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Whether you believe the worst market<\/a> conditions are now behind us or that the coming months will remain turbulent, there\u2019s no doubt that title<\/a> related businesses will need a combination of thrift, ingenuity, innovation and persistence to be successful for the foreseeable future. <\/p>\n And yet, it\u2019s during times just like these that tomorrow\u2019s leaders and success stories often emerge. More often than not, the small firms that become big, or the mid-cap businesses that eventually make a public offering, can explain their growth by using a new technology<\/a>, business model or even product in a way that not only differentiates them during market turbulence, but positions them for sustainable success when the tide turns.<\/p>\n While settlement services businesses are somewhat hamstrung when it comes to introducing new products or pricing, there\u2019s still a lot of room for growth and innovation in the title industry. Fannie Mae forecasts $1.6 trillion in origination volume<\/a> this year. While that\u2019s nowhere near the over $4 trillion in origination volume we experienced in 2021, it still signals ample opportunity for the firms willing and able to find it while separating themselves from their competitors.<\/p>\n One tried and true strategy for title businesses that are seeking to build revenue when order counts slip is growth. Because the title and settlement services business is closely regulated at the local level, a title firm needs to have some kind of presence or capability within the geographic footprint it serves. <\/p>\n Accordingly, title businesses may seek to cover more territory \u2014 preferably in a cost-effective manner \u2014 to increase their own revenue during times when origination volume declines. There are a number of ways by which they can do this, including affiliated arrangements, work share agreements or even less formal forms of partnership.<\/p>\n That said, simply entering a new market takes more than a new office and a marketing campaign. This is especially true if the growing title firm has little experience in the new footprint. It might be one thing for a title agent to add a few new counties in its home state, or some just across the state line. But it\u2019s another matter entirely when a title businesses seeks to expand into multiple states or even \u201cgo national.\u201d<\/p>\n Perhaps the most important element of building a growth strategy is compliance<\/a>. Compliance isn\u2019t a topic most owners approach with enthusiasm. It can be expensive, and if the approach fails, serious and expensive consequences can occur. <\/p>\n But the patchwork of state, county and municipal requirements \u2014 in addition to federal rules and regulations \u2014 demands that a growing firm have access to an attorney or legal resources deeply familiar with the industry, as well as the region in which that firm intends to grow.<\/p>\n As is usually the case in market cycles similar to this, it seems Realtors, lenders and title agencies are scrambling to form new joint ventures or affiliated arrangements on a daily basis. This can be a profitable strategy. <\/p>\n But far too often, these JVs are formed without enough effort in determining what\u2019s required \u2014 not only to stay compliant, but to be cost-effective. Additionally, JVs are garnering increasing regulatory scrutiny as their number (and the number of improper ventures) grows. <\/p>\n If you\u2019re seeking to build or join an affiliated arrangement, be sure your resources are familiar with the sometimes unclear requirements for a compliant venture. Cutting corners is not an option. Start by squaring away expert compliance resources.<\/p>\n New lines of business and the appropriate marketing to announce them are another great way for title firms to grow revenue in down cycles. Title firms are, of course, limited in the type of transactions they can perform. <\/p>\n However, a title agency that lacks a commercial real estate capability, or which relied primarily on refinance volume in years past, has the option of growing. Again, just hanging out a shingle \u2014 especially for commercial closings \u2014 won\u2019t get it done.<\/p>\nDon’t grow the geographic footprint alone<\/h2>\n
Expand your service offerings, but do it the right way<\/h2>\n