Editor’s note: The following essay, contributed by TI Services LLC founder Gary Wolff, was submitted as a part of the "Roadmap to Recovery," an Inman News editorial project through which our audience is envisioning the future of the real estate industry. Click here for details.
By GARY WOLFF
The title industry is in the midst of re-establishing its image and the value it provides to real estate transactions. The industry has made technological advancements in the title production and the closing processes. Reviewing staffing levels including management will always be a required budgetary process.
However, the following elements of the current business model warrant change, to be more cost effective in providing quality service and a profitable bottom line.
Multiple offices — The convenience factor of multiple offices is unwarranted and has proven only to drive up operating costs.
Underwriter’s agency relationship — Underwriters must create and adhere to stricter accountability standards of their agents to minimize defalcations and claims.
Shared title production — The consolidation of title productions operations over recent years has benefited the industry, but shared title production facilities can only further enhance the bottom line, without creating a competitive disadvantage.
Closing/escrow offices — This is what the customer sees and understands of the title industry. Local offices will always be needed to provide the necessary interface with the parties to the transaction. In fact, the future of the title agent will be more focused to the closing/escrow services as title commitments and policies are being produced elsewhere.
Marketing — Quality service will always be required, and costs for these services will become a critical factor as consumers will demand competitively priced products and service. Online resources will provide basic marketing services, thereby diminishing the need for a traditional sales force allowing closers/escrow officers to assist in the company marketing plan as companies can’t afford to pay sales commissions to everyone.
Regulatory — With the continuing consolidations of underwriters, antitrust issues will eventually have a negative impact on pricing. A separation of premium structure made up of an insurance risk factor priced accordingly by the insurance company and possibly regulated on a federal level, together with an operational agency cost factor could equal a new premium methodology. This two-tiered structure could allow for a competitive environment to exist between multiple title agencies that share the same underwriter.
The title industry alone can’t revive the housing market, but it can assist by keeping its cost of services properly aligned, so on a collective basis with other settlement service providers, the overall costs to consumers allows for increased homeownership and the ability to borrow equity, which together will grow a stronger economy.
Garry Wolff is founder of TI Services LLC, a title insurance consulting and services provider.
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