Digital Signatures vs. Digitized Signatures

I used to teach real estate agents how to use their technology in a forward thinking way. Most of them didn’t understand the concepts. The ones who did understand already understood before coming to me because they had the ambition to learn on their own. They typically just used me as their general consultant and laptop provider. A select few picked up on the concepts, but there’s still a bit of confusion regarding digital signatures versus digitized signatures.

Anything that is converted into a format that a computer can read is said to be digital. The screen I’m looking at now is digital, it’s fed by tons of ones and zeros. So in essence, whatever you see on the screen is digital.

When we speak of digital signatures regarding contracts in real estate, what we’re referring to is the ability to authorize a document as a fully executed contract without bringing pen to paper. Some people would say that hand writing your signature on the screen of a tablet computer is a digital signature. While it’s on the screen and in a computerized format, it’s still a digital representation of a hand-written signature, so it’s not really a digital signature.

I could take a handwritten signature on one of your personal checks, scan the check into my computer, use photo editing software to extract the signature, and paste your signature on any document I wish. There is no accountability for this. No system in place to protect you, and no way to prove that you actually signed the document. Once I print it, granted I’ll have a forged document, to the recipient, it’s as good as executed.

Digital Signatures work differently than hand written digitized signatures. The digitizer tablet is a convenience and a more advanced way to capture your hand-written signature, and it simply removes one step out of the process of scanning your documents. The digital signature involves no hand-writing, and protects you. Here’s how it works through DocuSign, the company that I use to execute contracts between all parties in a transaction.

On my computer, I draft a document. I print it, and when I select my printer, I choose “Send in DocuSign Envelope,” a small program that I installed when I signed up for DocuSign. The computer whirls and spins and converts the document into a PDF file then uploads it securely to DocuSign. Docusign asks me who I want to send the signature request to, and I select someone by entering their e-mail address. DocuSign then allows me to assign areas on the document that need your initials or signature. I send the document and you receive notification that there’s a document to be signed. You login to DocuSign and setup your account the first time, which involves verifying a few details about you. Then, DocuSign opens the document I sent, allows you to review it, and shows you where you need to “click” to confirm that you agree to the terms. There’s no risk of missing pages where initials should have been because I have defined where you need to sign in advance. Once you have clicked all of the spots you’re supposed to click, the document is considered executed. The document is stored at DocuSign and I am notified that you completed the signing. I download the document from DocuSign and deliver a copy to my broker.

The benefits of this are vast, as long as you have an e-mail account and access to a computer, anywhere. The industry is going to change so much over the next 10 years, and if you’re not in tune with the way of the electronic world, there’s a good chance that you’ll find it more and more difficult to conduct business the old way, as you watch all of the youngsters beat you to the punch.