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Can we stop pretending that title is easy? For as long as we’ve been in the industry, real estate sales and mortgage people have wanted to get into the title business. Or rather, they’ve wanted to capture the “easy” money flowing through the settlement side of the transaction. Too many have seen dollar signs, but without understanding what it is that title companies actually do beyond showing up at the table and returning (or failing to return) REALTOR phone calls. And who doesn’t love easy money?
Similarly, we’ve all heard again and again, whether from experienced owners to eager young entrepreneurs, that title is broken, and there’s a better way. And they have the silver bullet to solve it all in one fell swoop.
The problem: transacting real estate isn’t one process. It’s a series of processes conducted by different service providers. Getting those voices to sing in concert is very, very hard. Frankly, it never really happens in complete harmony and that’s not how to succeed. The measurement of success is finding a rhythm of activity and communication, so that the process keeps moving with some fluidity for buyers and sellers. This is what no one understands and a big mistake that people in real estate make over and over.
We’ve met with hundreds of real estate teams and brokers, mortgage companies, buyers, agents and other title companies who are passionate about the complaints and difficulties inherent to buying and selling real estate. Many come to us when starting a new title company. I feel their passion and I believe it. They care, they’ve experienced pain and they see an opportunity to do better. So they start a new company, a new brand with a fresh mission and values and then, they do another version of the exact same thing.
They all want to revolutionize the industry. They certainly talk about it. But they don’t know how. ‘Better service and communication’ is not a “how;” it’s a “what.”
The realities of title
People complain about the lack of communication and expectations in the real estate transaction process but don’t look around to understand why this seems to be the case almost everywhere.
Businesses in this space have a tough time understanding that the dynamics are not one-to-one.
I make coffee. You buy coffee. I only care about your experience. I control your experience and I get to look you in the eye and deliver. This is a one-to-one customer relationship.
With real estate transactions, many things have to be provided by different specialists. Each one of these specialists sees the world through their eyes, and sees their relationship with the buyer or seller as its own thing. Realtors, attorneys, appraisers, title companies, mortgage lenders, inspectors, movers.
Many people think of the real estate agent as a central guide that should know it all and pull all of it together – the expert in all things real estate. It’s actually not fair to the Realtor. Their job is to get a property sold or to understand value and find the right property for you.
The way that title and settlement services are packaged makes no sense. Buyers and sellers feel like they have no choices and no control, so they feel like they’re getting ripped off with settlement services. They think they’re forced into buying insurance that they don’t understand.
If the person or people running your new title venture don’t have very vetted, experienced and sophisticated systems for managing numerous options and moving parts, your agency operation is probably just a waste of your time and investment. The settlement in person or online is maybe 3% of the work and time involved. The overall real estate transaction involves a lot of people and variables that most people aren’t aware of.
Real estate should be simple.
“Real estate should be simple.” We hear so often from startups and companies selling an idea that it “should be simple.” They know they can make it simple. But real estate deals aren’t simple. As much as we’d love to turn it into ordering pizza, buying real estate isn’t ordering pizza and probably shouldn’t be.
A lot of technology companies pitch that they’re going to make real estate like buying stock. They’re building an “end-to-end” solution. A future in which buying real estate is completely transparent, can happen in hours and with barely any transaction costs or people. No Realtors. No Loan officers. No title companies. All crypto lending and Blockchain. Just click and go. Almost like buying laundry detergent on Amazon.
I used to think the future looked like this too.
We’ve come to see that it won’t happen this way. Comparing real estate to buying stock is the wrong comparison. It’s much more like Financial Advisory or Accounting.
The real estate transaction itself is too complex to be a one click transaction. No technology will ever be able to completely change that. Like long term or high volume investment or complex accounting, it’s too big and too important to DIY for most, even (and maybe especially) the most sophisticated buyers. The best title professionals build or buy the right technology. They curate other solutions. They understand that every client is unique and every title firm is, too. There’s no one system that fits them all.
It’s the title professional’s job to make it all fit as efficiently as possible. If you or your partners aren’t prepared to put in the time, hire the right people, and make the right operational investments, you’ll find that opening a title operation is anything but easy money.