Just about every article and blog out there these days starts with a nod to “the end of the refinance boom,” or an “emerging purchase market.” Those observations are now officially outdated. We’ve been facing current market conditions—declining order count, economic uncertainty, inflation and the hope for a rebound in purchase transactions—for a few months at this point. If you don’t recognize that we’re not in 2021 anymore, you quite possibly have been living under a rock for the past quarter.
However, all of the doom and gloom in the headlines isn’t quite an accurate portrayal of what’s going on, either. Yes, origination volume—thus, title order counts—is down. How could it not be after a record year of over $4 trillion in revenue?! But while odds are that the most recent forecasts of around $2 trillion in purchase origination may or may not fluctuate a bit more before the year’s end, the fact remains that there’s business to be had out there. People will buy homes again—even if the interest rate fluctuates between 5 and 6%.
Of course, the underlying premise to all of this is that the contracting market will lead to contraction among the businesses serving that market. We’ve begun to see signs of that as well. So the ultimate takeaway is that title firms will need to do more than wait for refinance orders to roll in from their favorite lenders if they wish to stay afloat. From what we’ve seen, the industry gets that.
At one time, a downturn in the market meant hunkering down fiscally. The excuse that “we’re too busy to implement a new technology” pivoted to “we’re not in a financial position to take on new technology.” And we’ll have to reluctantly admit that there was some truth to that.
Then again, for a long time, title agencies and firms were limited to upgrading their production platforms and a handful of other technologies if they wished to streamline and become more nimble.
Not anymore.
Expect to see title businesses continue to invest in new technology during the current slowdown. But not a spending spree. Instead, the best title business owners are already realizing that their traditionally narrow margins could soon become unacceptable margins as their profits continue to be eroded by compliance, client and market demands. And so, title businesses are moving selectively to attack specific pain points in their workflows, realizing real benefits without breaking the bank.
As a result, the agent that can’t quite afford a global upgrade to her production platform is now choosing, in spite of declining revenue, to automate elements of her workflow where chokepoints persist. Things like order creation from emails, pdf attachments or from another production system(s). Tasks like updates or date downs, lien release tracking, email monitoring and tasking, accounting and reconciliation tasks or title search packages. Anywhere a title agent can eliminate key mashing and manual data entry is worth automating. And the time once spent staring, comparing and typing can now be returned to revenue-focused tasks like sales, marketing or client service.
The title industry is changing with its needs and demands. Those who survive and even thrive during the current market cycle will be stronger for it when the next volume surge arrives. And they’ll be ready for that increased volume as well.
