Can A Real Estate Agent Own A Title Company?

Can A Real Estate Agent Own A Title Company?

October 22, 2020

It’s common for real estate professionals to dip their hand in more than one pot. We all want multiple streams of income, and why not keep it within the same industry – the industry you have the most knowledge in, right?

It could be beneficial but proceed with caution.

For example, could a real estate agent own a title company? Yes, absolutely. But, there are certain lines you must not cross to avoid accusations of unfair treatment.

So what’s the best way to make both work? 

Keep Them Separate

Combining services crosses the line between helpful and profitable. How do sellers know you have their best interest in mind when you cross-sell them – meaning you work as their real estate agent and title agent?

The lines blur and clients don’t know which party is being most honest. Are they getting the ‘best prices’ on title work or are you just saying that to get them to use your title company? If you use both your real estate services and title company services, make sure there are clear boundaries.

Don’t Pay Referral Fees

If you operate a real estate brokerage, don’t pay your agents a referral fee for using your title company. Only those who ‘do the work’ should get paid.

In other words, only those who perform the actual title services – title search or issuing insurance should receive payment. Referral fees are a way to lure people in without letting them choose or letting agents decide what’s best for their clients.

Follow The Laws In Your Area

No matter where you operate, have appropriate disclosures, policies, and procedures in place. Know what you must tell your clients and other agents. Be sure to follow the REALTOR Code of Ethics and discuss any formalities with your attorney.

How To Be Successful At Both Jobs

If you own both companies, do your best to provide the following:

  • Have a distinct code of ethics that all employees and clients have access to
  • Let clients shop around, using your title agency as one option, but let them see what else is available
  • Provide superior customer service no matter which business you’re operating
  • Operate with an open door policy, letting clients know you own both companies
  • Be open about costs, referral fees, and any other compensation that may affect the client
  • Clearly define the roles, especially holding escrow funds as there could be favoritism toward your client

Should You Own A Real Estate Company And Title Company?

While you can own both a real estate company and title company, the real question is, should you?

If you can separate the businesses, so that there’s no favoritism or push to only use your title company, it can be a lucrative way to increase your income. If you can’t separate the roles, or will push clients to use only your title company, though, it could leave you with less than optimal results. 

You want to earn the trust of your clients and doing that means operating as their fiduciary. Yes, you want to make a profit – everyone does and most people know that about real estate. But, you also want to operate within the lines, without sacrificing your client’s trust. Walk the fine line carefully and you can make the most of both businesses. 

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