Lone Wolf has long been the industry leader in real estate brokerage accounting software. This leadership position along with a plethora of additional SaaS solutions used by brokerages led to the company being sold to the world’s 4th largest software developer, Vista Equity Partners. The company serves 1.4 million real estate agents, 20,000 offices across 9000 brokerages, and 1000 MLSs and Associations across the United States and Canada.
Since Vista purchased Lone Wolf, the company has continued its growth trajectory by acquiring both Instanet and ZipLogix to become the industry leader in transaction management and forms management SaaS solutions used by the real estate industry. As a result, Lone Wolf now has a commanding position in two important core categories of SaaS software used by the real estate industry – Accounting and Transaction Management.
Anyone who ever had a conversation with Rob Reid during his time at ZipLogix understands the vision he had for making transaction and forms management the center of home services. Although agents and brokers may not steer a consumer under RESPA regulations, there is no limitation for a software company to integrate services that streamline the process of buying or selling a home.
One area of the transaction process that has plagued the industry for years is fraud when collecting earnest money (see explanation below). Nefarious internet fraudsters have mastered the process of luring unsuspecting homebuyers into wiring earnest money to offshore accounts, costing consumers and brokers millions in losses. You cannot imagine how homebuyers feel when they get defrauded out of thousands of dollars.
Lone Wolf is providing a great solution to the problem. In an announcement made today, they are integrating a product called Earnnest into both zipForm® Plus and TransactionDesk to securely digitize the process of transferring earnest money. Lone Wolf CEO, Jimmy Kelly says “With this partnership, we can bring the entire transactional process online in one connected system – from the moment the first form is created, to the day money goes to escrow, and beyond.”
One of the impressive features of Earnnest is the service’s connections to more than 12,000 financial institutions nationwide with the expected bank-level security and encryption to ensure money arrives securely though ACH payment transfers, mitigating the risks of wire fraud.
When the announcement came across my desk, I became curious to how agents and brokers would react to this integration. Many brokerages own in-house escrow businesses and have their own solutions for handling earnest money. There is a chance that Earnnest would be unwelcome by some. But I got over that pretty quickly. Like other announcements of this nature, Lone Wolf made it clear that Earnnest will not be the only solution available, it just happens to be the first solution available. This is pretty similar to the REW (Real Estate Webmasters) announcement. REW is the first broker and agent website platform to integrate, but will not be the only one. No partnerships are exclusive at Lone Wolf. Lone Wolf retains the option to provide the best services/partner integrations to their customers. A spokesperson for the company indicated to me that selections for partnerships are based on market analysis/diligence, and represent the best companies and products in their respective categories.
Today, it seems like more companies are pursing the marketplace idea of integrating services. We are seeing this happen with franchises, MLSs, Associations at all levels, brokerages, broker networks, and agent networks. At some point, there will be a bit of overlapping interest, but as long as these marketplaces are competitive, they should make real estate a much better experience for consumers.
WORD OF THE DAY – Earnest Money Deposit – From John Reilly
The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of good-faith intention to complete the transaction; also called bargain money, caution money, hand money, or a binder. The amount of earnest money is negotiable between the parties, and its primary purpose is to serve as a source of payment of damages should the buyer default.
Earnest money is not essential to make a purchase agreement binding — the buyer’s and the seller’s exchange of mutual promises of performance (that is, the buyer’s promise to purchase and the seller’s promise to sell at a specified price and terms) constitutes the consideration for the contract. Thought should be given to placing the money in an interest-bearing account for the buyer’s benefit, which can be done by the parties agreeing in writing to place it with a neutral third party such as an escrow company, subject to state law. Likewise, if the buyer fails to make the deposit by the date specified, the seller should take steps to document the termination before contracting to sell to another buyer. It’s good practice to first consult a real estate attorney.
The deposit, or earnest money, may be held by the listing broker, the buyers’ broker, or a neutral third party at the time the sales contract is signed. The broker’s authority to hold this money on behalf of the seller should be specifically set forth in the listing because such authority is not implied in law. The broker may never commingle this money with the broker’s own general funds.
Exactly who owns the earnest money once it is put on deposit is uncertain. Until the offer is accepted, the money is the buyer’s. The seller is not entitled to it until the transaction is complete. When the transaction is consummated, the earnest money is credited toward the down payment.
Issues arise when either party defaults. But once the seller accepts the offer, the money may be disbursed only with the knowledge and consent of both parties. This uncertain nature of earnest money deposits makes it absolutely necessary that such funds be properly protected pending final decision on how they are to be disbursed.