Why Your Real Estate Joint Venture is Costing you Money

The real estate joint venture has been a fact of life ever since I started in the Title business. No matter the state, these agreements are everywhere. Some are set up legally; others come into serious question. Nonetheless, Title reps must deal with these obstacles to obtain business. What Realtors don’t always comprehend is that the real estate joint venture you are in is costing them money. They just don’t realize it. I’ve had these conversations with Realtors in my market, and after I explained it, some see the light and understand, others understand it but still choose the JV. For a Title rep, this is great because knowing who NOT to pursue is just as valuable as knowing who is worth your commitment and time.

How it Started

Back in the summer of 2022, the market started to change. Interest rates were creeping up to 5.5%, and there was no stopping them from going higher. When this happened, there was panic in our market, especially from smaller to mid-size Title Companies that saw the end of the road possibly near. This was also because these companies lacked skilled business development people and a unique selling proposition. So…they created one. The joint venture. And not joint ventures with real estate brokerages but with teams and individual agents.

An example of this is in the screenshot here. Many agree that Title Companies primarily closed less purchase business in 2023 than in 2022. Half of 2022, we had interest rates at 5.5% or lower. In the screenshot, you can see this company that is redacted was up 800 purchase closings in 2023 vs 2022. How does that happen? This is also a company that, before 2022, was not a major player in my market. The way this happened was the transfer of business via joint ventures being signed. Their purchase contracts were redirected from their prior Title Company relationship that offered value to this one that offered dollars during a challenging time.

Why It’s Doesn’t Work

This is my 20th year in the Title business. I have never seen a joint venture last long term. Here is why: The relationship is about something monetary and not based on value. Over time, the market either improves, gets worse, and someone wants a little more.

The other issue is the joint venture becomes the valuable Title Rep. But, the joint venture is not a person. It’s an inanimate thing that only works when business is sent to the Title Company. What about when the Realtor has no business to send and needs help with systems, strategies, and guidance on gaining more listings, buyers, or growing their presence online? That’s right…nothing.

Does it Make Sense?

Let’s breakdown the difference and show how a Realtor is really stepping over a dollar to pick up a dime. In most cases the real estate joint ventures create a money payout based on the profitability of the joint venture. Essentially, the Realtor can make more money, the more business they close with the Title Company where they have an agreement. The joint venture becomes the Title Rep. What is the value of working with a top Title Sales Rep?

Not all Title Reps are equal, but if you have a great one in your market, partner with them. We partner with our clients to help them to become better at what they do or are striving to accomplish. This can be helping you gain more listing opportunities, sponsor your events, teach you how to gain more exposure online for your business. This can be with Instagram reels, ads, and how to grow your YouTube channel. As a Realtor fighting for eyeballs every day, wouldn’t it be great if you had a (Free) partner that not only has your best interest, but will teach you strategies that increase your ability to gain clients?

I understand that implementing new strategies an getting uncomfortable takes work, but the upside is much greater. Wouldn’t you rather have more buyer and sellers vs a small check from the Title Company? A trusted partner providing you ideas and strategies that convert vs average customer service for a check?

Know this…

The Title Company where you have a joint venture, absolutely hates the fact they have to give a Realtor part of their profits. But, they also know this is the best way to keep re-occuring revenue coming in the door. The trickle down effect these joint ventures has is apparent. Title reps on the team have poor commission structures, and the talent at the Title Company sometimes suffers because they can’t afford to pay high salaries to top escrow and closing people.

Watch the Video! 

Let’s Have a Conversation

If you are looking for a strategic partner in your real estate business, who wants to add value and pours into you, let’s chat. The real estate joint venture has it’s place, but the JV itself is not going to help you scale your business. Fill out the form below and I will reach out. You can also email me at Wade@Pruitt-Title.com