Dennis Badagliacco, broker/owner of RE/MAX Valley Properties in San Jose, Calif., spent five years looking for a way to automate sales transactions before he installed Fidelity National Information Solutions' Transaction Platform. The three transaction coordinators he hired now handle 250 closings a month on average, and the system saves sales agents 10-12 hours per closing, which amounts to more than 2,500 hours saved per month.

Badagliacco said a lot of agents resisted the system when he introduced it. Perhaps they didn't want to hand over their files to the transaction coordinator or they didn't want to let go of the familiar paper-bound system. But once the top producers starting using it, word spread that it was helping them close more deals and other agents became more comfortable with it.

"Now if we took it away, it would cause an uproar," he said.

Web-based transaction management systems manage every piece of a real estate transaction from listing to closing and enable everyone involved in the transaction to communicate and view documents at any time. The first generation of online systems rolled out in 1999 and left the industry unconvinced about the benefits, but the latest products are gaining traction in the marketplace.

Brokers using these systems claim they have an advantage over competitors who rely on old-fashioned ways. System users also say their business is more secure and efficient and home buyers, sellers and agents walk away more satisfied.

Badagliacco said the FNIS system has eliminated re-keying of information and fully automated many transaction functions, which means documents are distributed immediately when they enter the system. If an inspector, appraiser or other affiliate doesn't have digital file capabilities, the system will convert a paper fax into an electronic format and vice versa.

The absence of such timesaving functions was part of the reason why earlier generations of transaction management systems were not widely adopted, according to industry sources.

The FNIS system is missing some functions, Badagliacco said. It doesn't interact with the major back-office management systems brokers use nor does it have a link to MLS data, a function he expects to receive in the next month.

Those limitations aren't a major factor for the agents.

"The system allows the sales agents to put deals together and be there at the end to close them. Everything in the middle is done for them," Badagliacco said.

At John L. Scott Real Estate in the Pacific Northwest, a company-wide team of 15 coordinators handles not only transaction management, but also listings-related tasks. The company uses RealtyAssist's Web-based transaction platform.

John L. Scott Chairman Lennox Scott said using transaction coordinators to man the platform is key to the system's efficiency. He said the transaction platform frees up about 30 percent of an agent's time, which increases productivity and gives the agent more personal time. He also said buyers and sellers benefit from a higher level of service because they can view parts of the transaction online.

"This could probably see a higher productivity boost in the industry than the Internet," he said.

Alan Scearce, SVP of client transaction services, said the coordinators close approximately 210 transactions per month, a number that has increased 10-20 percent each month during the three months the company has been running the system. Each coordinator should be able to close 20-30 transactions per month, he indicated.

The company pays about $10,000 per month in operating costs for the transaction management service in addition to any extra expenses incurred at the branch offices, according to Scearce.

It's difficult to gauge how much a broker or agent will pay to implement and maintain a platform because vendors offer an array of pricing models for these systems. Some brokers pay a software licensing fee while others pay a per- transaction fee that usually is passed on to the agent. The fee often is determined by the broker's or agent's volume of closings.

Chicago Association of Realtors Deputy CEO Bob Dougherty said the association endorsed a transaction management system five years ago, but not all the MLSs wanted it. The association now offers GURU Networks' g3Direct platform to members and completed its first training classes on how to use the system in November 2002.

"The system is used primarily by high-producing agents, but seven or eight offices are running it as an office concept," Dougherty said.

Agents, brokers and home buyers benefit from an electronic, time-stamped process, risk reduction on the brokerage side and 24-hour online access to the transaction, according to Dougherty.

"Nothing falls through the cracks, and there are no surprises," he said.

Badagliacco's, Scott's and Dougherty's experiences demonstrate that the new generation of transaction management systems has proven its worth, but can these systems also generate a profit for brokers?

Badagliacco said the time and cost savings that result from using an online transaction system can create a profit for the broker.

Dougherty said online transaction management can be a third-party service that justifies the broker's charging clients an additional service fee. If the broker charges more than the transaction costs to process, there's a potential for profit.

Scearce doesn't view transaction management as a profit center. Instead, he sees it more as a core service for John L. Scott agents.

Tomorrow: How the products have changed.