With the Fed’s recent rate cut and more cuts forecast, now may be a great time to start a title business. In this MortgageOrb Q&A, Joseph D’Urso, CEO of Lincoln Abstract & Settlement Services and TitleEase – both under parent Lincoln Holdco – explains why.
Q: Is now a good time to start a title business? What impact will the Federal Reserve’s cut in interest rates in September have?
D’Urso: The current market, despite its challenges, presents a substantial opportunity for established players in the mortgage, real estate and title industries, as well as entrepreneurs willing to learn about the business.
In fact, with the recent Federal Reserve interest rate cut, this may be an ideal time to launch a title business. Lower interest rates typically lead to an uptick in refinancing and real estate activity, which can create more demand for title services.
In addition, lenders and real estate agents are always looking for ways to set themselves apart from the competition. One way to do so is by delivering exceptional value and customer service to clients. Owning an affiliated title business allows for precisely that – increased value and greater control over the client experience throughout each transaction.
By managing the entire process, lenders, real estate agents and title agents can ensure their desired level of customer service, eliminating reliance on potentially less customer-focused third parties. This personalized approach is crucial in an environment with fewer transactions, where each client holds significant value.
In addition, the decline in overall mortgage transactions over the past two years underscores the benefit of having an additional, yet closely related, revenue stream. This not only helps offset income loss and boosts overall enterprise value but also strengthens “customer stickiness,” a metric indicating the likelihood of customers returning for future business.
Ultimately, it fosters stronger, long-term relationships for lenders with their borrower customers.
Q: What are the main challenges that someone starting a title business might face?
D’Urso: When starting a title business, entrepreneurs must navigate numerous challenges. TitleEase simplifies the process by providing comprehensive support. While the franchise is 100% owned by the franchisee, TitleEase offers assistance with nearly every aspect of setup. This includes help establishing the corporate entity, creating a licensing strategy, obtaining licenses in desired jurisdictions, and recruiting qualified individuals with the technical skills to operate the franchise.
TitleEase also ensures that marketing materials, including flyers, advertising, and website reviews, comply with regulations. We also assist in finding suitable office space that meets the franchisee’s initial needs while considering future growth.
Q: What are the necessary skills to start a title business? What entrepreneurial skills are necessary to benefit in today’s title industry? Is it necessary to already have real estate experience?
D’Urso: While prior real estate experience can certainly streamline the process of starting and managing a title business, it is not absolutely necessary. TitleEase provides comprehensive support throughout the journey.
Hard work, persistence and a talent for customer acquisition and service are essential entrepreneurial skills for success in today’s title industry. How one handles customer interactions, particularly when mistakes occur or delays arise, can significantly differentiate a business from its competitors. A customer’s experience can make or break a relationship, and their memory of how issues are addressed will be long-lasting.
Q: What must be considered in starting a new business, particularly a title business?
D’Urso: “Going it alone” when starting a new business, business line or revenue stream can be very daunting. That’s even more true when starting a title business from scratch. Franchising with an established title company offers a number of benefits. For starters, the initial investment is significantly lower and the time to market is faster due to the franchise partner’s existing infrastructure. Additionally, the shared resources within the established title company’s network reduces the need for extensive hiring.
Another benefit: franchisees gain immediate access to established compliance, technology, underwriters and vendors – relationships cultivated over years in the franchisor’s title business.
TitleEase provides a comprehensive process and a dedicated team of professionals to streamline the challenges associated with starting a title business. The company offers a carefully crafted rollout and licensing plan to ensure a smooth and efficient process.
Q: What are some of the other advantages provided to an owner starting a new title business through a franchise?
D’Urso: While anyone can start a business, numerous concerns can arise when doing so. Working with a franchise partner like TitleEase offers several other advantages in addition to the previously mentioned benefits. They include: ongoing support and guidance, leveraging an established brand for enhanced market recognition, networking opportunities with other franchise owners and industry professionals, benefiting from shared resources and economies of scale, and reducing the risks associated with starting a business independently.
Q: What are some potential impacts of the NAR settlement on the title industry?
D’Urso: The impact of the National Association of Realtors (NAR) settlement on title companies is still unfolding and likely to evolve over time. However, early indications suggest several potential effects. Many believe that there will be increased competition among real estate brokerages and agents, and some predict that the number of brokerages and real estate may decrease as people leave the business. Fewer real estate agents and brokers will mean a higher concentration of control over real estate transactions. This could benefit title companies by increasing the number of real estate transactions and potentially reducing the cost of acquiring new business. However, with fewer agents and brokers, title companies will need to ensure they are doing everything they can to be in front of those remaining.
In addition, Title companies may need to increase their focus on consumer education to help buyers and sellers understand the role of title insurance and the importance of choosing a reputable provider. Offering educational seminars to both real estate agents and consumers would be one way of keeping both groups informed.