The Independent Title Agent Survival Guide – Part 1

The Independent Title Agent Survival Guide – Part 1

By Howard Turk

This is a scary time to be in the title business. Talk about market volatility!

No matter how hard we try, we are impacted by things we have no control over. That’s stressful! On top of that, we find ourselves confronted with a surge of slick vendors armed with fancy technology, seemingly appearing out of nowhere. They, too, are navigating these troubled waters, and it’s clear they’re after your hard-earned money. How to distinguish between what’s the real thing and what seems to be offering a ‘solution’ to something that really isn’t a problem? Does good old-fashioned service even matter anymore? There is no single ‘right’ answer to these questions. Navigating through what’s real and what’s mumbo jumbo can be intimidating and unsettling.

… And I stood arrow straight
Unencumbered by the weight of all these hustlers and their schemes -Bob Seger

However, amidst these challenges, it is crucial to remember that difficult times also present opportunities for growth and adaptation. It is during such times that innovation and resilience become paramount. By staying informed, keeping a proactive mindset, and leveraging available resources and expertise, professionals in the title business can emerge stronger.

There is always hope for the future.

As the leading M&A firm in the title industry we possess unique insight because we see the good, the bad and the ugly. Some agencies are doing better than others in these troubled times. Numbers never lie and patterns always emerge. We can learn valuable lessons from those agencies that are thriving. Considering the difficult decisions faced by many title agency owners in this challenging economy, I want to share some of the observations and learnings we’ve gathered having lived through a few of these cycles (we’re not new).

The agencies which seem to be on a good path (and consequently sought after by buyers) have the following in common:

Mindset of Abundance: In all markets, there is always a baseline of business. People get married, people get divorced, kids grow up, people upsize and people downsize. Real estate transactions occur for various reasons, some of which are independent of economic cycles and interest rate fluctuations. Because the title industry is so fractured, there is always room to get more of what is out there. Successful title agents have their eye on the prize and are taking action. Thinking about growing your share of the market and actually doing something about it are very different things.

Embrace Technology: The pandemic has accelerated the adoption of technology across industries, and the title industry is no exception. Smart agencies are leveraging digital tools and automation to streamline processes, enhance efficiency, and reduce costs. Embracing technology not only helps agencies survive the current crisis but also positions them for long-term success in a rapidly evolving digital landscape. The agencies that demonstrate a near obsession with automation technology achieve the highest margins we’ve ever witnessed, along with the highest EBITDA multiples upon sale.

Diversify Revenue Streams: Relying solely on traditional title services may not be sustainable in the face of economic uncertainty. Some channels are inherently countercyclical and interest rate insensitive. This is not lost on successful agencies who willingly explore new avenues for revenue generation, sometimes outside of insured title products. By diversifying their revenue streams, agencies can better withstand market fluctuations and create additional value for potential buyers.

Inorganic Growth, Step One: Hiring Staff with Books: People seldom leave jobs; they leave managers. That means there are people out there who have established client relationships but are unhappy with their job or who feel unfulfilled, or who are concerned about their employer’s financial stability. These individuals can be recruited and need not be limited to classic ‘sales’ people. Closers and escrow officers also possess valuable relationships with business originators that can be leveraged through clever compensation structures.

Focus on Customer Experience: Call me old fashioned, but I still believe that if you prioritize keeping your customer (and referral source) happy, that business will follow. Good work tends to be rewarded. I know that’s not fancy – but it is real, and it works. Remember that what is to you a simple or small deal is often hugely important to the realtor for whom it is their paycheck.

Strengthen Underwriter Relationships: Title agencies heavily rely on their underwriters for support and stability. Developing strong partnerships with underwriters can provide agencies with additional resources, guidance, and access to market insights. Underwriters can assist in navigating market challenges, offering solutions, and identifying potential opportunities. Collaborating closely with underwriters strengthens an agency’s position and enhances its chances of survival. Commercially reasonable splits matter but should never be the determining factor in Underwriter selection.

Evaluate Cost Structure: In times of economic downturn, cost control is paramount. Analyze your agency’s cost structure to identify areas of potential savings. This could involve renegotiating contracts with vendors, optimizing workflows, or implementing cost-cutting measures without compromising service quality. Agencies that demonstrate efficient cost management are more attractive to potential buyers and better equipped to weather financial storms.

By sharing these perspectives, we hope to assist and empower title agency owners who are navigating uncertain waters. Together, we can adapt, survive, and thrive in the face of adversity. It’s a waiting game of sorts because we all know that a time will come when the sun rises and volumes grow again. All of this is just another cycle.

Stay tuned for future posts as we delve deeper into specific strategies and actionable steps.

-Howard Turk


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