Title insurance is a percentage game. Profitability depends a great deal not only on the number of transactions a title agency handles, but also on the dollar amount of the transaction. So, when housing sales fall and housing prices fall it is a double whammy of sorts for title insurance companies.
What does not help the situation, however, is the absolutely outrageous cost structures in which title insurance companies have placed themselves. Newton Title is going to strive not to do this. Expensive marketing expenses, expensive staff that primarily deal with who they know as opposed to what they
know, and the space, furnishings, and aesthetics that do not impress anybody in this day and age, are all really too much.
Let me ask you a question. Do you really want to sit in posh surrounding, costing a princely sum, for a closing knowing that you and the property you are trying to buy or sell is paying for this opulence? I do not think so.
The declining state of the industry is not good. Stewart Title lost $26.6 million in the last quarter, a fall of 25%. Land America financial rating is put on negative watch. Also, Old Republic Title lost $45.4 million in one quarter.
How does a title agency make it better.
First, do away with the free donuts and the bagel slingers. Who needs jabbers hanging out at the water cooler. Realtors, buyers, sellers, lenders, builders, and investors are like everybody else. They have issue or problem to which they need quick, cheap, available and reliable solutions. You achieve this through tech -- not glad handing. Give them a lot of cheap, reliable and easy tech and they will reward you. Get rid of the danish, the pens, the folios, and free cookies. Quit insulting people in this way.
Second, get rid of the expensive staff. Again, if you get rid of the marketeers, and apply tech, you can effectively eliminate the non-essentials for the productive. The problem ultimately with closers or marketing personnel is that they can tell you what problems need to be corrected to proceed, but they are not lawyers and they can neither help you nor guide you in getting this accomplished. Real estate professionals do not want deals to fall through for incidental reasons, yet it happens everyday because title companies tell a seller to clear up a lien, let us say, but can or will not provide them assistance in doing so. The hard work of the real estate professional is then for naught. Replace the essential staff with attorneys who have an interest in the closing.
Third, is the office space. Get rid of it. Tech should allow you to close where you want, when you want, and how you want. The issue is not only convenience of the client or customer, but in making a title company or agency profitable. Nobody wants to deal with an unprofitable company.
Our model would not make us immune from a downturn. It would, however, make us immune from financial disaster because it is one thing not to make as much money as opposed to losing money. Again, title companies with financial problems do not make for good relationships.
We should really use these bad financial times to correct the errors in the system and try something new.
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