Don't Mistake Dropbox For a Real Estate Document Management System

Matt Cohen brings us this post from his Clareity Consulting blog.

Recently, I've heard some brokers and agents talking about using Dropbox for managing all their real estate documents. I'm glad they are learning about new tools on the Internet, but this is a situation where a little knowledge can be a dangerous thing. Don't get me wrong - I love Dropbox for sharing photos with friends and family, but it should not be mistaken for a real estate business solution. A few of my MLS and broker clients are getting asked by their agents, "Why are we paying for document management when there's Dropbox?" Here's the answer.

Dropbox is a useful document repository for casual sharing, but it is not a document management system. Real estate document management systems do things that Dropbox just doesn't. Document management systems let you control access to what you share; to individuals, teams, offices, regions, companies, settlement service providers and consumers, who all need different and precise levels of access to that content. Access control is critical when dealing with sensitive consumer and company information. The newly announced and rather expensive "Dropbox for Teams" may provide a limited amount of this capability, but we will have to see how good a fit it actually is. Comments and changes to documents can also come from people who aren't the core system users, and Dropbox doesn't provide logins for non-team members. A true document management system can help you securely share and manage these comments and changes. Dropbox just doesn't meet the challenge.

A real estate document management system also needs to provide a convenient way to get documents into the system. Professional document management systems allow documents to be faxed in, since not all stakeholders and consumers may be able to create electronic documents for upload. Once the documents are in the system, users need to be able to mark up documents and send them with the annotations.

Professional document management systems also provide versioning: retaining clean and marked-up versions and ensuring that the newest version is used and not accidentally overwritten by an older one. Ideally, these systems can also merge documents (e.g., the contract, counter-offer, and addendum) to create the legal contract for review, and manage electronic signatures. Document management systems also let you easily get documents out of the system, letting you fax documents outbound without requiring manual downloading, printing, or faxing steps. Most banks and other settlement service providers still require documents to be faxed. Dropbox does none of these tasks.

From a broker or transaction manager's perspective, actual workflow management is key to creating efficiency. They must be able to mandate which documents are required and they have a view across transactions, enabling them to identify which documents are missing and which ones need to be reviewed. Being able to mandate templates for documents, have a process of document approval and review, comment quickly and easily on documents, and track signatures are important features in a real estate document management system. Again, Dropbox does none of these things.

From a management perspective, it can also be important to be able to create an archive file for the transaction, including proof of who saw which documents when. Yet again, Dropbox doesn't do this.

Dropbox doesn't simply lack features. Most people are aware that Dropbox has suffered from security problems, in terms of both authentication and how encryption is used. To quote law.com, "Dropbox's security breach ... and the online storage company's recent controversial changes to its terms-of-service, should be a red flag for anybody who works with customer data. No matter how convenient, a data storage service is useless if it cannot guarantee the privacy of your information."

Some brokers may be willing to give up some of these features if the alternative costs a lot less. But Dropbox does not actually cost less. The professional/team version of Dropbox works out to be about twice as expensive as the real document management solutions already in our industry, with few of the features and only limited storage space.

I appreciate that Dropbox has a lot of press and hype behind it, and it's cool to say you're using the cloud. Nonetheless, I hope that agents, brokers, Associations, and MLS operators will be more careful in evaluating their professional business systems and will select one that will meet their needs now and into the future.

To view the original post, visit the Clareity Consulting blog.