My teams and I have started, operated, consulted or serviced hundreds of title companies.
Often, I find myself in a conversation with a real estate broker, team leader, mortgage originator or attorney that’s decided to enter the title space as a business and is exploring how they want to do this.
Making money in title for non-operators (let’s call them business-drivers) is a science to us. We know what works and certainly what doesn’t. I thought I’d share what I think is one of the most flawed approaches I see, as it almost always produces pain and never works out the way people envision.
Business-drivers usually start out seeing dollar signs and have felt the pain of bad experiences with many title companies. They want to start a title company and envision doing it better and of course, making money.
So what do they do?
Hire someone that’s spent a career at title companies exactly like they’re trying to not be, set it and forget it. Then when things get bumpy, they’re forced to pull their attention away from their core business and go to work trying to figure out how to run a title company.
If you want to own a successful restaurant but you don’t have experience running one and don’t want to spend the next 10 years in a kitchen paying for your education, buy a franchise or find an operating partner. They know what to do. They’ve already invested in the systems and tech and most importantly, they have years and years of experience in what not to do. Learning curves are expensive, especially in complicated or hard-to-operate businesses.
Operating a title business is a different knowledge and skill set than knowing the nuts and bolts of reading title commitments and balancing settlement statements. In the above analogy, you may find a great chef to hire, but do they know how to buy, how to manage food cost, what software is best and worst, how to hire, fire, and manage?
Sorry to go analogy crazy here, but I can’t help myself. Einstein is known for saying:
“The definition of insanity is doing the same thing over and over and expecting different results”
We can easily say this about title companies: wanting different results from your title company, and attempting that by hiring people to operate it that have been trained and practiced at the same-old-same-old.
Frankly, it isn’t unique to only people getting into the title business. This has been the M.O. of title companies for just about ever.
The knowledge, skills and experience needed to execute the nuts and bolts work in a title company isn’t entry level. It takes thousands of hours of experience to master and those with that experience are in a rapidly shrinking pool. There’s no school to learn these skills, no formal training and no visibility. As a child and young adult choosing a career, we’re all aware of attorneys, doctors, hairdressers, plumbers. No one knows about title insurance, there is no career path to follow into it.
Good operating partners for title operations will make everyone more money, not cost. Finding those good operators have – to date – been challenging in an industry of blind skill and same-old-same-old.
For lots of reasons that I’ve talked and written about, I believe the next few years will change the makeup of title companies more than ever. If you’re going to be a new player in the title business, think strategy and the big picture, not just the short term same-old.