The real estate industry has evolved tremendously in the past decade. Simple contract management systems are out of date due to their lack of versatility. In today’s market, you need to have access to well-organized and actionable data to get the most out of every real estate transaction.
In an EMEA Occupier Survey, 75% of respondents thought that the key to attaining strategic real estate goals was enhanced data quality and accuracy. For example, knowing the yield, occupancy rates, and expenses of a property will allow you to see potential problems or areas in need of attention. Only modern, versatile contract lifecycle management (CLM) systems can give you that.
They allow managing a real estate portfolio and streamlining operations more effectively. In this article, we’ll explore, in detail, some of the reasons why CLM is essential in the real estate business.
1. Contract Standardization Helps with Compliance
In the case of real estate companies, their first priority is to maintain compliance. But contract management in itself doesn’t prevent compliance violations, such as
- failure to supervise real estate agent activities;
- allowing unlicensed access to real estate operations; and
- misinterpreting disclosures.
This is where a contract management system comes in handy.
It can improve compliance because it’s one true source of contract information where you can track the timeline and deadlines and manage access permissions. Contract management software standardizes contract operations and helps define necessary actions and procedures throughout the contract lifecycle.
This leads to higher compliance rates; plus, it saves the company a lot of money.
The Ultria CLM Survey shows that being compliant is twice more significant for contracts than their authoring cycle time. So, the CLM software should be able to
- track contract obligations and compliance;
- take fast action to correct any violations;
- speed up contract creation, review, redlining, approvals, and discussions;
- enhance contract lifecycle compliance; and
- cut the time it takes to complete a lifecycle from beginning to end.
Solutions, such as AXDRAFT, can increase operational conformity to internal and external standards. This is done by performing transactional compliance with all necessary obligations and conditions thanks to unifying contract language and ensuring that documents are created from the latest template versions. Also, everything is approved by the legal team.
You can also complete contracts faster than with a human-managed document lifecycle. This is thanks to automated drafting, routing, and workflow management.
AXDRAFT has helped 100+ organizations to save over $4.5 million and 5.7 years of contract management time.
2. Improved Understanding of Contract Language Deviations
CLM software assists your business in limiting risk. That’s because it can recognize variations and deviations from pre-approved contract language.
Here’s an example. A clause includes a data entry field describing the time allocated for the broker to generate exclusive listings. If the broker deviates from these conditions, the contract manager will receive an email alert.
Another example is when some clauses include fields for an outside broker’s percentage charge. If a broker goes outside the permitted range, the system will send a warning email to a person in charge.
This way, a CLM assists businesses in establishing communication channels. These channels help negotiate contract modifications and language deviations before contract execution.
3. Contract Activities Are More Visible
Contracts are essential to a company’s survival. But, they may take a long time to create, negotiate, and administer once they’re signed. CLM can counteract this because
- it helps reduce risk and increase efficiency;
- it offers complete visibility over the contracts that drive your company;
- it keeps track of all employee activities;
- it audits any modifications made to the documents;
- It tracks rental and sales contract data; and
- generates customized reports.
This is possible thanks to time-stamped histories, audit trails, and proactive dashboards. All parties can also communicate through the software so your team can respond to queries in any contract procedure.
And if you know how and when any party contributes to a contract, visibility improves.
AXDRAFT offers dashboards for contract analytics to save your company precious time. You can also
- automate alerts to stakeholders when milestones are met;
- manage responsibilities on both sides of the contract;
- issue reminders as needed; and
- plan for any collection actions.
4. Data Repository with a Centralized System
Data is the new oil for real estate companies. Real estate brokers gather a lot of materials before pitching to clients to lease or sell property. These include tax data, surrounding traffic counts, and marketing brochures from competitors.
Contract management software makes it possible to store a broker’s paperwork in one location. Such a system makes it easier for other team members to locate the information they need. Client service professionals can save a lot of time by going straight to the relevant folder instead of emailing the broker.
A successful CLM empowers commercial and non-legal team members. It helps store and manage all contracts in one place and create error-free and compliant contracts that don’t need a legal review. As a result, companies can reduce contract development and approval cycle times by 15–20%.
5. Continuous Records Management and Archiving
A signed document needs guarantees for effective management and compliance with industry regulations. Property managers should ensure the safe maintenance of all documents whether they relate to the current or future property administration.
For example, keeping environmental and health aspects in mind during the management term is a top priority. In this case, centralized storage is essential for archiving and managing contracts. However, you also need quick search and retrieval features to navigate this storage.
Thus, you can use automated processes to boost your organization’s compliance rate. As a result, archiving your contracts and related papers will improve your customers’ experience in the long run.
Using CLM software in real estate offers many key advantages. It’s not just online data storage for all your contracts. The software has features for faster preparation of listing agreements and more. Such systems can detect any deviations from pre-approved contract language to cut risks. And you can make use of built-in deployment of compliance duties and continual document and record preservation.
CLM software designed for real estate can streamline and speed up your company’s contract processes.
AXDRAFT works great with real estate contract workflows. It offers dashboards for performance, contract analytics, and contract-template generation as well as other features to boost your performance and efficiency. If you’re interested in trying them out, schedule a demo.