How title companies can position themselves for the emerging refi market

It was July 2020 and interest rates had dropped just below 3%, every Title & Escrow company was being slammed! This season, most companies were on track to make more money than they had in years, or in some cases, ever! Consumers were refinancing in astronomical numbers!

Every title company wanted a big piece of today’s refi market and most would do anything to get it. The problem; almost all of them were late to the party and unprepared.

Many national companies had already set national refinancing rates with some of the largest banks and lenders, and yet that left many doing what they have always done; wait until all the sound has fully arrived and then respond. Unfortunately for most, while a few prepared, most failed to see the magnitude of this market anomaly!

By August, almost every remaining title company or agency began a race to the bottom, feeding on the scraps National had failed to secure.

As time went on, companies began to promote their new fast, beautiful and furious (negative profit margin) refinance rates. A direct consequence of not being well positioned before the market.

They would continue to compete solely on price for almost two years, until mid-2022, when rates would single-handedly cool the market again.

Why did this happen? The moral of the story is simple: “Any seller who is not well positioned in a market before that market breaks out has only one thing left to try to paint the picture of value; PRICE”.

Here’s the good news; it doesn’t have to be this way. You can position yourself well and be ready to capture the market-driven income coming from this next emerging refinancing market.

Don’t get me wrong, even if you are well positioned you will face some elements of competitive pricing, but ultimately when you are positioned you can choose which of those companies you want to acquire and which ones you just want next time to leave. take sucker.

Consider some very simple steps to prepare now. As I write this, rates are currently between 6.88% and 7.29%. So there is time, but not much, as interest rates are expected to fall to almost 6%.

Our safe assumption is that anyone who positions themselves correctly before rates fall below 6% will be the winner of this next market refinancing challenge. However, keep in mind that you cannot start this process if the interest rate is 6%. You need to start earlier because the positioning process takes time.

If positioned well, the further rates fall below 6%, the more revenue your title company will make.

The purpose of positioning is always to be there first. If we are not first, there will be a race to the bottom.

As of the date of this article, approximately 68% of all purchase transactions are currently mortgages, while 32% of closings are all cash.

Here’s what this means:

If you are a title agency/company that closes 100 purchase files each month, you are currently dealing with 68 mortgage lender options each month. When you use the nationals (corporate banks) From the comparison, it is estimated that you will continue to be involved in at least 45 lender opportunities as listed in the example above.

How do you manage those opportunities to best and most effectively position your title company with those lenders so that you can leverage the small amounts of refinances they currently have, while developing your position to “almost” automatically capture all increases in their refinance orders? to catch if rates drop to 6% or lower? If you’re like most title companies…you’re just not!

Consider a very simple, confirmation-based sales process.

Because most lenders in the market we live in only hear from mortgage lenders when something is needed, out of balance or the money borrowed is needed, the lending community has unknowingly learned to fear the mortgage company.

Since the true meaning of differentiation is simply doing something different, it’s time to master the scenario!

Try this:

1. When opening a purchase file they are on, call any local lenders to introduce yourself.
2. Thank them for “the company”. This will be a call they’ve literally never had before! That’s right, treat them like a real customer.
3. After the talk, ask if there is any additional information or specifics that your team should know as you work through this current case.
4. Use this script to end the conversation: “I wanted to thank you again for the opportunity to work with you on this file and work together to provide a smooth buyer experience. And before I let you go, what refinancing files are you currently working on so you can give me the opportunity to handle them for you?’

Let’s look at the simple reasons why this works so well.

1. They have never been thanked on a purchase file before.
2. They were treated like a real customer, which removed their sense of inferiority.
3. Most lenders currently have some low-level refi activity.
4. Because we are on the edge of a refi market, where their low volumes are less important, you get the opportunity to be consistent and build a good relationship.
5. You’re the only one who intentionally talks to them.
6. You asked for the order. They respect that.

This process immediately starts the pre-market positioning It was necessary to have good working relationships with your active local lenders in your market and to align you to see incremental and potentially radical refi growth as each of your well positioned Lenders’ customers see their activity increase as interest rates fall. Also keep in mind that these same lenders will likely see more loan purchases as interest rates drop and the buyers they warmed up can now qualify. Win! Win!

The choice is quite simple and you are really the one in control.

Shall You make this extremely simple positioning initiative? Or do you play the most traditional reactive role and wait until the prices are lower, the blood is in the water and all the noise just creates another race to the bottom?!

Darryl Turner is the CEO of The Darryl Turner Corporation.

This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners.

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