Tag Archives: title insurance price compression

The Beginning of the New Normal for Title Agencies

The age of fragmentation between all of the parties involved in the closing process – the title agent, the banker, the realtor, the buyer, and the seller – is coming to an end. In its place, comes the age of integration, wherein the entire process is consolidating into a single platform. Consumers and new technology are driving this consolidation, making it imperative for other companies to join in. Otherwise, they could be at risk of losing business.

In previous years, this single-platform technology was only accessible to the big names in business. However, since technological advancements have made this software easier to build and distribute, smaller independent agencies can now utilize it. As a result, if other businesses wish to thrive in the coming years, they will need to integrate this software as well. This is “the new normal” – the standard for title agencies to conduct digital transactions between separate parties.

To illustrate, Zillow has eliminated the need for a prospective buyer to use a real estate agent to find a home. Now, people interested in purchasing a home can begin their search on their own, which is partly the reason the industry is shifting towards allowing the entire process to be completed on a single platform. If title companies do not adopt this new technology, they can expect their partners and customers to leave them in favor of a different title company that offers a unified experience.

There are three entities from which title companies would feel pressure

  1. Market Consolidation:
    Large title agencies used to rely on transactions deriving from a centralized place such as Bank of America. Today, national title agencies are moving to where the independent agencies are located, moving business away from those that have yet to adopt new efficient technology. An example of this would be an small corner store pharmacy going out of business  after a CVS opened across the street
  2. Lead Consolidation:
    With the internet available in our pockets, information regarding real estate listings are more accessible than ever before. Rather than word of mouth referrals, prospective buyers can now discover and make decisions on properties on their own. This increases competition and the access to leads.
  3. Margin Compression:
    Big name companies appointed RealEC, Ellie Mae, and other eMortgage software products to make sure the fees charged by title companies are lower in price.

The new reality is that smaller agencies lagging behind in single-platform integration are slowly being squeezed out. Years of price compression following the mortgage meltdown have led to this. 2018 is now the tipping point.