There are three major pieces to the Title business that affect the real estate transaction. The first piece is sales and marketing…” business development people”. We are the “gas in the car” and make things GO on the front end of things. The last piece is our closing department. The last people a Realtor and home buyer/seller see in the transaction. This person goes over the closing documents and makes it as fun and uplifting experience as possible. The middle piece is the long lost hero of the Title business. They are the Title Company escrow officer. These people work their butt off doing everything necessary to get your transaction to the finish line. They get little love, yet bare the brunt of all parties in the transaction.
One weird issue in our business that we deal with is how to get an earnest money deposit check to a Title Company. In some states, real estate offices hold the EMD, but due to potential liability issues, the trend has moved to the Title Company holding EMD checks. In the past, we have always had clients drop off checks, mail them in, wire the money, or yours truly would drive to the Realtor’s office and pick them up. In the age of being able to scan or take a picture of checks and have them deposited into bank accounts–something had to be done to make things easier for our Realtor clients.
One way to know the real estate market is doing well is when you hear Realtor teams mentioning they are going to open their own Title Company. Now, I must preface by saying I don’t hear this on a regular occasion but in reality, I should hear this zero times…ever. There are many Realtors who don’t fully know or understand the full scope of what a Title Company does, let alone under the full scope of detail and liability they will be assuming by having ownership in…or fully owning a Title Company. Many see us Title Companies like the “piggy bank” and we rarely pay claims so we must be swimming in cash. That statement is far from the truth. In the hierarchy of real estate, we make less profit than the Realtor and the lender on a transaction. With this said, here are what Realtors don’t know about opening their own Title Company.
Having been in the Title business since 2005, I have seen many things as it relates to methods used by Title Companies to generate business. When I was a Title sales rep in Phoenix, AZ most of the major Title Companies has sales teams. These salespeople would lead generate Realtors and lenders to create Title orders for their company. There were some companies that had joint ventures or MSA’s (market service agreements) but they were not prevalent. Mostly because of the many Title salespeople each company had that caused the “capture rate” of those agreements are pretty low. When I moved to the Washington DC area, I found the opposite is true. Most Title Companies had joint ventures or other agreements in place and very few employed salespeople who generated the organic business. Let’s discuss the two different Title Company business models, how they work and the major differences.
This is not a blog about how amazing Stewart Title is because we have the best service, escrow staff, etc. Everyone says that about their company. I want to talk about the REAL differences that influence and affect YOU…our clients. Settlement and Title Companies are everywhere in each market. Figuring out who to use to support your business can be tough, especially if they essentially all do the same things. Realtors are viewed the same way. If you don’t have at least one strong value proposition, you are in trouble as consumers will view you as the same as other Realtors.
The DAAR Fall Convention took place this year on October 19th. If you don’t know about DAAR–its the Dulles Area Association of Realtors. The main focus of this Realtor Association is Loudoun County and the cities along the Dulles Airport corridor. These conventions are pretty cool, in that you get to meet and talk to not only great Realtors in the area but other vendors as well. This year I was asked to not only teach a 2 hour class, but also a smaller class that lasted about half an hour. I know many vendors across the country attend their local association’s conventions, but gaining the platform to speak at length is another type of experience. I wanted to share this with you and deviate a little bit away from my normal real estate marketing/technology posts.
I would say at least 3 -4 times a month I get this call or email from a Realtor: “Wade…we really want to use Stewart Title on this transaction, but this other Title Company says that if we go with them, they will give my buyer a free home warranty at closing. Can you guys do that?” That is when I have to drop the news, that the Title Company Home Warranty isn’t really free. Ever hear the phrase…”no such thing as a free lunch?” Think along those lines. You might be thinking that this doesn’t happen in your area of country, and you are probably right. It does happen in the Northern Virginia/Washington DC area…all the time. There are several things about this marketing tactic to “earn business” that needs to be explained. Not only to real estate agents, but also the buyers and sellers on the transaction. It affects them as well.
Most real estate agents and mortgage lenders have some sort of Title Company relationship. Some are stronger and more loyal than others, some of these relationships are due to a joint venture or Market Service Agreement. But are all Title Companies the same? Definitely not! Just like not all real estate brokerages are the same. With that said, Title Companies are key vendors for agents and lenders to leverage to get their deals closed and help them in the expansion of further business. So how do you know when you are working with a good company? When do you know that it is time to make the “switch” to someone else? Here are the 3 major signs you should switch your Title Company relationship right now.
Real Estate agent partnerships form constantly. Partnerships with lenders, Title Companies,inspectors, etc. People form these partnerships because they believe by doing so it will improve their business and make their life easier. Sometimes this is true, other times it is not. This is more true than in the Northern Virginia/Washington DC area. Here “Joint Ventures and MSA’s” (Market Service Agreements) are a large way that many of the Title Companies gain their business. Title Insurance Sales Reps play a different role here to their agent and lender partners. I have been in this area since 2012 and working like mad everyday to overturn how Title Sales people are viewed by real estate agents and mortgage lenders. This brings me to an email I received from a mortgage lender client. *snippet
As Real Estate agents and Mortgage Lenders you deal with a lot of different companies when closing your transactions. If you are in the Northern Virginia/Washington DC area hopefully you deal with just Stewart Title when it comes to your Real Estate closings. Do you ever notice that some of the companies you deal with are “Settlement Agents” (Companies) and some are “Title Insurance Company’s?” Are there differences when you compare a Settlement Agent vs Title Company? Yes! There are several differences. Many of these differences you are probably unaware. Let’s talk about the differences between Settlement Agent vs Title Company and why these are important, and what it means for YOU when deciding where to send your business.