Monday, July 2, 2007

Title Insurance - the decline of the lawyer's role in selection

Notwithstanding complaints that it is expensive and unnecessary (an article late last year from Forbes, no less!), title insurance is still a vital player in the real estate business. And I happen to disagree with the conclusion, at least from my perspective as a commercial guy who also needs extensive escrow services and other real estate related help.

Title companies can be either a huge help in getting a transaction done, or a huge hindrance. I have encountered both over the years. I have always tried to steer business to companies and underwriters that think outside the box to solve problems that less creative types thought were unsolvable.

Many people think that the lawyers control who picks the title companies to do the deals. And maybe some do, especially in states where lawyers are much more involved in the process, such as Florida or Georgia (where most real estate lawyers, even in commercial deals, are title agents and derive significant revenue from it).

But guess what? I really don't control who gets the business anymore. In fact, I haven't for years. Clients, or at least my clients, dictate who gets the work. Often it is because of business relationships that the title companies have wisely made with the clients, other times it because of the cheapest rate. But most often, at least for me, my clients pick (or try to pick) the company that gives the best service, regardless of price.

I was at a very fun title company function on Friday. Ten years ago, 80% of the people there would have been lawyers. Friday, 80% of the people were lenders, developers and other real estate professionals, with just a smattering of lawyers. I was really there not so much because I can steer tons of business but because I have developed long-standing relationships with this company and with the companies both here in Chicago and around the country.

I do wish that sometimes I had more control over this potentially vital issue, but I understand why I don't. After all, it is not my money that is being spent on the service, and I applaud the title companies who have been smart enough to focus their marketing efforts on those whose money it is. Just don't forget that, price and bread and circuses aside, service is still king.


Kenisha said...

Good for people to know.