Great Idea—So where is everybody?
Title insurance and closing product enhancements. One of the biggest problems we face in the title industry is how little we actually know about the consumer as a decisionmaker. We make lots of guesses drawing on experiences we have had at the closing table and assumptions we make based upon personal experiences. We know how consumers feel and act about the real estate purchase and refinance experience overall, but we're not sure they care one iota about title insurance specifically. In spite of this, we create intricate new underwritten products with cool expanded protections, we figure out ways to enhance the efficiency of the closing process. However unfortunate, consumers see title insurance and closing as an extension of the real estate transaction, not as a separate business. Because of this, and a number of other important factors, attempts to make title insurance more attractive by expanding coverages and closing services interesting through efficiency efforts have been lost on consumers.
Marketing title insurance to listed properties. A little while back, a title company had launched a huge campaign aimed at getting sellers to choose them over competitors. While against regulation, cultural practice in the area is that the seller (seller's agent more accurately) controls where the title and closing work would be performed. The title company was mailing and calling the sellers directly, marketing free value-added services like in-home or in-office signings. Sellers were polite and happy to commit. The title company was rubbing its hands together and gleefully awaiting the arrival of all the orders. They're still waiting. The problems with the strategy were many, the most obvious being the fact that listing agents were basically 1) perturbed at the title company for stepping on their "turf" and 2) powerful enough to sway the seller to use their own company of choice. Oops.
Title insurance.com There is no question that the Internet will accelerate the title and closing process and provide enormous cost, delivery, and efficiency benefits in the near-term. Yes, one day, electronic connectivity will be the standard facilitation tool for the entire real estate transaction. There is little doubt that the Internet has, and will continue to, dictate significant short-term changes in the way we transact in our industry. All true. What isn't necessarily true is that consumers will care to notice. At present, unless I missed an important memo, title insurance is not the point of sale for a real estate transaction. Because of this, it is highly unlikely that the consumer will even notice our dramatic changes and Internet-related efficiencies. WE will notice, THEY won't care. If you can bank on the Internet, order your groceries, reserve a flight, buy perfume, of course you can close a transaction. Technology will be a competitive advantage for some companies as it's deployed to assist real estate agent, builder, and lender clients and provide value to their customers. But to the consumer, we'll still all look the same. They'll count on their real estate service provider (their agent) to handle the transaction from start to finish just as they always have, including title insurance and closing services.
Ok, So Now What?
There are so many reasons not to attempt to market title and closing products to consumers, you might feel discouraged. Fortunately, there are some ideas that have worked and others that are likely to work.
Let's take a closer look at three that are likely to work: At the moment, the most obvious and successful way to attract consumers to directly buy our products and services is to market them to owners who are attempting to sell their homes themselves. In some geographic markets, such as Columbus, Ohio for example, properties sold by owner made up as much as 23% of total sold resale volumes in the year 2000. Where there is a vibrant FSBO market and culture dictates that sellers determine where title and closing services are to be performed, marketing direct can be fruitful. If done correctly, a FSBO marketing program can both increase orders from the FSBOs themselves and generate a source of leads to hand out to good real estate agent and lender clients. The approach that works is one where the title company provides the same type of marketing assistance to the potential seller that they provide to listing agents. Homebuyer kits, valuation tools, relocation kits, materials for open houses and other common industry goodies can give sellers real value. Where legally possible, it's advisable that you charge for the FSBO tool kit and then refund the amount charged at the closing table to cover your efforts. It's also important to tell the FSBO that you can provide a referral to a real estate professional if they get frustrated or need help from a lender. Lastly, FSBO seminars are a great way to give value and make connections. Be sure to bring in one of your good clients to talk about how to write contracts, prepare the house for sale, and other useful info. Better yet, charge for the seminar. People will perceive the information to be more worthwhile and are more inclined to show up. Again, if you wish, you can always credit the seminar charge to the attendees at the closing table if they choose to use your core services. Either way, everyone wins.
Another great way to become attractive to consumers is to figure out ways to package consumer driven products with settlement services and to market them together. Not bundled service products like flood certifications, credit reports, and other products important to mortgage and real estate professionals. Consumers don't care about any of that stuff any more that they do about title insurance. Instead, think about creating a separate corporation charged with establishing marketing alliances (i.e. , commission arrangements) with seemingly unrelated companies. Market cellular services or legal services (wills, trusts, estate planning, whatever) to gain access to the consumer in exchange for future title and closing services. Come to think of it, why not pre-sell closing services? Kind of like time-share for the title business, a consumer could pay a fee and receive closing services for a fixed period of time with the caveat that they allow the closing company to pick the title provider. Just a thought.
The upcoming idea is a bit of a stretch, but is really my personal favorite. If you're really interested in becoming the point of sale for the real estate transaction, why not buy (or startup) your own real estate agency? Think of it. Pretty soon, many of the big real estate companies will provide title and closing services if they don't already. One of your customers may even try to buy your company. In general, we'll have an increasingly difficult time competing with customer-owned title and closing operations. As you build your brokerage, you could attract a great deal of refinance business into your title company from loan officers who want access to your agents and builders who won't really care that you also own a real estate brokerage. True, some of your real estate agent customers will go sideways because they see you as a competitor. Whatever. Instead of worrying about it, hire them if they're worth a darn. A broker or two may close their office to your sales effort…big deal, chances are it's already closed to title companies anyway. A small price to pay to improve your net per transaction by three hundred percent and still retain the majority of your customers, hiring the ones you like the best to help you build the brokerage. The nay-sayers will just fuel your marketing efforts by loudly whining, inadvertently marketing your company in the process. Chances are those same nay-saying brokers will own an interest in one of your competitors anyway.
It's easy to see why most title providers steer clear of marketing directly to the consumer. Given the difficulties in differentiating our services from other components of the real estate process, a lack of consumer interest and education about the value of our products, and the fact that noone buys title or closing products outside the context of a real or personal property transaction, it will be difficult for us to ever have much sex appeal with the general public. Instead, we have to creatively examine other sales opportunities using our existing tools and spread our wings beyond what we're comfortable with. To get to the consumer we'll have to convince ourselves we're willing to take some drastic steps outside the real estate cultural box. We'll have to be armed and ready to endure the questioning looks of our peers, and take the risk that our business savvy may not apply to other service driven industries. In the end, we'll not only sell more title insurance, but we'll sell a lot of other stuff besides. We might even build in some protection against market cycles. Wouldn't all that be terrific? Absolutely.
Dan Miller is the CEO of RightNow Business Development Systems, a San Francisco-area training and consulting company which specializes exclusively in the title and mortgage industries. Dan can be reached at email@example.com or view their Web site at www.nowstuff.com. This article is an excerpt of Dan's presentation at the 2001 ALTA® Tech Forum.