You have undoubtedly noticed that there is a virtual track meet taking place among web-based businesses targeting the commercial real estate sector. The majority of these sites attract customers by offering online services that streamline or otherwise improve the commercial transaction process.
What is noteworthy about this race is that there is a lot of room in the winners' circle - for as most in the industry know, the traditional commercial transaction can be a time-consuming, labor-intensive and generally inefficient endeavor.
Scratching the surface At present, most web-based commercial real estate services are focused on providing financing and/or listing services. EquityCity.com, CapitalThinking.com, RedBricks.com, LoopNet.com, PropertyFirst.com and CoStarGroup.com are but a handful of players that have taken steps to profoundly enhance two of the most essential functions in the transaction process.
Fortunately for commercial property investors, the above dot.coms only scratch the surface of what is becoming a deep pool of online firms that are improving how commercial real estate professionals do business.
Let's back up a bit and examine how the traditional transaction gets started. Consider the investor at the New York REIT who is interested in a neighborhood strip center in Phoenix. As part of his due diligence on this transaction, the investor needs the services of a local surveyor, appraiser and title and escrow company. The process of locating and then retaining these providers will more than likely involve innumerable phone calls, either to randomly selected service providers or to local contacts who may have some recommendations.
This can be a painstakingly inefficient approach, one in which the investor has no guarantee that he's getting the bestfor the services he so badly needs. In other words, he's not getting a competitive bid.
Another way As president of the Denver office of a leading national title company, I dealt with these market inefficiencies on a daily basis. The need for a better system was so apparent that I redirected my career and set out to build a more efficient system myself. And like so many before me in so many other industries, I realized that the vehicle for delivering that system was sitting on my desk in the form of a computer. Through the Internet, it would be possible to provide commercial investors and lenders with a one-stop shop for a host of services ranging fromto escrow.
In March, I launched AmeriQuotes.com, an online transaction center built around a rich database of more than 20,000 premier service providers located throughout the United States. Services offered by these providers cover most elements of the transaction process, including title insurance, escrow services, appraisals, land surveys, environmental reports, 1031 exchange reports, p&c insurance and brokerage.
With the Internet as its backbone, here is how AmeriQuotes.com provides its services: An investor informs AmeriQuotes.com electronically about a property he is interested in - a process that takes about five minutes. The site creates an electronic and secure RFP that keeps the investors' identity concealed. AmeriQuotes.com then locates the appropriate service providers in the selected market and, via e-mail, solicits electronic bids. The providers are instructed they have 48 hours to respond. AmeriQuotes.com analyzes and packages the bids, and then forwards them to the investor or lender within 72 hours of the original request. This all happens at no cost to the investor.
Until now, there has not been an exclusive online system that bundles provider services. And to illustrate how willing the industry was to embrace such an offering, during the first four weeks of AmeriQuotes.com's existence (it went online March 15), 52 transactions had been completed, saving investors thousands of dollars. Indeed, the very first transaction provided the investor with bids on title and escrow with a variance of more than $4000 - a considerable savings opportunity. Our mission is to enhance each transaction by one-half to two points.
What should be abundantly clear is that our industry - the commercial property sector - has been extremely quick to embrace the Internet as a way to radically change the way business is done.By taking advantage of web-based service offerings, commercial property investors will benefit from the increased speed and lower service costs. In addition, the Internet is serving to level the playing field for service providers, who can compete for a broader range of high-end transactions based on their skill sets and cost competitiveness, rather than the size of their promotional budgets.