One thing that has been a constant in the title industry over the past few years is change.
Companies that can quickly recognize and adapt to change prove to be the most successful.
At this year’s National Settlement Services Summit (NS3), Knight Barry Title Group Chief Operating Officer Craig Haskins and Bowe Digital owner and Chief Inspiration Officer Wayne Stanley discussed the best ways for title and settlement servicers to weather changes and plan for the future.
The rate of change across the title landscape is speeding up, Stanley said.
“When we first presented this idea, the business looked very different and the future looked a little different,” he said. “Things have shifted in the last couple of months for sure.”
Technology
It can be overwhelming to wade through the new tech that’s available in the title space, Haskins said, especially after all the tools the industry was forced to adopt and master during the pandemic.
“My staff has recently said, ‘Please don’t put in anymore new stuff,’” he joked. “But our company would not have survived the last couple of years without some of that stuff.”
Stanley agreed the title industry seems to be in an “arms race” for technology.
“Everybody wants more technology. In the last two years, you’ve introduced more technology to your team probably than ever before,” he said. “But I think one thing people have to think about technology is that it’s a tool for efficiency and productivity. It’s not necessarily going to be your differentiator.
“A lot of people are trying to lean on their technology as their differentiator moving forward, the piece that they’re going to lean on for gaining new business or keeping the business that you have, but if everybody has the same sorts of technology, in the end … there’s no more differentiation.”
The three areas of new tech that Haskins is interested in are improving efficiency, reducing risks and bettering the consumer experience.
Efficiency tech includes tools that will reduce time on the search, exam, underwriting, typing, production or closing process, he said. For example, robotic process automation (RPA) can handle repetitive, laborious tasks, freeing up staff for more complex work.
As far as reducing risks, Stanley said, technology to fight wire fraud and cybercrime continues to present itself in new ways.
“I think people thought they had solutions before the last two years and then when our volume went up, all of a sudden we saw all the cracks in the dam,” he said.
Perhaps the biggest sea change has been with tech that improves the consumer side of the transaction experience.
“We’ve not really focused on the actual buyer and seller. In our states, they’re not really the decision-maker on who hires us; that’s typically a real estate agent or a lender,” Haskins said. “But now, the buyers and sellers feel like they’re engaged with what’s happening. Keeping the consumer in the game seems to be really important now.”
Such technology is long overdue in the real estate space, Stanley said. The rest of the world is already deploying tools that keep consumers up to date in real time about their purchases, through things like pizza trackers, he said.
“But in our title world, we focus on our four walls so much that we kind of forget that sometimes,” Stanley said. “Of course, buyers and sellers have open arms and are happy to adopt it. It’s easy for them; they’ve seen it before.”
It’s the rest of the stakeholders in the space that need to catch up, he said. And that’s not always an easy sell.
“This is my 10th year in the industry. And from day one I didn’t understand why we don’t talk to buyers or sellers ourselves,” Stanley said. “Everyone says my Realtor won’t let us talk to them or we don’t want to talk to them, and then slowly but surely, over the years as more and more have tried to do this, we hear the customers actually embrace this, they want this, they are open to it. And once they were open to it, the Realtors sort of thawed toward the whole idea.”
Haskins has had a similar experience.
“The first month or so we were trying to have direct communication with the buyers and sellers, the Realtors were saying ‘Don’t talk to my buyers and sellers,’” he said. “After they got used to us reaching out, they said, ‘This is pretty cool.’”
Underwriter relationships
Another thing shifting is what title companies expect and value from their underwriter relationships. When shopping for a new underwriter, agents need to ask for specifics on what that underwriter can do for the agent, rather than settle for a boilerplate sales pitch, Haskins said.
“They all say sort of the same thing sometimes, and it’s up to the agent to kick it to the next level,” he said.
For example, underwriters often tell Haskins they have a strong financial statement.
“From an agent’s perspective, that’s important in some states, but less face it: most underwriters have strong financial statements,” he said.
Ditto the promise that they will pick up the phone at 4 p.m. on a Friday or can handle large commercial deals. “Again, all of them can, so I don’t think that separates Underwriter A from Underwriter B and C,” Haskins said.
“If you’re an agent evaluating an underwriter, these are some things that you need to press back on,” he said. “Ask for some specifics on how they can help an agent grow their business. Can you help me in the M&A field? Is there an agent of yours that might be better if they were part of our team? Is there an employee of another agency who is undervalued, underappreciated and trying to get out that you think might be good for my company? Is there a part of a state we’re in that is underserved and might need a solid title agency? Or is there a product in a certain part of our market area that isn’t being offered to banks or lawyers or Realtors or builders?”
Too often, title agents don’t make the most of the underwriting relationships they already have, Stanley added. He talks with a lot of agencies and hears their grievances about certain problems and issues.
“So often I say, ‘Have you asked your underwriter about that?’” he said. “Several of the underwriters I know have solutions for the problem.”
Too often, the answer is, “No, we only go to them for the underwriting,” Stanley said.
“Remember that they’re literally invested in you, figuratively invested in you and are there for you,” he said. “You should be leveraging that to the best of your ability.”
Staffing
If there’s one solution every title company wants and no one has, it’s staffing and training, Stanley said.
The issue is not as acute as it was six months ago, Haskins said, as orders have dropped and the market has softened. But finding talent is still top of mind for many title companies.
“We had some real success at hiring folks who have no idea what the title industry is and training them the way we wanted them trained,” he said.
The more traditional strategy of hiring experienced closers or escrow officers can have its challenges, he said.
“You get an application from a person that’s worked at Brand X, and five years ago, they worked at Brand Y. They just seem to kind of go with the flow to wherever is going to write a fatter check next month,” Haskins said. “They’re great - once you erase the 15 years of habits they had from the other company.”
Employees who have spent years with another title company are often resistant to doing things “a new way” and push back against the company’s policies and procedures, butting heads with the current staff.
“We’ve decided to bite the bullet and start hiring people right out of college who don’t know what title insurance is and have never seen $40,000 a year in their life,” he said. “They come in with a clean slate. It stinks the first six months you’re paying a good salary and they are not really that productive. But once you hit that three-to-six-month period, they know what they are doing. You have to bite the bullet, or you hire someone for twice as much money and you get the pains of having to retrain them your way.”
That approach has proven successful, Haskins said. He estimates Knight Barry hired 50 people in the past few years with no title experience. They now have two full-time trainers on staff. The investment is worth it, he said, as they discovered having a new team member “shadow” someone isn’t effective.
“It’s complicated, what we do. Shadowing doesn’t usually work well,” Haskins said. “It takes a long time. It’s frustrating for the trainee and frustrating for the trainer and frustrating for the company because there’s a slow down on what you’re trying to produce.”
Securing new talent is even more vital, Stanley said, now that things are slowing down and companies can catch their breath from the breakneck pace of business over the past few years. Before 2020, the industry experienced the start of a “silver tsunami,” he said, a flood of retirements as people aged out of the industry.
“And then everybody said, ‘If we give you a bunch of money, would you stick around and just help us get through all of this? We can’t afford to not have this talent and this depth of our bench.’ Now that it’s slowing down, I think we’re going to see [retirements] happen again,” Stanley said. “I’m worried that some people are going to look up and not be prepared for this. They haven’t thought about the training. They’ve been hiring like crazy, but not necessarily for some of these key positions they're going to need replace.”
Growth vs. maintenance
The current market environment also is a great time for title companies to focus on the long-term strategy for their operation, Stanley said, whether that is maintaining the business they have or growing it.
“We didn’t have time for that in the past two years. We were all trying to not go crazy. Accept all the orders we could and not lose our minds, that was the plan,” he said. “We’ve got to think differently about our plan moving forward. How do we maintain the business that we have, if that's our plan, or how are we going to grow, if that’s still something that we want to do? Growth in this market is possible. It just looks very different.”
Haskins is well-versed in the title M&A market, as he’s worked on 30 acquisitions of small to mid-sized agencies over the last 10 years. Even in the current market, there are a lot of title agencies for sale, he said.
“This is the opposite right now of what you are seeing in the real estate market, where it’s a seller’s dream,” Haskins said. “I think it’s a buyer’s [M&A] market now, because there are an awful lot of [title agency] sellers.”
Not every title company is interested in growing, Stanley said. He’s heard from agencies who say they are happy with the size of their operation and staff and want to maintain the business, not expand it.
“A lot of times people think of maintenance as being able to sort of be stagnant or just go with the flow, and as long as nothing changes, then we are maintaining the business we have,” Stanley said. “And then they wake up and realize, ‘Oh, our order count has chipped away over the last quarter and we didn't even realize it,’ because people shifted their businesses.”
In some ways, maintaining is more challenging than growing, he said.
“Maintenance is hard. It’s not sitting still, autopilot or cruise control,” Stanley said. “It is just as hard to stay invested in your customers, especially in a market like this, then anything else.”
One way to do that is to remind existing customers about all the different work the agency does.
“I say this all the time until I'm blue in the face,” Stanley said. “Remind your commercial customers that you can do residential, and vice versa, and talk to people about agricultural property, 1031s. Every little possible transaction that you could be a part of, especially in this market, you want to have a piece of it.
“You would be surprised how many times we do interviews with a title company’s customers, their Realtors or lenders, and we ask them why they don’t give [the title company] more commercial work, and they’ll say they didn’t realize they liked commercial work, or we only give them the smallest deals because they’re so efficient and fast and that’s what they want.”