Why Is Outsourcing The Strategic Tool for Title Companies Growth?
Don’t put all your eggs in one basket. The saying goes, trying to warn us against relying on just one source of success.
But what does that have to do with you and your business?
When was the last time you didn’t have to stress over the documents you need to close on a property? When was the last time you weren’t dangerously close to a deadline and had to pay for the HOA rush fees?
If your answer is “a long time ago,” congratulations, you’re a total rockstar; carry on!
But if you’re like most title and escrow professionals, you probably vividly remember the last time chilling sweat drops formed on your forehead while you went back and forth between your clients and HOAs, trying to get the paperwork in on time to close.
That’s what putting all your eggs in one basket looks like.
Then, how do you carry your eggs from one place to another without breaking them? You transfer part of the eggs into someone else’s basket. You outsource.
Outsourcing–Rooted in History, Driving Progress
Throughout history, outsourcing has been a tool for expanding explorational, operational, and cultural capabilities.
From the time of the Industrial Revolution, factories in the States would outsource the sourcing of raw materials to India and processing to Scotland until they could finally produce a product with high quality and lower manufacturing costs.
Even though it was only in the 1990s when outsourcing was finally recognized as a profitable business practice, owners and managers have long been tasking emerging service providers to execute work instead of the companies’ internal teams.
Often related to jobs in which the company didn’t have specific expertise, outsourcing roles varied greatly but included accounting, human resources, data processing, and security. These roles are still outsourced by many companies looking to optimize and cut costs.
But today, outsourcing is undergoing a transformation.
Powered by technological developments, like the use of AI and machine learning, emerging service companies position themselves as the partners that deliver “the” solution to markets overwhelmed by countless time-consuming and repetitive tasks. Tasks that otherwise stunt the company’s growth.
With the promise to lessen the burden of internal operations, tech-savvy startups aim to shoot straight for long-term strategic partnerships, offering business remedies on the way there.
But how useful is outsourcing actually? And is it worth your attention?
According to the numbers, yes. According to Future Market Insights (FMI), adopting technology-based real estate solutions and services will likely drive the Proptech market’s growth. In fact, FMI predicts the market to reach approximately USD 48 million by 2033.
Here’s what other real estate professionals have to say on the topic of outsourcing.
The Case for Outsourcing
Before diving into how useful outsourcing can be for your business, let’s look at what experts say.
In 2018, a KPMG survey of more than 100 senior real estate professionals came to the conclusion that the market tended to lean towards outsourcing. The survey found that about 84% of the respondents outsource tax preparation and filing, generally to accounting firms.
When asked about it, Phil Marra, National Real Estate Funds Leader at KPMG LLP, said this:
“Providers are adopting different strategies, either through lift-outs or organic growth, to create a scalable business and capitalize on the needs of a growing marketplace,” “The building of scale allows fund administrators to reduce the cost of delivery and make investments necessary to manage the complexities of expanding client portfolios.”
The sum up?
Outsourcing cuts costs and enables business expansion, and real estate professionals agree.
Now, here’s a breakdown of the top three ways you’d benefit from outsourcing in your title and escrow business.
1. Streamlining the Processes, Saving Time
Title and Escrow professionals constantly deal with time-sensitive tasks, often on multiple closings. And as experience shows, some of those tasks get disproportionately risky, for example, acquiring HOA documents.
In fact, when asked, many title and escrow professionals share they entrust part of their work to an outsourced technology provider. The Title Report’s March edition of the “Voice of The Title Agent” found that about 65% of the surveyed professionals can’t live without their title production system.
Dealing with HOAs often turns out to be a massive headache, as it opens vicious loops of back and forths that take a needlessly long time to close. From finding all related HOAs, requesting the appropriate documents, waiting for a reply, receiving, reviewing, finding out something’s wrong or missing, and starting the process all over again, sometimes several times. It all sounds like another week of work piled on top of your already thinly stretched closing timeline.
Is that extra work something you’d benefit from sparing? We dare say, yes, you would.
And that’s what outsourcing is meant to help with—shifting the focus of the team from the fringe back to the center of the business. In Real Estate, that means going back to building relationships with clients.
But of course, that’s not all.
Most work outsourced in the United States is non-core, or the business lacks expertise. But that work is often an integral part of that business, and no owner or manager can afford mistakes.
So what do you do in that case?
You find a partner with the knowledge and the tools to help you run your business smoothly and free of errors.
2. Getting It Right the First Time, Accuracy, and Reliability
Taking our early example, let’s look at the implications of incorrect or outdated HOA documents.
Imagine this, your team is working tirelessly to obtain all property closing documentation on time, and everyone is handling too many tasks at once to be able to pay close attention to all. You get the HOA documents, but no one’s noticed they’re outdated or there is an error. You go on and close on the property, but now these issues start to surface, potentially leading to legal disputes, additional financial costs, and reputational harm.
Could all that have been avoided? Yes, it could have.
And yes, the solution here is outsourcing. When you find a partner that has built a reputation for leveraging expertise to deliver accurate documents on time, you can have a breather. You can delegate tasks that would otherwise cause you to stress relentlessly and potentially damage your reputation.
And if you’re still hesitant about outsourcing and its potential implications on your business, consider these 3 points.
- Outsourcing brings expertise at a fraction of the cost of hiring someone internally to do the same work
- Outsourcing is less about fragmenting your operations and more about consolidating your position in the market
- Outsourcing is NOT a way to replace your existing team but a business scaling tool
Outsourcing has strong roots in American business history for yet another important reason. It’s economically viable for Title and Escrow companies that take advantage of outsourcing and those providing those services.
3. Save More Than Just Money, Be an Active Economy Player
First thing, yes, outsourcing is a way for you to show financial savviness. However, outsourcing isn’t solely about financial savings.
It’s a dynamic business strategy fostering economic growth, innovation, and resilience. When Title and Escrow firms outsource, they’re not just cutting costs but contributing to a broader economic ecosystem, nurturing business relationships, creating jobs, and stimulating market sectors outside their immediate sphere.
This ripple effect underpins a thriving, interconnected business community where resources, expertise, and opportunities circulate to fuel continuous growth and prosperity.
In this realm, every strategic move you make extends its impact far beyond your balance sheet, redefining your role as an active participant in bolstering the economy’s health. And ultimately bringing more business your way.
To Wrap it Up
Outsourcing is a strategic move that ensures every task, especially the ones outside your team’s expertise, is handled with precision and efficiency, mitigating risks that come with overloading your internal team.
It helps you carve paths for your firm’s growth and makes you an active contributor to a larger economic landscape. It gives you back the focus on finding that thing that differentiates your business from the hundreds of thousands of other real estate businesses in the United States.
If you have an entrepreneurial spirit and want to scale your business, you’ll consider looking for a partner who can carry some of your eggs in their basket.
This is a huge win for us – so THANK YOU for all you do!"