PHILADELPHIA, April 4, 2019 /PRNewswire-PRWeb/ -- It's no secret to many in the industry that it can be tough for real estate brokerages and franchisees to increase profit margins. Most of the sales volume is driven by few of the salespeople, those driving salespeople command the lion's share of commissions while brokers often foot the bill for overhead and marketing.
Profit for brokers and franchisees is often propped up by ancillary services: mortgage, title and insurance. The most frequent and compliant way to accomplish this is through affiliated companies; a partnership jointly owned by the broker and by a management group that's an expert in operating that particular business. The broker refers business to the joint venture, the operating partner manages the details and they split the profits.
But in recent years, more and more surveys report unhappiness in these arrangements from agents and consumers, and now brokers are climbing on that wagon.
For Diallo Souleymane of Diallo Real Estate, it felt like an affiliated services company that wasn't capturing business from his agents was a wasted opportunity.
"We had a title affiliate company for a few years and we were making money, but it was getting more and more painful", said Diallo.
"We've been growing, I'm busy recruiting, and I was taking calls on my cell phone to put out fires at the settlement table. I knew we were leaving a lot of money on the table, many of our agents just wouldn't use our title company."
In 2018, Matt Einheber of Transfer Real Estate Intelligence was busy figuring out why the title industry was still largely using painfully outdated technologies, and why so many were having trouble keeping up. He also observed this frustrating experience happening with many brokers.
"Most title companies hire good people and just let them work. There isn't much to systems and repeatable processes in title", said Einheber. "Even in the biggest, most sophisticated operations, companies are very reliant on experts that just know stuff. One of the problems with that is that you need a ton of information and data to get this job done and it's just slow. The other is that the experts are getting older and there's now a shortage of them."
Transfer's solution, a mix of technology and processes, gave way to a ground breaking way to help brokers increase profits. Transfer Real Estate Intelligence offers a RESPA compliant package in which the broker owns 100% of the affiliated company. Transfer takes none of the profits, instead they manage the processes for flat fees.
The result, says Einheber, is a far more profitable title affiliate, in some cases by astounding amounts.
"The key to this is how we manage the work. The hardest, most time consuming part of the title process is clearing title issues. Taking action on judgments, liens, estates, bankruptcy obstacles, divorce issues affecting title and so on. That's where everything slows down and is the most expensive to operate, yet there is almost no one focused on solving this problem. This is where we've spent our energy."
In addition, Transfer has turned the complex title commitment into simpler data visuals and shares progress through a dashboard and a portal called SYNC, for brokers and agents.
"No one really understands title except title people. Agents want to know when every transaction will be ready to close at any given time. We do that with easy tech so agents don't have call, email and otherwise chase down title and so they can understand what's happening without being experts. There have been cases where we've been able to show a broker profit increases of hundreds of thousands per year, before we even attract new business and grow it."
Opportunity is found in inefficiencies and many feel that the title space has been inefficient for too long. Only in the past few years have well capitalized outsiders entered the space and attempted to make change, but it's largely proven harder than it looks.
Einheber and his team at Transfer Real Estate Intelligence believe title is a hyper local, rules-complicated black box that requires a mix of deep subject matter expertise and outsider's perspective.
So far, they seem to be delivering that mix to the benefit of real estate brokers.
SOURCE Transfer Real Estate Intelligence
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