As interest rates continue to climb, a purchase-dominant market (and less transaction volume) is further solidified for the foreseeable future. For title & escrow businesses looking to capture purchase business, the ways of operating that went hand-in-hand with a refinance-heavy market must be replaced with new ways of conducting business.
To succeed in a purchase market, title & escrow companies are rethinking their operations from multiple angles including business and relationship development as well as staff capacity and the necessary training required to up level staff for more complex transaction types.
Business development tactics to succeed in a purchase market
Between 2020 and late 2021, record refinance activity pushed forward the necessity of speed to win new business. Lenders primarily selected the title companies they worked with based on how quickly they could close and title companies therefore focused on speed to capture new business.
Now, in a purchase market, the closing process is generally more complex and involves more participants. Instead of interacting primarily with lenders in a straight-line fashion (as they would in a refi transaction), title & escrow companies must now cater to a variety of participants including the homebuyer, seller, and real estate agent. Because of the complexity of the transaction, the sentimental value attached to home purchase transactions, and the many personalities involved, title & escrow companies are now focused on delivering an exceptional client experience rather than focusing solely on the speed of the transaction.
To deliver an exceptional client experience, title & escrow companies must set their attention on managing the emotions and expectations that are often attached to a home closing. For example, homebuyers are generally excited yet anxious to finalize one of the largest transactions of their life. They are therefore looking for someone to help them understand the complex documents and paperwork that arrive in and around the closing date. Qualia’s 2022 Homebuyer Sentiment Index found that this person is typically the real estate agent. It is therefore critical that title & escrow companies quickly respond to and clearly communicate with real estate agent partners to ensure a smooth transaction experience.
Title & escrow companies can leverage a variety of tools to strengthen their communication and responsiveness with real estate agents; however, “winning” technology will enable title & escrow agents to securely update their clients automatically when key milestones are complete. This frees up title agents’ time to deliver greater hands-on support for the more complex aspects of a transaction while also ensuring that no important updates fall through the cracks—or into the wrong hands.
Staff capacity and training: newer team members must learn the ropes again
Over the past two years, title & escrow companies hired new staff members who quickly jumped in to manage the deluge of refinance transactions brought on by record low interest rates. Now, these “new” team members (who may not be so new anymore) must learn how to handle more complex purchase transactions.
For example, in a refi transaction, title & escrow agents manage one or two lines of communication whereas in a purchase transaction they engage with several different parties. On average, purchase transactions require two times as many information requests going out to four times the number of contacts compared to a refinance transaction.
Title & escrow agents are not only juggling many more communication lines, they are also expected to act as subject matter experts to provide timely information and serve as a compassionate problem solver to help manage the high emotions that go hand-in-hand with a purchase closing. This is a lofty responsibility for title & escrow agents who were initially trained to execute simpler processing tasks over the past two years of refi-heavy work.
Title & escrow businesses must evaluate the capacity of more tenured staff who have experience managing more complex transaction types and take strides to train newer staff in order to effectively allocate pipeline. Managers might consider implementing a team structure to pair tenured staff with less experienced ones to encourage peer mentoring. Another way to integrate training of soft skills (such as the people management skills mentioned above) is to allow high performers share best practices in weekly meetings.
The power of technology to pivot to new market conditions
Another piece of the equation as businesses shift from a refi to purchase-dominant market is operational agility.
The configurability of a company’s workflow software is an important element in managing operational pivots. Configurability refers to the ability to leverage tools within a software to meet specific requirements without needing to upend the system or custom code requirements. With greater configurability, title & escrow businesses can more quickly adjust their processes and train staff on those adjustments in order to meet market demands.
For an industry that must navigate through many cycles for long term success, a configurable workflow software will be a competitive differentiator for businesses to outlast the ups and downs of the real estate market for years to come.
To learn more about Qualia’s cloud-based, configurable platform click below to speak with a Qualia specialist.