The title insurance industry has been ripe for mergers and acquisitions since the national underwriters began gobbling up smaller underwriters and agents across the country decades ago.
After the Great Recession decimated the real estate industry, picking up the pieces in the title insurance industry led to a lot of shifting of assets and territories through many mergers and acquisitions.
It also led to a lot of displaced title professionals banding together to form new title agencies out of the ashes, sometimes led by young, tech-oriented agents wanting to rethink how a small or regional agency could improve process and service by tapping into the burgeoning landscape of title technology.
All of these factors led to brisk M&A activity in the title industry over the past decade, but will that pace continue in light of an anticipated softening in the real estate industry?
What happens to M&A activity in a downturn?
Traditional wisdom would say that M&A activity tanks in a recession, but if we’ve learned anything the past few years, we’ve learned how often traditional economic wisdom simply unravels in this day and age.
According to PricewaterhouseCoopers Company research, companies that continued to make deals during a downturn actually outperformed their peers.
While PwC acknowledged that deal volume is likely to decline in a downturn, they also noted that there could be extraneous factors “driving a decoupling of deals from the broader economy;” meaning, a softening economy could actually include elements that enhance the prospect for M&A activity.
This could be especially true in the title insurance industry.
For instance, title agencies that sprang up in response to the high volume of refinances could now be ripe for acquisition, especially if the agency offers an array of technology that an under-teched company could view as a value add.
The PwC report also offered three major elements that could contribute to a continued healthy activity, all of which could readily apply to the title industry:
This third point is most applicable to the title insurance industry.
Marginal players always enter a hot real estate market and experience short term success due to the sheer glut of available business. But if they are not properly capitalized for the long haul, they will be the first to exit by seeking a quick sale to a more established company.
In addition, with the graying of the title insurance profession, long-term owners who are contemplating retirement could make the leap a little earlier than planned, rather than to try to ride out yet another real estate cycle.
The bottom line is M&A activity is likely to continue in the title insurance industry. But anyone contemplating jumping in should not try to do it without the help of professionals qualified and experienced in M&A. Our experienced team at AMD Enterprises can help with planning, evaluation and due diligence. Contact us the next time you have a potential merger or acquisition in your sites.
Recommended LI posting: Surprisingly, a down market cycle is exactly the right time for many to enter the M&A circle. Here’s why.
There are many documents discussed during the closing process. One of those documents is the deed.
A real estate deed is a document designed to transfer a property from one person, known as the Grantor, to another person, known as the Grantee.
Regardless of the type of deed, it must contain basic information to be considered valid, including a legal description of the property being transferred, the identity of the person selling the property, and the identity of the person buying the property.
Still, there are various types of deeds that you may see, and each one grants the new owner certain promises from the previous owner.
There are several different types of deeds that can be used during the sale of a property, including the following:
WARRANTY DEED
A warranty deed is a transfer of title where the seller pledges to the buyer that the property is owned free and clear of all liens.
This deed is the most commonly used deed with the issuance of title insurance.
SPECIAL WARRANTY DEED
A special warranty deed is a deed to real estate where the seller of the property warrants only against anything that occurred during their physical ownership.
In other words, the seller does not guarantee against any defects in clear title that existed before they took possession of the property.
QUITCLAIM DEED
A quitclaim deed is used to transfer an interest in real property from the Grantor to the Grantee if the Grantor has any interest in the property.
The Grantor does not, however, give any guaranties or “warranties” about the title and may not even own any interest in the property. The name comes from the fact that the Grantor “Quits” any “Claim” to the property.
This deed is often used to clear up defects in title and for transfers between family members or spouses.
Remember, we are always available to answer questions about your client's file and have attorneys on staff to assist you in choosing the right deed for your client.
We've created a digital document with the deed descriptions to help your client better understand these terms during the closing process.
The purchase or sale of a home can be intimidating. As a buyer or seller, we want to make sure fully understand everything happening throughout the closing process.
We can help you get better acquainted with each step of the closing process to help avoid surprises along the way. View our quick breakdown of the steps to close below and let us know if you have any questions:
Once a buyer's offer has been accepted and the sales contract has been fully executed, Real Estate Agent will submit that contract to the title insurance agent.
Once a buyer's contract is submitted, they'll receive information on sending their earnest money deposit to be held in escrow for the closing. We have several options available for the delivery of the EMD. Please note: Buyers and sellers should always call to verify any wire instructions with the title agency and/or closing agent.
During this time, the inspections are being ordered and completed, be sure to stay on top of all deadlines and critical dates per the contract.
The title insurance company will search and examine public records, which include deeds, mortgages, liens, wills, divorce settlements, and more.
After the search is completed, an examination is carried out to determine legal ownership, debts owed, whether there are any liens in place, etc.
Once both of these steps are completed, a title commitment is completed and sent out.
Once the title commitment is issued to all parties, the closing agent will gather critical information needed to prepare closing documents.
During this time, the appraisal and loan approval will also occur.
Once the closing agent has all the necessary information and approvals, the Settlement Statement is prepared. Then, the statement will be sent to the Lender for review and approval, if applicable. Then, sent to the Real Estate Agents to be reviewed and approved and then to the client for review.
During this time, the closing agent will contact the buyers and sellers to discuss the closing options and confirm the time/date for closing.
Before signing, the closing agent will review the documents with each party and confirm the buyer has received the wiring instructions from the Secure Portal.
Once the necessary documents are notarized and all funds are received, disbursement will take place and copies will be available on the Secure Portal for the buyers and sellers.
We strive to make the closing process as stress-free as possible, if you ever have any questions about the closing process, feel free to contact any of our offices for personal assistance.
As we head into 2022, you might be thinking, "New year, new social strategy!" If so, here are five trends for 2022 you can incorporate into your real estate business social strategy.
A Push Toward More Video
With the rise of Tiktok and its influence on other social media apps, it's no surprise platforms like Instagram and Facebook are working to convince their users to create more videos.
In a video update from the summer, Instagram CEO mentioned the app is shifting focus from photo-sharing to "four key areas: Creators, Video, Shopping, and Messaging."
If you haven't done so already, creating engaging and entertaining short-form videos is essential to all social strategies. A few ideas you can work on include creating a video of your listing and its best features, showing off your team using a viral trend, or using viral audio to keep customers up to date with market trends.
The Rise of Live
Livestreaming continues to grow in popularity as it gives your audience an intimate look into your business. Giving a behind-the-scenes look to your customers creates a relationship. And with new features being developed for livestreaming (for example, the ability to bring in 3 different people into an Instagram Live), you can bring more value to your customers.
One of the ways you can use livestreaming for your real estate brand is by going live with other real estate professionals and conducting interviews or doing a Q&A on Live. You can also go Live at events such as Open Houses, Charity Events, etc.
Social Customer Service
"People don't want to talk on the phones anymore." Naturally - It's much more convenient and comfortable to reach out to businesses and brands virtually. The pandemic pushed this even more with the need for everything to be virtual/digital and updated at any moment.
In a Nielsen survey commissioned by Facebook, 64% of people said they would prefer to message rather than call a business. And according to Gartner, 60% of all customer service requests will be managed via digital channels by 2023.
It's vital to ensure your customers can locate you on your social channels and can get in contact with you easily.
Understanding Inexpensive Social Media Advertising
Not every business has the budget to include paid or sponsored posts into its strategy, but it's beneficial to understand how it works.
If your goal is to reach new customers, you won't achieve that goal by relying only on an organic post or going viral. In fact, the average organic reach of a Facebook or Instagram post is 5.2%.
At the very least, learn how to boost your top-performing posts to engage with new customers. Check out Hootsuite's Venn diagram on the benefits of paid social posts vs. organic social posts.
Further Use of Augmented Reality
About 90% of the real estate agencies have started using AR technologies to provide better services to their clients, for example showcasing homes. As the technology continues to develop, so will the ways you can use it in your strategy.
In some markets, it may not yet seem like it. But even as some lenders continue to ride the refinance wave, the forecasts for the coming year are fairly aligned in agreeing that the refinance boom will be receding soon. For some, it already has. For others, maybe in a month? Three months? Five months? Obviously, we don’t really know. But it seems likely that, barring some incredibly impactful and unexpected event, we’ll be doing much more purchase business in the coming year than we will be refinance.
The forecasts also agree that volume will be high again in 2022. The downside is that, like most boom markets, the mortgage and title industry expanded to meet the historic demand we saw in 2020 and 2021. That means there are more mouths to feed. And while the proverbial “pie” is still ample, it will be smaller than the giant feast we’ve been enjoying.
So what does that mean for you?
If you’re a REALTOR or loan officer, you already know what you need to be doing. You’re shoring up your relationships, scrubbing your leads and double-checking your CRM. A competitive purchase market is built upon leads, marketing and sales. But if you are a lender, you’re probably also becoming more and more aware that 2022 will likely be more expensive for lenders. “Margin compression” may end up being the phrase of the year, and with good reason. When volume is sky high and a product lends itself naturally to streamlined production processes, we don’t talk too much about margins. But the purchase transaction takes longer to close, comes with more complications and can be costlier to produce.
So, REALTORS and lenders, the service providers you choose on the title and closing side can make a difference in a purchase market as well. Turn time is a great example. If your provider helps shave a day or two (or three) off of the closing process because it’s already positioned for efficiencies, your closing process is that much shorter as well. Your staffs are more productive as they move on to the next file or next sale. And, as an added bonus, you’re likely to have a happier borrower on your hands when the closing process is smooth and quick. Can’t hurt the repeat or referral aspect of marketing, right?
For title companies and other service providers, now is also the time to revisit your production and service processes as well. How automated are you? Are there costly, way-too-manual elements to your workflow that require more labor than your margins can bear? Outsourcing has long been a Business 101 solution for shrinking margins for a reason. It works. Simply being able to eliminate some fixed expenses for a provider able to scale its services is a classic and effective way to relieve some of the margin pressure.
This isn’t the first posting we’ll do about the coming purchase market and it likely won’t be the last. But we haven’t truly seen a more-or-less nationwide purchase-dominant market in years. Here’s the best news. All indications are that the opportunity will be there. And a little competition never hurt, right? It’s time to get prepared and have a plan!
