Why Every Agent Should Refer Their Clients To An Independent Title Company: Part 2
Guest contribution written by Alex Craig, a real estate agent based in Lansing, Mich.
Anything but independent is anti-consumer
In the first installment of my series, I made the moral argument that as Realtors® we agreed to a code of ethics, while affiliated business arrangements and joint venture relationships are damaging to the credibility and image of a Realtors®. These arrangements make us look like we are profit-hungry.
I’m always cautious to argue on moral grounds. Here are two more reasons why it’s best to avoid these damaging relationships, the first of which I will explore in further detail today in the second part of our three-part series.
- Anything But Independent is Anti-Consumer
- Superior Customer Service and Products
Most real estate brokers will sell joint ventures as very “consumer-friendly.” They do it under the guise of convenience and being a “one-stop shop.”
Anything but an independent title agency is often anti-consumer. In 1974, Congress passed the original Real Estate Settlement Procedures Act, or RESPA, in an effort to improve disclosures of settlement costs and to eliminate abusive practices in the real estate settlement process.
By referring an independent title company that is not bound by an affiliated business arrangement, you eliminate potential conflicts of interest for your buyer.
It is common for real estate agents to receive higher commission splits with their real estate broker by referring your real estate transaction to their “in-house” title company.
This is a conflict of interest for you and your buyer. Here’s my question to you: Are you recommending a title company because you want your commission to be higher or because you genuinely believe this is the best title company for your client?
By having independent groups working on your transaction, you establish a system of checks and balances, working in favor of your client.
With affiliated business arrangements, who supervises the title company? The referral source does (i.e., the real estate broker). That means a client gets what the broker wants, whether that’s good for your client or not.
To me, this is all anti-consumer. There are too many competing interests. And we lower the checks and balances of a real estate transaction — exponentially increasing the likelihood something goes wrong.
If avoiding a conflict of interest on behalf of your client isn’t reason choose an independent title company over the “in house” option, consider your client’s closing experience.
Independent title companies don’t count on a stream of referrals from the affiliated business arrangement or joint venture. They instead count of the quality of their service and products to drive revenue and profit, which I will explore in further detail in part three of this three-part series on reasons to choose an independent title company.
choose independent, homebuying, real estate agents, RESPA, title company