living” document like Word or some other changeable format, typically leads to better deals anyway. .pdf files also have to be printed out, signed and faxed. Just as legally binding are services like Echo Sign that provide evidence of signature and an unchanged contract.
Finally, let’s all stop being so risk averse. Why do I get DMCA complaints in 10 pound boxes? So that someone can argue that I had actual knowledge of the facts set out on the documents in the box. Both case law and the Federal Rules offer ways to demonstrate that knowledge without further harming the environment with paper and the jet fuel needed to get it to my doorstep by 7 am. It may take some additional thinking, but in the end, it should all make our lives simpler, and more efficient.
What won’t change? My engagement letters. My malpractice insurer requires them to be on paper and physically signed. Sigh.
