The Two Different Title Company Business Models Explained

Having been in the Title business since 2005, I have seen many things as it relates to methods used by Title Companies to generate business. When I was a Title sales rep in Phoenix, AZ most of the major Title Companies had sales teams. These salespeople would lead generate Realtors and lenders to create Title orders for their company. There were some companies that had joint ventures or MSA’s (market service agreements) but they were not prevalent. Mostly because of the many Title salespeople each company had caused the “capture rate” of those agreements to be pretty low. When I moved to the Washington DC area, I found the opposite is true. Most Title Companies had joint ventures or other agreements in place and very few employed salespeople who generated the organic business. Let’s discuss the two different Title Company business models, how they work, and the major differences.

Model 1–Broker and Title Company Agreements

I want to begin by saying that neither model is wrong. Both have worked very well for real estate brokerages and Title Companies around the country. There are major advantages to both and also negative features. One of the Title Company business models we see on the east coast are called joint ventures, and market service agreements. In this model, the Title Company either pays a certain level of money to the real estate brokerage and in return, the Title Company works directly with that specific brokerage attending all meetings, and marketing partnerships and it also kicks out any Title Competitors from teaching classes, doing presentations, and more within that brokerage. It gives the Title Company which has the signed agreement a big leg up on competitors to gain business and access to the entire office of real estate agents.

Positives:

An easy path to incoming business
Access to Realtors and free reign in the real estate office
Broker pushes business to the Title Company
Creates great opportunities for a Title Company to get into other markets.

Negatives:

Title Company either pays a set amount of money per month or % of Title Premium back to the real estate brokerage. Title Company doesn’t keep all their fees.
Less money is available to hire a sales team. The real estate broker is the Title sales rep.
Possibly paints a picture your Title Company only works with that brokerage. Could hinder your ability to capture other business.
Volume transactions–meaning the relationship isn’t with the Realtors, it’s Broker to Title Company owner.
The agreement could end at some point and leave the Title Company stranded without organic business.

Model 2–Building Organic Relationships and Business

This is the Title Company business model I’m used to from my days in Phoenix and at my current Title Company in the DC area. In this model, the Title Company has no signed agreements with any real estate brokerages. The Title Company has sales and marketing people who are out in the field generating clients from all real estate brokerages and building organic relationships. These salespeople are offering value-added marketing tools and educational content to help their Realtor and lender clients generate more business.

Positives:

Completely relationship based with the Realtor, not the Brokerage
Title Company keeps all of its fees. Nothing changes hands
The extra money from closings to spend on marketing tools and programs for the salespeople to use and help their clients.
Not seen as working with just one real estate company.
Generally higher commissions are paid to salespeople–due to keeping all their fees.

Negatives:

- A lot of lead generation is needed to bring in the business and keep it (retention strategies).
- Can hinder the ability to move into a certain market. Starting a new office with no immediate business.
- Not all Title salespeople succeed. Could be spending time and money on employees and very little to no business comes in.
- A big blow if a top client leaves your company as you need to organically replace that business.

Takeaway

These are the two different Title Company business models that I have seen. Sometimes companies also do a “hybrid” of the two models where they have agreements signed with a brokerage but also employee salespeople to generate organic business. In my opinion, this is the best model. As you can see, there are positives and negatives to both models so using the best aspects of each to truly expand into other markets, yet gain organic business is important.

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DCTitleWade1

Senior Vice President of Business Development at Pruitt Title

I'm the Senior Vice President of Business Development for Pruitt Title in the Washington DC/Northern Virginia area. I help my Realtor and Lender partners grow their businesses with offline and online marketing solutions. More eyes to them mean more business. I create the win/win!