From ordering food to shopping for homes and cars, consumers have moved dramatically toward online channels. In turn, companies and industries have responded, and real estate is no exception. It’s an exciting time for the real estate and title industries. Modern technology has made the closing phase transparent, highly efficient, and remarkably less stressful than ever before.
Whether due to advancements in technology or a desire to better serve your clients, perhaps you’re wondering if you can own a title company as a real estate agent. In short, the answer is yes. There are two ways of going about this: creating your own title company from the ground up or forming a joint venture with an established title company.
Building a title company from the ground up
First, for building a title company from the ground up. This is the more complicated approach of the two options. While the legal requirements to open a title company varies from state to state, the basic steps are as follows.
- Understanding your state’s insurance requirements. There will likely be requirements for licensure, education, insurance, and financial requirements.
- Passing a licensing exam
- Carrying a fidelity bond and/or surety bond and Errors and Omission insurance to ensure your title company can fulfill financial obligations to your clients should something go wrong
- Forming a company entity and applying for an Employer Identification Number
- Choosing a qualified underwriter. The title underwriter is responsible for checking the title and ensuring that ownership rights to a property can be guaranteed.
- Applying for a business license.
If all this sounds complicated or cumbersome, it's because it can be. The title industry can be complicated to those without experience. Plus, you shouldn’t have to worry about understanding the details of the title process. You should be able to focus on what you do best: buying and selling homes. Fortunately, there’s another more straightforward option.
Forming a joint venture with an experienced title company
Many real estate agents and brokerages form joint ventures with title companies. In this case, a real estate agent or brokerage enters a business relationship with the owners of a title company. This creates one-stop shopping and a more streamlined and cost-effective closing for your clients. The Real Estate Settlement Procedures Act, or RESPA, allows for these affiliated business arrangements. For instance, when an agent or brokerage partners with Expetitle, we create a new and fully legal LLC. The agent or brokerage then owns a portion of that entity, allowing them to share in the net operating profits of the new title company.
By creating a joint venture, you’ll have more control over your closing processes. Expetitle’s tech-forward solution allows you to stay connected and in the know on all closings happening under your brokerage using one system, with real-time updates.
Additionally, your clients will be happier. Expetitle’s state-of-the-art platform connects all parties in one user-friendly, accessible, and organized application to make the closing a painless experience. So if you’re ready to extract more value from the home closing process, then it’s time to own your own title company because, yes, you can.