The residential real estate landscape is facing potential disruption from multiple sources. The two that could immediately affect title insurance are new investment models that have arisen.
The first model consists of institutional investors, such as Invitation Homes and American Homes 4 Rent, which began acquiring tens of thousands of foreclosed and vacant homes after the Great Recession and renting them out. These so-called “single-family rental” companies have continued their buying spree today, often focused on desirable communities near jobs and good schools. These firms stand to benefit as COVID-19 has fueled an exodus from urban centers to the suburbs.
The second model is “instant buyers” or “iBuyers” such as Opendoor, Offerpad, Zillow Offers and Knock. A home seller contacts one of these companies and receives an all-cash offer in 48 hours based on a valuation algorithm. Sellers can dispose of homes quickly without the hassle of open houses, repairs, or even cleaning up before closing. Purchases by iBuyers accounted for one in every 100 homes sold in the U.S. in 2019, according to research by Redfin, and their influence is expected to grow. In fact, Opendoor announced in September 2020 that it plans to go public.
Some of these institutions are expanding into title, escrow and closing services, and integrating them into their platforms so they control the process start to finish. Others rely solely on national title service providers. Both business models are disintermediating local realtors, who are frequently the source of referral business for local title companies.
How can title owners stay competitive in this shifting environment? Think about the value you deliver and the overall customer experience. Review systems and processes, and outsource components of the business to drive efficiencies, lower costs and deliver faster, better service to clients.
About String
String is the leading solutions provider to the title industry with 16 years of specialized experience. String’s mission is to help title agents build better, more efficient and cost-effective businesses by helping them lower costs, increase margins and improve operational efficiencies. String offers title search, production and curative services for a variety of secondary market players. For more information, visit www.stringinfo.com/