I want to begin by saying Realtors are not “forced” to use the joint venture Title Company. With full access to the brokerage’s agents, office meetings, events, and a push from the Broker, the business capture rate on the real estate joint ventures is fairly high. Joint ventures between Title Companies and Realtor brokerages have existed for quite some time and are fairly prevalent today in the Washington DC/Northern Virginia area. Perhaps they exist in your market as well and maybe you currently participate in one. BUT…what if real estate joint ventures were told to disband and can no longer exist–effective tomorrow?
In my opinion, the most effective Title Sales Rep in the country is the real estate broker in a joint venture. Brokers have a “vested interest” in their agents sending purchase contracts to Title Company A and vice versa. But if these joint ventures no longer existed, would the Title Company still have the same amount of business? Would the broker still push business towards the Title Company? Would the Title Company have to hire a sales team to gain organic business? Would it cause Title Companies or some real estate companies to go out of business? Many scenarios to think about. Let’s explore a few and have some fun.
Shock to the System
If real estate joint ventures ended tomorrow, there would be a big shock to the system of both parties. New Title Companies being able to walk into the offices, promote their businesses at office meetings, teach classes and more. And the best part–no pressure from the real estate office manager coming down on agents to use the joint venture partner (pssst! Realtors don’t like that pressure by the way!). A new world would be opened up to these real estate offices when they realize that vendor partners previously shielded from the office offered additional “value added services” that the agents want and need–but never knew existed before!
Business Capture Rate Would Fall
The capture rate of business for the joint venture partner would drop. Slowly at first, then dramatically over time. As new vendors made their way into the offices and created relationships with the agents, it would level the playing field in a big way. In many real estate joint ventures, the capture rate of business is fairly high. Which makes sense, as Realtors are exposed to one vendor partner a majority of the time. If the joint venture vendor didn’t immediately hire a sales force to retain their existing business and gain new clients–they would find issues down the road.
Need a Sales Team
If real estate joint ventures were to end tomorrow, how would a JV partner retain and capture new business? They would need to hire a sales team. Paying for more employees also increases their monthly expenses. That means running their business with high-efficiency is a must. When business leaves or clients move on, it really impacting as their aren’t more Realtors coming through the door from the real estate broker. A highly effective sales team is needed to bring “value added” services to the Realtors so they stay and new clients come in.
Realtors Get Better Service
Yes! The Realtors would get better service, marketing tools, and an overall better experience with their vendor partner. As the joint venture disbands, the Title Company would have a different view on business they receive from their Realtor partners. The business is now 100% “organic” and not in a “controlled” setting, so every client/contract earned means even more. That creates another level of caring and relationship with these clients. In the end, if you provide a high level of service with an array of value added marketing tools to assist in business, there is a recipe for long-term success.
Why Do Real Estate Joint Ventures Still Exist?
We thought that the CFPB would have done more to end these relationships, but we have only seen a minimal impact thus far. I think a few reasons they still exist.
- Money-Brokerages want the extra cash-flow and Title Companies want business.
- Path of least resistance to earn business.
- Possibly cheaper than paying a sales team to earn organic business
- Title Company upper management lacks the ability to adequately train Title Reps to be successful.
- Don’t know any other way of doing business–Always done joint ventures
Real estate joint ventures aren’t going away anytime soon, but we can imagine “what if” right? At Stewart Title in the Northern Virginia/Washington DC area, we don’t have joint ventures with residential real estate brokerages. We have a team that works daily with our Realtor and Lender partners helping them with their business–to earn it. We truly value our client’s business because if someone leave us, we have to replace that business by acquiring more clients. Nothing is given to us and I think that is how business should be handled.
If you want to be a part of a top producing Title Company that works directly with our clients with offline and online marketing tools…and the best processing team in the area, please fill out the form below and we can set an appointment!
- Why Leveraging with Real Estate Video is More Important Than Ever - July 3, 2020
- Title Insurance Sales Rep vs Account Manager-Know the Difference! - June 2, 2020
- How to OWN Your Real Estate Farm Online - May 5, 2020