Imagine you are a farmer in 1830 with 40 acres in Eastern Ohio. You have routinely struggled to transport your crops to market 30 miles away to the river or canal. You are a careful and lucky farmer and you would like to sell more crops, but everyone around you is growing nearly the same thing. Your prices are, therefore, relatively static, and further production on your part is incrementally counterproductive. You are not able to bank enough to put some of your competitors out of business or buy a farm closer to your market outlets.
The very next morning you are astounded, because outside of your barn, there is a diesel train with 75 grain cars attached. You’ve never seen one before, but the engineer tells you its tracks go around the world. Can you take advantage of it? Do you know who is on the other end? Do you trust them? How do you protect your goods from spoilage or pilferage? How can you package the goods for wide distribution? That train and the choices it imposed on farmers, consumers, corn brokers, investors and canal boat operators 160 years ago are the same choices we face today with the Internet.
A New Way of Thinking
Notice I said the choices it imposed on us. Whether you like it or not, someone in your business is thinking of ways to connect themselves more closely with your customers, your markets, your lenders. The Internet forces us to think in new ways. It is interesting that the questions we form today in response to the new technology are similar to the questions farmers and others faced with market-shifting technologies. The farmers who adapted thrived. Others left for the city and the shift was on. Today, another shift is occurring with new distribution methods posed by the Internet.
Just as that farmer faced new questions, we wrestle with many of the same issues. Should we invest more in our private databases or wait until the public database is brought to us? Should we try to narrow the focus of our market or become more intertwined with remote and unknown customers? Should we exit areas of the market which we have not been able to efficiently cultivate? Perhaps we should we reinvent our concept of how we service new markets.
After all, our business is really about matching lenders, buyers, and sellers to properties, and making sure the seller owns it, the buyer has the funds from the lender, and the property really can be conveyed cleanly. Anything that helps this process surely must help us. Just remember the tide that lifts your boat lifts all boats equally.
Do you think it is any coincidence that lenders are now more willing than ever to forego title insurance in selected markets on seconds and equity loans? Simply put, information is power and there are many people more willing than ever to sell information about individuals and real estate to all paying customers. And data that is available quickly is also held less precious as a commodity.
Consider for a moment why title companies routinely eschew or avoid performing certain types of property reports. A title report with minimal information should take an automated system(s) about 2 minutes to produce, fax or e-mail and bill. At $50 each, that translates into $1,500 an hour. Not a bad wage. If you allowed that capability over the Internet with "privileged" customers," you might even do it unattended and have a significant competitive advantage.
I know, I can hear you now. You’ve got all your data in different systems; you have to check the address against the purported owner’s name to make sure you are searching the right legal; your tax system is not connected to the plant system; or you are in a metes and bounds or township area. Or you have some form of liability, perhaps perceived or assumed, but real nevertheless. I agree with you, these are all real facts.
Shouldn’t we, therefore, cut our time on the clean deals even further? Should we improve even more on delivery? Perhaps reinvent our approach to certain parts of the industry?
Consider the fact that several companies in this business have already built rule-based systems, which allow you to match addresses to legals in the background, yield a tax ID number, confirm it with the searcher, and then perform intelligent searches on that confirmed legal and merge the resulting data into property profiles or "property reports." Can integration of carefully- structured databases, with intelligent searching and seamless interfaces to commitment templates, connected and delivered over the Internet be very far behind? Probably not.
Are We There Yet?
So, is anyone getting close to providing this mythical service in a true "lights-out" fashion unattended over the Internet? Not yet, but the tracks are being laid today.
Today, we do have service providers on both coasts offering access to their title plants on a limited basis to selected customers. Until very recently, the Internet has been seen as an extension of a wide area network. Simply put, most people have sparingly used it as a replacement for telephone lines directly connected to your branches or remote searchers. That is exactly how most companies today use the Internet. However, that is changing quickly.
First American, through its subsidiary Smart Title Solutions (STS), has embarked on an ambitious and credible campaign to extend its title plant and document retrieval services in key markets. For instance, in Florida, there are five counties already automated and available over the Internet to title searchers. Searchers, utilizing the Internet, log into a server which authenticates them, and depending upon their access rights, allows them a terminal session connected to the plant host system. Examination search functionality, procedures and document entries are the equivalent of search routines which would have been provided with more expensive dedicated telephone lines.
This allows the extension of services to key participants and subscribers to a much wider arena of players than would otherwise be available without Internet availability. The Internet has lowered the cost and extended the reach of the delivery of the product.
Old Republic Title, through its subsidiary ORBIT Systems, supplies title plant indexes and document images in the Twin Cities area of Minneapolis/St.Paul to more than 300 users. Most connect via dedicated private telephone lines utilizing frame relay networks. Like Landata and Smart Title Solutions, ORBIT Systems has moved forward with Internet delivery options. A selected set of customers are currently beta testing Internet access to existing databases and image retrieval. Rob Chapman, Vice President for ORBIT, stated that he expected the services would go live by early first quarter of 2000. ORBIT will also offer credit card verification services to allow purchase by the casual consumer.
Two Approaches to Getting Connected
Today, there are two widely-used approaches to gaining access to a remote large-scale database, such as title and image plants - the remote access approach, or connecting the title plant software to a web server.
Some companies use a remote session approach. If you are familiar with remote control software, such as PC Anywhere or Reach Out, these packages functionally assume control of a remote PC. You, in effect, only pass keyboard data and screens across the telephone wires or Internet session. Speed is maintained and all processing is performed on the central server, which has been sized for this type of traffic. Recently, packages have arisen to perform this same process remotely, such as Citrix Metaframe or Winframe, and Microsoft’s Terminal Server. Again, all the action is on the central server (like your title plant server) and the client (your customer) is remote. Rather than dialing a number to a modem bank directly, they call their Internet Service Provider, input a web address, perhaps run a script or invoke a small program, come out of the Internet into a web server and are authenticated into the central title plant system.
Essentially, this configuration steps around telephone long distance issues and often becomes a cost-effective alternative to installing a high speed and expensive dedicated leased line to a customer. These costs climb even higher if you have to cross telephone districts or are unlucky enough to pursue providing electronic plant searching services for your customers across area codes. Internet delivery allows cost savings compared to conventional telephone lines.
Of course, there is a tradeoff of speed, and the Internet is not the most reliable transportation mechanism. Not all customers, especially large ones, will be able to take advantage of Internet delivery due to the bandwidth requirements of delivering data, especially images.
But many smaller customers can use it quickly and understand it. For a system’s administrator of a plant system or service department, which maintains a modem pool for customer access to data, Internet access greatly simplifies support of casual users. Further, if your company decides to offer plant data to selected customers with billing arrangements, you can closely select whom you want to have access to the data and how you wish to bill them. The ultimate convenience is to have them provide credit card data for authorization and billing. This has an unexpected benefit for the provider, little or no administration of billing, invoicing, etc.
Another benefit of Internet access is the speed upon which you can implement a connection to a remote customer. In one reported instance, a customer in a new location was using the Internet for access to a plant provider’s information, until their local telephone company was able to provide their new high speed circuit. As telephone companies are scrambling to meet pent-up demand, lead time for circuits in certain markets is as much as 60 days. Internet delivery allows common voice-grade or ISDN lines to fill the gap.
The alternative approach to providing remote Internet sessions, as described above, is to enable the title plant software to connect to a web server. This almost always requires a rewrite of parts of the title plant software to understand remote browser interactions and provide screen displays in HTML programming code. True Internet connectivity via browser-based software is now starting to appear with several vendors. Most have put web interfaces in front of their existing servers, but several are taking the progressive steps today to position their services far into the future.
What Market Leaders Say
Title Data Inc. is a market leader and is known for providing large metropolitan title plant systems and services in a wide variety of locations. According to James P. Sibley, the company’s President, "Title Data currently uses the Internet to market our technology products, including a demo at our web site. By the end of 2000, we plan to use the Internet to make our Texas databases (plant indices, county grantor/grantee indices, recorded documents and plats) available to the casual’ user of such information, including attorneys, lenders, Realtors, surveyors, landmen and homeowners."
He further stated, "The idea of making our information products available to the general public via the Internet is quite exciting to us. This is one reason why we wrote our TIMS Image document imaging system in Java."
Title Data embarked on a methodical conversion of key components of their AS/400 plant software into Internet-capable Java language. Not only will this provide them platform independence in the future, but it will allow all processing to be performed in a true web-hosted environment.
Sibley continued, "Previously, we’ve avoided selling to the casual user, believing that this customer is marginally profitable at best. First, the search and write-up work is still largely a manual process. Second, the price for various title information products is relatively low in Houston, and the mom & pops’ who work out of the courthouse are highly competitive. Finally, a large percentage of title information product billings never get paid. The Internet solves all these problems simultaneously. It shifts the cost of production (searching, data entry and billing) to the consumer; eliminates bad debt expense through on-line credit card validation, and because of these factors, allows a company like ours to make a respectable profit in a low-price market.
The $64,000 question for us is: How much volume is out there waiting to be tapped?"
Title Data’s rationale and concerns for revenue is shared by another market leader.
Landata Technologies Inc., a subsidiary of Stewart Title Information Services, has painstakingly built a very capable presence in several key markets. Currently, through their publicly available website, www.landata.com, searchers can search textual plant databases and select document images for return by either e-mail or fax. Many of the databases are currently grantor/grantee name searches, but more are expected to be geographic in the near future. Landata has been proactive in working with other technology vendors as evidenced by their alliances with Ultima Software, First Data Systems, and most recently, by offering their services as a front-end provider of Internet services to backend data warehouses like Datatree. This "co-opetition" has enabled them to extend their reach to areas they wouldn’t otherwise be able to provide. Richard Petty, President of Landata Technologies Inc., stated, "We expect to have 50 counties on-line by the end of the third quarter of 2000."
To improve Landata’s exposure to new market consumers, they will offer this service to current subscribers, as well as the casual consumer. Consumers will be able to purchase information and images with credit card verification.
Other providers differ in their approach to placing records on the Internet. For instance, Max Harris, President of Title Records Corporation, supplier of title plants in the Dallas/Ft. Worth area stated, "The Internet is a critical delivery mechanism that every service provider must consider. To better enable a low-cost, low-demand service offering, Title Records Corp. is developing cost-effective means of access to data and images as part of an overall solution to title company needs."
In contrast, some providers of title data did not feel the pressure to deliver an Internet solution as quickly and voiced concerns. For instance, Art Wilkins, Executive Vice-President of Attorneys’ Title Guaranty Fund in Illinois, said, "Currently, our members aren’t willing to sit and wait for the Internet browser to bring them the data they needspeed is a concern, they would rather have someone aggregate the information for them because of the lowered money in the real estate business, it’s not cost-effective to be searching on-line."
New Delivery Methods
Our own industry is faced with new, unique and differing delivery methods. Consider what the public arena is undertaking and why.
County officials, ever mindful of their public and required by the law to service every request, however unusual, see tremendous benefits in moving public access to records out of their offices and into a self-selecting means like the Internet. Web access to county clerks translates into less counter time with unusual requests, less wear and tear on reader printers, books, plats, film records and less repetitive filing of commonly utilized reference material. Clerks, who are obligated to deal with the public, see a double benefit of the Internet in positioning their records for long-term digitization and delivery to the widest possible audience with little or no person-by-person interaction "what name are you looking for?, when?, etc."
If you want a capable demonstration of one county clerk’s capabilities, point your browser to www.recorder.maricopa.gov for a tidy display of index searches and speedy document image retrieval over the Internet. Many other counties exist on the Internet or are in a headlong rush to web-enable their county records process today.
Most title people are aware that title plants are a recompilation of public documents which, rather than being sorted by party names, are usually sorted by geographic reference, like legal description or parcel number. In the East, title plants are internal compilations of prior policies and references to supporting publicly-filed documents. This investment in our databases is a competitive advantage for searchers as compared to courthouse databases. This distinction is not clear to our consumers however, and should be.
We make a tremendous investment in arranging our records for fast access to public data. We are moving toward putting our records on the same Internet the county clerk places every deed in the county. There is the risk that our data will be perceived to be the same as the clerks. Perhaps this is a blessing in disguise and frustrated users of clerk indexes will give up on public Internet sites after a few title encounters with searches containing 40,000 matches to one common name in a county.
However, I don’t think we should be so passive as to wait for sensible searchers to reach conclusions we have already reached. I believe the sooner title companies position their images, plants, prior policies, and plats for delivery on the Internet the more quickly they will be able to meet challenges from other market entrants, public or private.
Do we have a widely available market for admittedly narrow regional or county specific title plant searching? No, but you have the opportunity to more closely tie your services, order tracking, document delivery, and order fulfillment with your closest customers.
The End or the Beginning?
Some individuals contend the Internet will be the end of all "bricks and mortar" or maybe combinations of "clicks and mortar " like Stewart Morris, Jr., is fond of saying. I do not know which will prevail, but I contend we are on the verge of shaking up many of the foundations of existing businesses. Maintaining store fronts will have its adherents. You probably have a lobby, building and lots of files to fill out the mortar. Do you have the "clicks" to match the mortar?
The Internet and its impact on the title industry has raised a lot of questions that need to be answered if the industry is to survive and thrive in the next century.
How will title companies respond? Is the Internet a threat or opportunity? You do have a web page, don’t you? Your favorite Realtors are linked, aren’t they? Your closers can e-mail directly today, can’t they? You do know what your County plans for Internet access, don’t you? If you do not know the answers to these questions, you should.
At the risk of being proven wrong, I predict that in the next five years all major providers of plant services, public or private, will connect their customers to their internal databases and deliver their customized compilation products electronically. In context with what has happened in other industries, such as retail marketing, customer-driven manufacturing, and customized order fulfillment in industries like housing, I would be surprised if it did not happen sooner.
Last, realize that we, as an industry, are only now beginning to achieve some semblance of electronic connectivity and to achieve small steps toward workflow improvements, in the back room, as well as linkage directly with our customers. Your vision toward meeting your customer’s demands is what keeps you in business.
The train is leaving. Are your goods on it?
Chuck Barnett, Product Manager for Title Records Corporation in Dallas, Texas, has been involved in title plant automation since 1981. He can be reached at 210-860-8963 or firstname.lastname@example.org .