Predicting what will happen in the next recession has been top of mind for many in the real estate industry. After two years of record-breaking volume, a tumultuous market has led many title & escrow businesses to reassess their strategy for the coming months and years.
A common response to market downcycles and less volume is reducing staff to drastically lower expenses. While this strategy may provide an initial cushion against the challenges of a recession, it can negatively impact a business’s long-term health for a few reasons. One, when the market eventually returns to peak volume, businesses will likely need to increase staffing again to handle a surge in orders. And two, volatility around hiring and retention can hurt employee morale and increase training costs over time.
Instead, businesses should evaluate current technology and operations to improve efficiency and mitigate the risk of workplace volatility through future cycles. Ultimately, thinking creatively during market downcycles can result in sustainable long-term strategies that can help businesses succeed regardless of market conditions.
The perfect time to optimize your operations? Right now
Instead of reacting defensively to changing market conditions, businesses should think proactively about the factors they can control. A 2018 study from the National Bureau of Economic Research examined how businesses across industries proactively responded to past recessions and actually achieved technological transformation instead of regression. The study found that businesses that took advantage of slower times by implementing technology were able to advance their business and come out stronger when the recession eventually ended.
Since order volume and output are often lower during recessions, organizations have more time and resources to invest in technology adoption and implementation. Finding the right technology that helps increase productivity, reduce costs, scale effectively, and provide excellent customer service can help businesses weather the storm and prepare for high volume in the future.
Rick Hill, Vice President of Industry Technology at the Mortgage Bankers Association (MBA), reiterated this idea during his session at FORES22. “This boom and bust cycle is an interesting thing. When we have a lot of business and have a lot of money, nobody has the time. When we turn around and have the time, nobody has the money,” he said. “Those who invest in this downcycle are going to be the ones who will be able to deal with the next refi boom or whatever comes next because they’ve invested in [the productivity tools] to do things more efficiently.”
Investing in technology can help businesses adapt and grow during periods of uncertainty. A recent Harvard Business Review article explained that recessions are “a high-pressure exercise in change management.” Businesses willing to think outside the box to cut costs and modernize their tech stack can create business models that withstand future market cycles. A modern tech stack can also open doors to new partnerships (such as joint ventures and bank partnerships) to increase revenue and reduce costs. Businesses that lack the technology solutions to collaborate with partners successfully may find themselves left out of partnerships due to their inefficient operations and inability to integrate technology.
Take a closer look at your workflows and software
Over the past two years, many title & escrow companies have experienced some of the highest levels of refinancing and purchase volume ever. While some of these businesses optimized processes and introduced new systems for efficiency during this time (like RON, RIN, and eSigning), many others often focused on simply getting the job done with outdated operations to keep up with high volume. Now, businesses can take advantage of lower volume to improve workflow efficiency.
Fixing operational bottlenecks and standardizing workflows can help title & escrow companies complete orders more efficiently. Standardized workflows with consistent and optimized processes can drive positive client relationships and help title & escrow companies win new business. A modern technology stack also enables teams to work with outside clients and partners more effectively to drive further efficiency and earn repeat business. For example, an optimal technology infrastructure incorporates solutions like partner APIs to enable businesses to share resources and information while maintaining security, control, and authentication. Qualia’s API enables users to send and receive messages and documents, automate orders and information requests, pull data for custom reporting, and more.
During this time, businesses can also invest in workplace training to ensure that employees are knowledgeable in a wide range of closing situations and regional requirements. Taking the time to level up employees and improve processes will ultimately help title & escrow companies deliver an outstanding closing experience that provides value for years to come.
Future-proof mission-critical systems
To achieve long-term success, title & escrow companies must future-proof their operations and optimize for efficiency. Businesses can thrive in various market conditions by evaluating existing processes and finding new opportunities for growth—even amid a market downcycle. Further, a willingness to pivot and invest in new technology can help businesses prepare for upcoming challenges and opportunities. As the research shows, this approach can help businesses weather a recession and gain momentum after the recession is over.
For more information on how Qualia can help identify opportunities for efficiency gains and cost savings in your business, click below to schedule a call with a Qualia Specialist.