It’s clear that 2023 will be a very different year for the title industry than what we’ve experienced in the recent past. Despite the forecasted decline in orders, we’re still expecting an overall origination volume of just over $2 trillion. Historically, that has represented a solid market, albeit not spectacular. Regardless, it’s clear that title businesses will need to compete for their share of that available volume, in large part, by differentiating themselves from the competition.
For many firms, those efforts will include increased sales and marketing efforts and new products or services to tap into new markets. For most, part of the plan will also feature budget cuts. Many of the most successful firms, however, won’t just make across-the-board cuts. Instead, they’ll seek long-term solutions by examining where they are weakest on the production side, then deploy strategies to improve those weaknesses. In doing so, these title businesses will very likely be building unique differentiators for themselves, not just for the short term.
Processes, or chokepoints?
At the height of the refinance boom in 2021, it was not uncommon to hear the owners of some settlement services businesses confide that they were struggling to keep up with surging volume. Then, the fear was “leaving money on the table” because of chokepoints in the workflow. Now, those same challenges, presuming they haven’t already been comprehensively addressed, represent an opportunity for advantage if addressed properly.
Many of those chokepoints in the workflow have actually been with us for decades. More often than not, they started as quick-fix or practical workarounds to regulatory or market changes that demanded sudden change. But rather than creating more practical, streamlined solutions as time went on, these “hacks” became the norm.
For example, if a particular state introduced a new form requiring specific data to be regularly disclosed to a regulatory agency, the title business affected would then most likely assign an employee to manually prepare those forms. In many cases, no technology existed to specifically address that new requirement (or could only be created on a costly, custom basis). Over time, that responsibility simply became part of the workflow. But, in so doing, it also added unnecessary time and cost, not to mention the potential for error, to the production process. The time spent on basic data entry could have been much more productively allocated to things like marketing or quality control.
When TRID requirements were introduced in 2015, title agents quickly realized that this was not a form change. Instead, it was a process change. And more than a few of the solutions introduced to address those changes didn’t always meld smoothly into a title agency’s workflow. Quite a few of the inefficient hacks used to simply get orders closed in compliance with TRID remain commonplace today, seven years later.
Other production bottlenecks in the title workflow have seemingly been around forever. At the outset, these impediments were likely the best options for the job. However, as better solutions emerged over time, some businesses failed to make the transition. Wire fraud wasn’t a major threat to the title industry ten years ago, so simply advising employees to be attentive could be considered a legitimate cyber defense. At one time, there was no better means to collect earnest money or pay out a REALTOR’s commission than a cashier’s check. At one point, there were no curative options for an HOA lien other than to manually contact the lienholder and remove the cloud on the title— with all of the respective paperwork required. New orders might have come in from the firm’s website, fax, email or phone. Because of that, it fell to an employee to gather that avalanche of varying data and enter it into the workflow by hand.
Turning weaknesses into differentiators
For several reasons, new solutions are coming into the title industry every day to address outdated or unaddressed chokepoints in the title process. And not all of them are technological. The industry has evolved in the way it hires, trains and deploys its human resources. For some title agencies, that means moving away from a business model that assigns entire files to employees, instead choosing to deploy centralized resources and specialization to make the process more efficient.
Technology, too, has changed. Namely, title firms are no longer dependent on large platforms to provide solutions for all of their specific needs. Title agents no longer have to hope that their title production platforms will provide an update to address a minor form requirement imposed by certain municipalities. Instead, specialized technologies today allow title businesses to electronically transfer agent commissions. Customized bots and even AI solutions are being crafted to address the specialized processes that, until now, required a human to undertake menial and repetitive tasks.
Lenders and consumers have reluctantly come to expect average “days to closing” periods of over 50 days. And while it’s not the title industry that’s solely to blame for those averages, there are any number of small workflow inefficiencies throughout the production process that could be improved dramatically. That improvement, however, must start with a thorough and objective evaluation of the business’s production process. In some cases, the volume surge of 2021 made readily apparent the weaknesses in a title firm’s workflow. Many title firm owners know exactly where their worst inefficiencies reside. But for those who don’t, and who might not believe themselves capable of evaluating themselves objectively, there are numerous, capable third-party service providers able to quickly and objectively help business owners identify their most glaring needs. And because the only solutions to some of those challenges are no longer just hiring more employees or paying for expensive technology customizations, title firms have numerous options, whether specialized technology or new staffing models, to address them.
A title agency’s average time to close is never lost on its clients. Simply shaving a few days from the closing process can give a firm a brand and marketing edge in its market. But there are other pathways for improving an agency’s efficiency that can make a big difference. A REALTOR who no longer has to wait for the mail to receive her commission. A real estate agent or loan officer who can get an updated status on a pending file without having to play phone tag. A first-time homebuyer who, after hearing story after story about the horrors of the home closing process, experiences a quick and smooth closing. All will be able to sing the praises of the title firm that aggressively addressed its workflow deficiencies, even if in seemingly small ways. Additionally, the title firm that pulls its team members off of outdated or ineffective tasks to focus on things like marketing, sales or client support has found new resources to stake its claim to share in its market. All while experiencing reduced costs and expanded margins.
It’s not always the first impulse of a title business owner to spend or undertake major initiatives when facing a market downturn. And yet, the slower volume does allow more time for insight, examination and introspection. While there are numerous ways to survive or even grow when a market shrinks, a streamlining strategy should continue to deliver benefits even after the market pivots in an upward direction again. And although a marketing strategy for discovering niche markets may help a firm get through this down cycle, it won’t allow that firm to keep up with the next refinancing surge.
Jason Doshi is the CEO and Co-Founder of Charlotte-based Paymints.io.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Jason Doshi at jason.doshi@payments.io
To contact the editor responsible for this story:
Sarah Wheeler at sarah@hwmedia.com