How To Grow A Title Agency
As the housing market starts to heat up again and the mortgage industry has mostly adjusted to account for TRID, title agencies are in a strong position for growth for the first time in nearly a decade. Figuring out how to take advantage of that position can be a challenge, though. Growth requires effort and time that many title agencies simply don’t have; the smaller the agency, the more true this is. Agents are already struggling to keep up with shortened deadlines and for many, if not most, the idea of taking on the roles of sales and marketing on top of their actual work as title agents is simply out of the question. How, then, does a smaller title agency become a larger one without driving anyone to a nervous breakdown? The details make all the difference.
Remove choke points
In smaller offices or solo agencies, it’s common for there to be one or two people whose knowledge and experience drive the entire practice. As the agency grows, the fact that everyone else in the office depends on the knowledge and input of those few people will cause a choke point in the workflow. Building an effective system for producing accurate and on-time title policies will ultimately eliminate those choke points.
A smart place to begin is with ALTA Best Practices. Although there is no legal requirement for title agencies to use ALTA Best Practices, it is a strong market demand. Mortgage lenders are increasingly demanding that title agencies demonstrate compliance, and many are now requiring certification in an effort to insulate themselves against liability for errors caused by the title agencies they work with. Title agencies that are not implementing ALTA Best Practices are facing decreased opportunities, which continue to dwindle.
A full implementation of the ALTA Best Practices requires, among other things, written procedures and control for funds management, a written privacy and security program, written settlement procedures, and policies and procedures for customer complaints. These policies and procedures need to be written to achieve Best Practices compliance, so it’s a wise move to write them in a way that also serves to get rid of choke points in the workflow. Instead of writing a bare-bones set of policies and procedures, title agencies with an eye toward growth should be taking the opportunity to include the knowledge everyone in the office needs from those “choke point people” and integrating that knowledge and Best Practices into a comprehensive training program and manual for today’s employees and future hires alike. Pull that information out of the individual minds and make it part of a system that ensures that everyone who is authorized to work on transactions has the ability to do so in a consistent way, without having to refer to the principles for information or answers.
Take advantage of technology
Technology can make a significant contribution toward standardizing the processes and verifying that all of the requirements for each transaction are completed accurately. Packages like the Easysoft Real Estate Closing Solutions suite use a relational database to reduce the likelihood of data entry errors by automatically populating chosen forms from the database; faster production and more accurate results. By creating custom forms, title agencies can ensure standardized production that not only covers compliance demands, but also provides information that can later be used in marketing and in evaluating client relationships. Tracking the chain of accountability and deadlines for each transaction is another excellent application for a software solution. Periodically reviewing the features and functions of software packages already in use is a smart way to ensure best value and return on investment as developers frequently add new features.
Branding & marketing
For many small businesses, branding and marketing depends heavily on building the personal brand(s) of the principal(s). In the case of title agencies that are looking toward growth, though, this is not the most effective strategy. It is ultimately more confidence-inspiring to market a well-developed and efficient system than it is to market an individual. It’s a big step away from the mind-set and branding and marketing strategies that solopreneurs and small agencies are accustomed to employing. Growing an agency depends on creating the image of a coordinated team with rock-solid performance, not the outstanding qualities of the principal. The larger the clients that an agency wants to work with, the more critical this image becomes. Those larger clients are going to want to know that even if the principal breaks both legs while skiing, their work will get done on time and at the same quality as if that principal were at her desk. Title agencies that build a brand reputation based on a well-developed system and well-trained agents within that system are in a much stronger position to attract business from larger and more profitable clients than agencies who market their principals’ personal brands.
Track & analyze client performance
Another important aspect to growth is time management, because business development takes time. Obviously, building an efficient system and using technology to shorten production time will play a major role in freeing up more time to work toward growth. Another key to successful time management is tracking the time spent on transactions referred by various realtors, brokers, and lenders. How many of each client’s transactions actually close, what is that client’s volume, and what is the fee for their transactions?
Nationwide, the average percentage of residential real estate transactions that fell through was 3.9 percent in 2016, though in certain markets that rate was as high as 11.6 percent. That is nearly twice the national average from 2015. There is also significant variation among starter homes, move-up homes, and premium homes, depending on the specific market. It’s important to keep those trends in mind when evaluating clients. The national average “fail rate” can be considered a baseline: the cost of doing business. If, for example, a client brings in work that fails to close 20 percent of the time, that means their title agency is working free about 16 percent more often than the national average, and unless that additional percentage is built into the negotiated fees, that title agency is giving away money by continuing to work with that client.
In some cases, where the fail rate is only slightly higher than average or the agency’s per- transaction fee is higher, the reduced profit may be offset by a high volume of work. More often, though, an above-average fail rate will cut into an agency’s profit to an unacceptable degree. Title agencies need to keep a close eye on these statistics and either re-negotiate fees as soon as allowable or, in the worst case, consider firing the client. Growth comes from spending time on work from more profitable clients, not necessarily from having more clients.
Efficient & secure communication
Today’s buyers expect constant communication and prompt responses during a transaction, so it’s critical that part of a growing title agency’s procedures address those demands. For some types of communication, automated updates may be effective and appropriate. Replying to buyer-generated communications, though, requires a careful plan, or agents end up spending far too much time on email and not enough on closing transactions. This is another place where technology speeds the process by keeping transaction information quickly accessible and, through a secured closing and communication like BeesPath Closing Bridge, agents can chat or message and share information and documents instantly with buyers and lenders while maintaining compliance in security and privacy. This gives title agencies another sound marketing point in talking to prospective clients and helps build social proof among home buyers as they share their recommendations and experiences online.
Title agencies that deliver closing files to buyers digitally have a distinct marketing advantage over those that still use paper. If that buyer later chooses to re-finance, they’re going to need to access that closing file for information. Smart title agents will have notifications set on those closing files, so they know when a buyer may be looking to re-fi. The title agency can let the original lender know that a new marketing touch is in order, which gives the lender a chance to gain the re-fi business and leaves the lender with an impression of added value from that title agency. Proving value is one of the strongest methods for title agencies to build more profitable relationships with lenders.
It’s also an excellent approach to winning the loyalty of realtors and brokers, especially those that represent the healthiest segments of the market a title agency works in. One simple but effective way to earn that loyalty is to include their digital business cards in every closing file.
Buyers always have access to that file and digital business card, and they can and will use it to refer friends, colleagues, and acquaintances.
When it comes to buyers, title agencies can market in a more indirect way by leading those buyers to contribute to the agency’s body of social proof. Essentially, social proof is an overall public opinion, comprised of positives from satisfied buyers who post reviews on relevant websites and their own social media, and who make referrals to friends and acquaintances on social media. All of these things can be found by prospective clients doing even cursory research, and they help create a favorable impression of the professionalism, quality of work, and customer service a title agency delivers.
Build a system of success
The take-away for growing a successful title agency is to build a system that works, build a team that is effective within that system, and use that reliable efficiency and accuracy to market to an increasingly profitable set of clients.