April 20, 2008
Technology fuels agency’s ability to capture attorney business
Why would a company invest 50 percent of its profits in developing Web-based tools that it gives away for free?>
While technology isn’t the only unique aspect of New York City-based TitleVest, company President Bill Baron admits it’s been a top priority since the company’s inception in November 2000. That’s when Baron got the itch to start a title company after 12 years as a real estate attorney in the Empire State.
“We aren’t always in a growth mode, but our investment in technology has been substantial for many years,” he said. “Our software provides tools for a variety of needs that our target market requires.”
Over the past eight years, TitleVest has developed several proprietary online tools that automate many of the processes of transacting real estate in New York including: Closing Cost Calculator, Legal Form Generator and ACRIS ASAP. TitleVest also provides an order placement and tracking system for its clients.
In New York City, there is a requirement that all real estate conveyances include a series of six legal forms in order to transfer real property and co-op apartments, which are a huge component of properties for sale in New York.
To create the software, TitleVest identified the minimum amount of data required for submission to the city’s Department of Finance and created a simple one-page Web form. When the user has completed the ACRIS ASAP form on TitleVest’s Web site, the data is automatically transferred to the city’s ACRIS site. In about one minute, the transfer documents are generated and posted as a PDF file attachment to TitleVest’s Web site with a user-friendly interface for future retrieval and revisions. Historically, the forms required an attorney to enter the information into each form, but this software auto-populates the information to the other forms. Baron said the company spent more than $100,000 for the interactive PDF ability and spends tens of thousands each year on maintenance and support.
“Our software created a lot of buzz and in many cases results in the users of our online tools to place business with us, including title insurance, 1031s and co-op lien searches,” Baron said.
Complying with the New York City Department of Finance’s requirements is a two–step process: the creation of the E-Tax forms and the cover pages. While the E-Tax forms must be created before closing, the ACRIS cover pages must be created on or after the closing date and be dated as of the closing — this can be cumbersome and often leads to closing delays.
“In our sometimes hectic world of residential real estate transactions in New York City, what we look for in a company that we work with regularly is not only professionalism, but efficiency as well,” said Peter Graubard, attorney with the law firm Graubard & Nihamin in New York City. “TitleVest exhibits unparalleled customer service when needed, but because of their unparalleled Web site and technology, talking to an individual is rarely necessary.”
Baron added that TitleVest also has proprietary technology that alerts clients when any real-estate related document is recorded, similar to Uniform Commercial Code functionality.
“We do courtesy recordings, typically when there is no insurance,” he said. “It’s not a lucrative business, but this is just another service we can offer and make a profit. More importantly, we create good will with our clients and that leads to additional higher-ticket business.”
The other main purpose of investment in technology was to automate the company’s internal operations, enabling TitleVest to operate more efficiently from a cost and quality control basis. While Baron said the company’s software lacks the bells and whistles of SoftPro or RamQuest, the ability to perform the tasks required of its clients proves more beneficial. Because TitleVest doesn’t maintain a sales force, it’s dependent on clients to drive business.
“Our growth is based in large part on our existing clients’ word-of-mouth recommendations to their colleagues,” Baron said. “We get new clients on an almost daily basis. Our growth is viral and in large part word of mouth buzz. The attorneys on the other side of the transactions are highly targeted as future clients.”
By meeting the needs of its attorney clients in New York, TitleVest has been able to expand into New Jersey and Florida. Earlier this year, the company opened two new offices — one in White Plains, N.Y., and one in Short Hills, N.J. The company now has four offices and employs 40.
Baron said the company is looking to add additional employees to handle the volume of business, adding TitleVest has about 10 real estate professionals registering on its Web site each day. “We are overwhelmed by the opportunities we are leaving on the table. We are looking for people that can help us pursue other possibilities. Not by pounding the pavement, but to talk to people who have come to us,” Baron said.
While TitleVest closes a few hundred transactions a month, the company does significant business in the co-operative market, which makes up roughly 80 percent of the residential market in New York City and accounts for more than two-thirds of Manhattan apartments. According to New York-based real estate appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate, the median price of a Manhattan co-operative apartment or condominium increased 13.2 percent to a record $945,000 in 2007.
Co-op residents buy shares in a corporation that owns the building, rather than having a deed to the property itself. While title insurance can be purchased on a co-op, most, however, get closed with an uninsured lien search, which cost about $350. In the early 1990s, the Title Insurance Rate Service Association created an endorsement to the standard title insurance policy that would cover co-ops. First American received approval for its Eagle 9 U.C.C. Co-operative Interest Insurance policy for co-op buyers in 2006. Neither have really caught hold in the market. Both cost significantly more than a lien search.
TitleVest, which competes for these lien searches with Modern Abstract, a subsidiary of First American, receives about 30 to 40 lien search orders a day.
“We have already done the underlying title searches for the vast majority of lien searches — we have a vast data base of back title searches for thousands of co-op buildings — so our incremental cost to process each order is fairly small. That enhances the profitability,” Baron said.
Besides the title company, TitleVest also operates 1031Vest, a qualified intermediary for 1031 exchanges, and Vest Insurance Brokerage, a full-service property and casualty insurance brokerage. Baron said TitleVest has found its largest source of P&C business has been on commercial lines, writing professional liability, business owner and auto insurance policies for their clients.
“It’s not that we are writing home ownership insurance on a large percentage of the title transactions we handle,” he said.
Interestingly, TitleVest taps six national underwriters to conducts its business. The company utilizes First American, Chicago Title, Fidelity National Title, Stewart Title, Commonwealth Land Title and Old Republic National Title. Baron said having so many large nationals facilitates the ability to resolve title issues.
“On a regular basis, there are issues that will delay a closing indefinitely or may result a title underwriter declining to insure a property or issue,” he said. “This allows us to go to an underwriter and expedite the clearance by having a relationship, or we put the deal that has these difficult title issues through a particular underwriter that has previously insured the property. So if an underwriter is on the hook, in most cases they will reinsure it on a subsequent transaction.”