Real Estate, Financing, Title, Insurance: All Under One Roof By David Fryxell
The real estate industry has been talking about integration of services for quite a few years. Today, most of the nation’s top brokerages now include mortgage and title services alongside their real estate product offerings. As broker/owners appreciate the higher profit margins typically realized from providing customers with one-stop shopping, services once described as ancillary have become core.
But having mortgage, title and insurance in place to complement the real estate transaction doesn’t translate directly into an integrated real estate experience. In fact, some broker/owners say they’re frustrated by a “silo effect” that doesn’t serve customers as intended.
Creating an Integrated Culture
HomeServices of America CEO Ron Peltier has been a leader in innovating an “anti-silo” culture that truly moves the customer’s experience toward a simplified real estate transaction. Peltier’s passion for an integrated real estate experience long pre-dates the growing industry buzz. “It’s a strategy that we innovated back in the early ’90s,” says Peltier, who at the time was CEO of Twin Cities-based Edina Realty. “We really began to believe that the industry—and consumers—had shifted, and the home-buying process had become more complicated. We felt like we were in the best position to help facilitate consumers through the whole process, from contact to close.”
And HomeServices’ mortgage capture rate percentage, now in the high 30s—well above the industry average—validates HomeServices’ commitment to its integrated services value proposition. Peltier anticipates a capture rate percentage in the 50s in the foreseeable future.
Since the early 1990s, many things changed, but Peltier’s philosophy didn’t. “We still clearly want to be at the center of the consumer’s decision-making as it relates to brokerage, mortgage, title and casualty insurance, Peltier says. “We think those are the four components critical to the real estate transaction.”
Peltier says the financing component of a broker/owner’s integrated real estate platform can be especially attractive for customers. “It used to be just the real estate channel where consumers started the process,” Peltier explains. “But just to show how the mortgage component has risen to a more elevated position in the mind of the consumer, a lot of them now say, ‘I don’t want to go look at houses until I see what I can afford.’ But we’re confident about our position and our value proposition, and we’re telling the buying public that we’re not just real estate—we’re mortgage, too.”
‘Connecting the Dots’ for Customers
Also at the forefront of evolving the business model has been Joe Jackson, head of Wells Fargo Ventures, a division of Wells Fargo Bank, N.A. Jackson has been a longtime proponent of “connecting the dots” for customers throughout their real estate transactions and the consumer buying lifecycle. “Over the past 12 years, we’ve become experienced in blending the sales cultures of our strategic alliance companies,” Jackson says. “Instead of having a separate mortgage culture, we’re more focused on providing customers with a team of experts who work side-by-side in the same office, all on the customers’ behalf.”
Jackson says that Wells Fargo, like HomeServices, had the foresight to recognize and invest in the concept of one-stop shopping enabled by strategic alliances long before it became one of the industry’s most significant trends. “Our joint venture strategy focuses on helping broker/owners increase their long-term economic value by better serving their agent and customer needs,” Jackson says. “It’s a complement to the broker/owner’s integrated services model.”
Rewriting the Business Model
Peltier says that a successful integration of real estate services is dependent on the level of commitment from both sides to create change from the inside. “We’re helping rewrite the business model of the future,” he explains.
Already well-established among early adopters, this integrated real estate services philosophy continues gaining momentum in the industry. In fact, the latest Harris Interactive survey, conducted on behalf of RESPRO, the Realty Alliance and Murray Consulting, indicates that 84% of home buyers surveyed say they would prefer a one-stop shopping experience if they buy again in the future.
“Buyers are saying, ‘Make it easier for me—not more complicated,’” says Steve Murray, CEO of Murray Consulting. “And when a broker/ owner commits to serving customers every step of the way, there’s a huge upside for the broker/owner in having more control over the key components throughout the transaction.”
But fully integrating real estate services requires a true culture shift. “A ‘build-it-and-they-will-come’ attitude just doesn’t work,” Murray says. “But making the customer the sole focus of a companywide business philosophy helps get everyone marching behind the same banner and invested in making the team of services work. This kind of shift requires experience with the business model.”
Wells Fargo applies this philosophy when staffing its strategic alliances. “It is essential to hire loan officers who understand they are part of the bigger team that focuses on the family of services customer,” Jackson says.
Team with the Best Talent Wins
J. Lewis Glenn, president of Atlanta-bas-ed Harry Norman, Realtors, among the nation’s top real estate firms in terms of closed dollar volume, credits the experience and expertise of his on-site financing, title and insurance specialists with the successful integration of services at Harry Norman. “When we first formalized our family of services, we knew we had to go the extra mile,” Glenn says. “We quietly and gently introduced it in the offices, and worked the team into sales meetings and really focused on education. We knew we had to earn the business—and we did.”
Glenn reports that over the past several years, he has seen that his mortgage, title and insurance joint ventures, which include Academy Financial Services, the alliance with Wells Fargo, become an interconnected team. “When we say ‘family of services,’ it’s not a cliché,” he says. “Mortgage, title and insurance are part of the fabric of our office.”
A Companywide Customers-First Philosophy
Jim Rose, CEO of Rose & Womble Realty Company based in Virginia, ranked in the country’s top real estate firms, was a very early adopter of a companywide customers-first philosophy. “We try every day of our life to be as consumer-centric as we can be,” says Rose, whose One-Stop Resource Advantage program includes Advance Mortgage Company, a joint venture with Wells Fargo. “Going all the way back to 1999, when everyone first started talking about one-stop service, we were listening. We heard loud and clear when consumers said they wanted the convenience of having everything under one roof.”
Rose & Womble’s commitment to offering customers real estate, mortgage, title and insurance services has even been integrated into its logo, with the tag: “A Family of Companies.” “We’re not just another real estate company—we do it all,” Rose says. The company’s success reflects its philosophy: Rose reports a 2005 mortgage capture rate approaching 30%, 40% in title and a growing conversion in insurance.
Rose & Womble’s team of services also extends to its Concierge Home Services Program, in which customers can select from four different warranty companies and take advantage of exclusive offers from preferred vendors providing security systems and cable service.
Industry research supports dedication to providing a full menu of services. For example, industry analyst Weston Edwards’ final work, published in fall 2005, said 72% of
customers surveyed have used additional service companies referred to them by their real estate agents.
Rose & Womble’s strategy is in line with Edwards’ findings. And notably, Rose emphasizes that his company’s concierge services are clearly connected with a customer’s sales associate, to avoid confusion. “When anyone talks to a customer about our concierge services, we make sure it’s understood that we’re calling on behalf of the customer’s sales associate. We even try to say that three times in a conversation.”
Real-World Perspective
At the branch level, an integrated real estate services strategy becomes a differentiator. “Agents who have the support of an in-house loan officer have a far greater advantage,” says Jane Healy, associate broker and officer manager for Long & Foster Real Estate’s Blue Bell, Pennsylvania, office. Long & Foster is the largest independently owned real estate company in the United States.
“They’re a tremendous support and help to keep the buyer comfortable.’’ Healy says in her fast-paced market, having real estate, financing, mortgage and title under one roof offers a competitive advantage.
“Agents have to keep in balance the awareness of what is happening in the industry,” she says. “Consumers are inundated with information—from cell phones and Blackberries to TV. Having mortgage, title and insurance all under the same roof keeps us on the cutting edge of day-to-day information. We’re never behind the curve.”
Healy says she appreciates the “tremendous support” of others in her team of services, including Prosperity Mortgage, the joint venture between Long & Foster and Wells Fargo. “I really do depend on our in-house loan officers as a resource,” she says. “When we all work together to give customers the highest quality experience every step of the way, it benefits all of us—particularly in a changing environment.”
Bob Frazier of Prosperity, whose team works with agents in Healy’s office, says he appreciates the substantial upside to working in the same office with agents and title and insurance specialists. “The customers like to know we’re communicating with each other,” he says. “There is power in working side-by-side.”
Frazier explains that he also recognizes the support of the Long & Foster team, including Healy. “Support from within the real estate office makes our group more cohesive, and communication just comes easier and more frequently,” he says.
The Prosperity Mortgage capture rate in Frazier’s Long & Foster office is about 30%, but Healy and Frazier anticipate moving it to 40%.
Focused on the Future
Wells Fargo’s Jackson also notes how a team of services can offer strengths in a changing environment.
“Broker/owners, especially those with experience in a successful and profitable joint venture, are seeing how integrating real estate services increases the bottom lines of all the components,” he says. “And with the National Association of Realtors’ chief economist forecasting a decrease of 4.75% in existing home sales and 8.5% in new-home sales, it’s a good time to keep focused on innovation. The downstream effects of creating a family of services includes a buffer against market changes. It’s a win for broker/owners, agents and customers.”
Peltier sums up the value of innovation: “At the end of the day, our job and our value is imparting insight and intelligence to consumers. If you ask the customer what do they really want, they say they want to own their home. The real estate transaction, the financing, the title and casualty insurance are stops on the road to owning their home. Our job is to make each stop smooth and aligned.”
Creating a Customer-Centric Real Estate Services Company
Broker/owners aiming for a true integration of their real estate, finance, title and insurance services zero in on creating a common, customer-centric culture with shared goals, coordinated business plans and marketing strategies. Industry consultant Andrea Zimmerman shared strategies and tactics that have been successful in evolving a one-stop shopping/simpler customer experience, based on her experiences in working with industry leaders who have embraced the concept of one-stop shopping.
For Agents
• Consistent, deliberate messaging from real estate, mortgage, title and insurance entities to help agents internalize the value of their in-house services. It’s the “what’s in it for me?” and “what’s in it for my customers?” value proposition.
• Agent/manager compensation structures and education to help make clear their role in the promotion and support of in-house services and to give them some “skin in the game.”
• Real estate management support from the broker/owner to office managers and throughout the team via group and one-on-one meetings.
For Business Groups
• Training initiatives to help each service appreciate their interconnectedness in enhancing the customer experience and meeting agents’ needs.
• Mortgage, title and insurance management and sales compensation structures that help properly balance their focus on capture of internal business relationships vs. external business relationships.
• Initiatives that create team focus and make it clear that all services are part of the team, including coordinated global and office level business planning, goal setting and team-building activities.
• A clearly communicated mission and vision for the organization that helps all business groups understand their collective importance to the bottom line and ongoing success of the company.
• Target agent plans that focus mortgage title, insurance and agent managers on tactics to approach each agent.
For Customers
• Direct-marketing activities that explicitly help customers understand the value of selecting real estate, finance, title and insurance services all under the same roof.
• Embedding family of services values into the real estate lead-management processes. |
