5 Benefits of Using Contract Management Software in Real Estate
Realizing the full potential of a real estate transaction requires visibility into organized and actionable data that can help guide better decision-making. Leading real estate companies have discovered that incorporating tech tools throughout the contract lifecycle allows them to achieve better results.
Ranging from property visualization tools to property management dashboards, several tech tools empower real estate professionals. However, contract management software stands out from all of these tech tools because of the several benefits that it can provide to every transaction.
- Centralized Repository of Data
Data is truly the bloodline of commercial real estate. Even before making the pitch to a client for the leasing or disposition of commercial real estate, a broker gathers tax records, nearby traffic counts, past or current marketing brochures from competitors, and several other documents to develop a complete picture of the asset.
Often that data is scattered throughout the broker’s computer, laptop, and smartphone; contract management software helps centralize the storage of all of those documents and allow other team members to quickly find necessary contract data. For example, a client services specialist can save a lot of time by going directly to the appropriate folder, instead of having to email the broker back and forth. A study from the Aberdeen Group indicates that best-in-class enterprises are able to cut contract creation and approval cycle times by 15% to 20% through the use of several initiatives, including the use of contract management software to centralize contract data.
- Faster Creation of Listing Agreements
When the real estate salesperson goes on the road, it shouldn’t mean that the person literally packs the latest pre-approved contract templates in his or her bags! Keeping physical copies of contracts or isolated digital copies on a laptop often leads to contract templates that may be no longer valid or that may include clauses that are only applicable to another client.
Contract management software solves this problem by housing all of your contracts, associated documents, and data in a secure centralized repository, which is always available to team members 24/7 with an Internet connection. With contract managment software, you can create a library of both contract templates and clauses. The contracts and clauses can be categorized by geography and other criteria so that those responsible for creating contracts have access to the appropriate contract data. A centralized library of clauses would enable the salesperson to make appropriate changes, all of which would be tracked by the contract management system.
- Improved Insight into Deviations from Preapproved Contract Language
With contract management software that centralizes access to contract data, the activity of the salesperson and all staff is tracked, providing visibility into the full scope of your contract processes. Visibility allows you to answer the who/what/when questions for each contract process.
But there’s more. Your enterprise can configure contract management software to track deviations from pre-approved contract language within a range. For example, a clause may have a field that specifies the months of exclusive listing rights or the percentage fee that an outside broker may receive. If a broker were to deviate from the approved range for the percentage fee to an outside broker, the appropriate managing director or operations manager would receive an automated email alert. This way early conversations about intentional or unintentional changes to contracts can be initiated before execution (when it might be already too late!).
- Built-in Deployment of Compliance Tasks
The same study from the Aberdeen Group indicates that best-in-class enterprises demonstrate rates of contract compliance that are more than 2.4 times higher than their competitors. The top performers showed an 88% rate of compliance per contract expenditure.
This increased compliance rate is possible by making certain compliance steps required instead of suggested. A lot of time and legal expense can be saved by clearly determining the broker splits as early as possible into the execution of a listing agreement. Instead of gathering the allocated commission of a transaction when the leasing or sales voucher is being processed, contract managment software can make the input of broker splits a necessary step of any contract lifecycle.
Another example would be to establish thresholds for asset consideration that require a team member to seek review from general counsel. The senior counsel member would provide the necessary legal support to professionals across all business lines, including brokerage, property management, and advisory services.
A standardized workflow for drafting, redlining, approving, and executing leads to faster contract creation and improved compliance. The Aberdeen Group indicates that best-in-class companies benefit from contract creation with increased operational compliance to both external and internal processes of governance and improved transactional compliance to terms and commitments.
- Continuous Archiving of Documents and Records
Once a transaction is executed, the work is not done. Proper steps have to be taken to keep documentation for internal and external processes, such as audits and industry regulations.
In the case of property management, a senior manager must ensure documents and records relating to both the new management process described in this procedure, and for the ongoing management of health, safety, and environmental guidelines for the term of the management, are maintained. Contract management software helps in this process by centrally storing documents and making scanned documents searchable by text through OCR software. These and other compliance tasks can be automated for improved enterprise compliance. Continuous archiving of all documents for a client leads not only to improved compliance but also enhanced client servicing.
Contract management software can streamline and increase the agility of enterprises in the real estate industry. Key benefits from using CLM software in real estate are centralized contract data storage, faster creation of listing agreements, improved insight into deviations from pre-approved contract language, built-in deployment of compliance tasks, and ongoing archiving of documents and records.