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Real estate fraud: Is Canada's digital transformation the problem or the solution? | RENX – Real Estate News EXchange

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The global pandemic has changed many industries, processes and ways of doing business. However, if there is one shift that was well underway prior to the pandemic, it’s the transition to an online world.

The ongoing digital revolution has drastically altered the way we live and changed consumer expectations across all industries, and real estate is no exception.

As digital transformation continues, however, so too does the amount of information available in the cloud, providing more opportunities for fraudsters looking to access vulnerable data.

With this in mind, digital transformation can be a contributing factor to the problem of digital fraud, but also a critical resource for solving it.

Moving away from traditional processes

The global pandemic has expedited the adoption and integration of various technologies, replacing previously offline or in-person activities with digital options.

Today, digital experiences like virtual appraisals, remote closings, e-signatures and cloud-based document sharing have become must-haves for consumers, not just nice-to-haves.

Across all steps of the real estate transaction, a critical example of this transformation is identity verification. Previously, the traditional, in-person model for validating identity relied on one person reviewing a driver’s license to ensure it matched the person in front of them.

This is a process that has been used for decades, but it is one with potential to leave room for human error if fraudulent information is being provided.

There is no doubt that fraudsters are becoming more sophisticated and, as careful as an individual may be when checking the identification, it can be difficult to flag fraud based on simply an in-person manual review.

Fast-forward to today.

Given the ongoing importance of identity verification in a real estate transaction, the model had to be adapted to ensure identification could still be verified, while taking into account social distancing measures and limited in-person meetings.

With new digital ID verification solutions in place, lawyers were presented with an opportunity to decrease the risk of incorrect identification and verification.

Identifying new types of online fraud

Despite the reduction in potential human error, the shift to digital does not negate all risks.

Fewer in-person meetings are resulting in clients becoming more reliant on email communication and more sensitive information being stored in cloud-based databases, ultimately leaving them vulnerable to email or money transfer scams.

Wire fraud in the funding process, for example, has become more prevalent. It can occur when fraudsters intercept an email chain and instruct a law firm to send funds to a different, fraudulent account.

Prioritizing communication to eliminate risks

During National Cybersecurity Awareness Month, customers and businesses are encouraged to ask questions to ensure they understand all of the new online processes they’re exposed to.

Lending and real estate professionals should schedule regular phone or video calls to walk through each step of the process and should encourage clients to call if they are unsure of anything along the way.

This will prevent important personal information being sent over email, which could make clients more vulnerable to fraud attempts.

Navigating the new digitized world

At FCT, we are dedicated to improving digital processes for real estate professionals, delivering a more intelligent and connected journey. However, we recognize we must be cautious in our approach.

COVID-19 has created new opportunities for how identities may be verified, but with that comes additional avenues for fraud – and fraudsters are only getting more sophisticated as they adapt to the COVID-19 environment.

Luckily, this isn’t a new trend; technology will continue to evolve to be able to better detect, deter and prevent fraudulent real estate transactions.

In such a highly regulated industry, we believe a mature and informed approach to technology is always best.

Organizations across all sectors need to remain proactive and open to new technologies, ideas and partnerships that can help Canadians continue to navigate the new normal and protect themselves and each other from potential cyber threats.

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Commercial Real Estate: Navigating Opportunities And Challenges Ahead (Video) – Real Estate and Construction – Canada – Mondaq News Alerts

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Canada:

Commercial Real Estate: Navigating Opportunities And Challenges Ahead (Video)

To print this article, all you need is to be registered or login on Mondaq.com.

Uncertainties currently abound in many sectors and commercial
real estate is no exception. While the COVID-19 pandemic has caused
some level of distress in certain sectors of the commercial real
estate market, it has also opened doors for stakeholders and
presented opportunistic transactions with their own unique set of
risks and important structuring considerations, particularly in the
restructuring and insolvency space.

In this video, Graham Rawlinson and Charlene Schafer briefly
discuss what to expect in our upcoming webinar on December 3 on
commercial real estate. Some of the key topics to be explored
are:

  • preparing for bankruptcy or insolvency opportunities that may
    affect the Canadian real estate market, and what to consider when
    dealing with assets going through some type of a debtor/creditor
    process;
  • funds focused on distressed and opportunistic real estate
    assets, and whether the ongoing distress in the market will
    continue to present new opportunities; and
  • distressed opportunities south of the border and unique
    considerations affecting the U.S. commercial real estate
    market.

Play the short clip below and register for the webinar here.

self

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Real Estate and Construction from Canada

Asserting Privilege In The Condominium Context

Field LLP

The issue of asserting solicitor-client privilege in the condominium context is an interesting one, especially as between the condominium corporation and the individual unit owners

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Nakisa to acquire real estate management tech firm IMNAT | RENX – Real Estate News EXchange

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IMAGE: Nakisa CEO Babak Varjavandi. (Courtesy Nakisa)

Nakisa CEO Babak Varjavandi. (Courtesy Nakisa)

Montreal-based software company Nakisa is expanding into the real estate technology market with the acquisition of IMNAT Software, a cloud-based real estate management solution.

Nakisa CEO Babak Varjavandi said IMNAT’s real estate management technology will be added to Nakisa’s lease management solutions portfolio.

“By combining the breadth of our lease accounting knowledge with their real estate expertise, we’re poised to disrupt the corporate real estate market, which is currently reliant on outdated processes and proptech legacy software,” he told RENX.

IMNAT is also Montreal-based. The start-up has about a half dozen employees and has entered the sales phase for its platform, which it markets specifically at businesses which manage their real estate.

“Our reimagined corporate real estate solution will offer customers a complete modern end-to-end solution that leverages the Nakisa cloud platform and provides full ITGC (IT general controls), GDPR (General Data Protection Regulation), user management and more,” Varjavandi said. “We truly believe we can disrupt this market because I think we are much further ahead . . . of our competitors with the technology.

“At the end of the day, because of the technology that we have, we believe we can bring in all these other pillars to provide an end-to-end solution.”

He said IMNAT Software’s technology will complement and extend Nakisa’s existing lease accounting product line and address increasing demand for global corporate real estate management solutions.

The acquisition is set to close on Jan. 1, 2021.

Nakisa and IMNAT

Nakisa released the first version of its product in 2000. The company has two lines of business – one addressing human resources and the other in leasing. It will now expand to provide end-to-end lease management which will include real estate and lease accounting.

The company also has offices in Frankfurt, Singapore, Florida and Pakistan.

Varjavandi said the company name is also his mother’s name.

He said IMNAT Software, founded in 2011, has a core product, InfoSite, which is a leading edge corporate real estate management software designed to centralize and manage corporate real estate accounts.

The platform features databased reporting and dashboards, streamlines corporate lease operations and manages data for leases, taxation, payments and rent rolls.

“When we talked to our customers and looked at the market, what we found that was interesting is that the real estate software industry hasn’t really evolved,” said Varjavandi. “They’re still using very old technology and it’s very costly to implement.

“Even if they’re on the cloud, they’re really not what we call a native cloud application.

“We saw huge opportunity in that area. For us to enter that market, we had a choice of either building the whole real estate functionality, which is the operation day-to-day activity of maintaining your real estate.

“Or we had to acquire a company that already had a customer base, they already had the expertise and they could use their expertise and that’s what happened. We saw this made-in-Montreal company.”

IMNAT has some major clients

Nakisa became familiar with IMNAT because the companies share some of the same clients.

IMNAT’s customer base include large private corporations such as Dollarama, Transcontinental and Lowe’s Canada, as well as some of the largest public government institutions in Canada.

Nakisa and IMNAT will combine their technology and networks. They will also combine their company-level data to generate a more accurate financial planning repository of information for trends and projections.

Varjavandi said InfoSite will be integrated into Nakisa’s product line and branded under the Nakisa umbrella. In January, IMNAT’s team, including CEO and co-owner Alexis Dénommée-Godin and co-owner Jean-François Bechard, will join Nakisa.

“I’m extremely proud of the quality software our team has built over the years and it’s an honour to be recognized and chosen by an established lease accounting brand that serves Fortune 500 companies around the world,” said Dénommée-Godin in a statement announcing the sale.

“Joining Nakisa allows us to take our real estate expertise to the global market and fulfill a need that has a tangible impact on both businesses and people.”

Unify divergent software products

Varjavandi said Nakisa serves more than 900 enterprise customers and over one million subscribers in 24 industries. Its client base includes a number of different industries, including retail, pharmaceutical and airlines. It has users in over 120 countries and supports 18 languages.

He said the acquisition of IMNAT presents a huge opportunity for Nakisa to both better serve existing customers and attract new ones.

“We are seeing companies having multiple software and we think we can actually unify the whole leasing, both for accounting and operations side, under one umbrella,” Varjavandi said. “From our perspective, any kind of asset you have we can provide an end-to-end solution.

“On the real estate side, we have a few customers who are interested in expanding on that to things like facility management and project management. Those are areas we’re also working with them. The beauty of the customers that we have, because these are very large customers, they’re actually willing to engage with us . . .

“From a customer perspective, the whole implementation and management is already done for them because it falls on the same platform.”

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Real estate expert Benjamin Tal on the winter market, the vaccine, and the massive recovery to come – Post City

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How has the real estate market outperformed your expectations as of late? 

Yes, we have seen the mother of all V-shaped recoveries. The fact that the market recovered was not a big surprise. The speed at which it recovered was a surprise. I think that the number one fact though, of course, when people try to figure this out, will point to pent up demand and extremely low interest rates, which is true. However, there is much more to it. I think that if you look at qualification rates, at 4.79%, for variable and fixed-term rates, they are in fact higher from a qualification perspective when they were in 2008. And back then, this activity went down. In fact, this has been the most housing-market-friendly recession ever. Okay, so it’s not just about the industry. It’s about the composition of the damage in the labour market. 

Explain how the labour market activity has impacted the market.

The vast majority, almost 100%, of all jobs lost during this recession were low wage occupations. Many of them are renters and are not players in the resale market. Second, is that it means that a very large segment of households was untouched by this crisis, financially speaking, their job is there, their income is there. In fact, many of them are sitting on extremely high levels of excess cash. And the interest rates are in the basement. That’s the opportunity that they were looking for. So the asymmetrical distribution of development in the labour market is the secret behind the success of the housing market today.

The downtown condo market is that big outlier here. What do you see happening there right now? 

I think most of the most of the improvement was, of course, in the low-rise segment of the market. It makes sense because the nature of the crisis means that a lot of people want to move to detached houses. We are seeing a situation in which there is a positive correlation between the inflation rate in housing and the price of housing. The fact that detached prices are rising is a real nightmare, if you wish, for mover-uppers, because the price of the house that you want is rising faster than their own house. The gap is widening. So this is a reflection of people wanting to live in bigger houses and therefore they also move to outside the 416. 

And do you see this trend continuing for the long-term?

I  believe that that will continue to be the case for the next six months or so especially during the winter. The housing market in general, during the winter, will weaken alongside the economy as a whole as we have a second wave combined with the flu season confidence will go down. So that’s clearly something that we expect, and that will impact the housing market.  I think that the 416 condo space will feel most of the pain because of the fact that we have a lot of supply coming in and demand is slowing. Having said that, I think that as we reach the other side of this crisis, the later the second half of 2021 we’re going to see a situation in which people start realizing the rental space in downtown Toronto is a bargain and you will see demand returning In between I see some adjustment in supply and some developers that basically front load and that activity will not be there during the winter. So the net result of some reduced supply in the second half of 2021 and marginal improvements in demand, we see some improvement in this market as well. But in between, we have to go through the winter.

And do you see the exodus to the suburbs trend continuing?

That trend started way before the crisis, as we all know, this is not new. Every crisis is a trend accelerator. And this crisis is no different in the sense that it accelerated this trend. Will we continue this trend? Absolutely not. When we are on the other side of this crisis, people will rethink this approach, it will continue, but not at the current rate. So again, when you’re in a situation, you have a tendency to exaggerate the long-term implications of that situation and we are in a situation. So people look at the people fleeing from downtown as a sign of a long-term trend. That’s not the case. I think that people will go back to downtown and the trend will continue but at a much slower pace than we’re seeing now.

What is your advice in terms of navigating this volatile market? Is it better to wait it out?

Well, I think that if you are in the market for a quick investment, then you can wait. For the long term, I think that the winter will provide some good entry positions given the relatively soft nature of the market. I think that the spring will be relatively strong.

And when the vaccine rolls out the timing, what will that do in terms of the market and the economy in general?

That’s one of the reasons why I believe that the economy will be very strong in the second half of the year, especially in the summer and into October, November when the vaccine will be widely available. That’s one of the reasons why I’m so optimistic about the second half of the year, when the economy I believe will rise by four, five, six percent including some nice improvement in the housing market.

Is now actually the best time in terms of buying a condo downtown?

I think that the market is soft and will probably get softer. The next few months will be actually if you have a long term horizon, the next few months will be a good opportunity absolutely.

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