Real Estate Zealot

Understanding Title Companies and Affiliated Business Agreements

Dan: Today, we are talking with Mark Eibner, principal of Meridian Title and Escrow. Mark, thanks.

Mark Eibner: Pleasure to be here Dan.

Dan: Yeah. Well, let's talk a little bit about the title business because I am sure your average consumer doesn't know an awful lot about it and I also want to talk about ABAs, affiliated business agreements and so forth. First, let's talk with ABA. What is it?

Mark Eibner: Well, an affiliated business agreement is just another unique way of doing business where actually the owners or the shareholders are in fact people that are doing business as real estate brokers or mortgage brokers. So, it is really no different than a traditional title company experiencing the fact that you are either a corporation or an LLC. It's just that in this particular case your closely held participants are owners in the company.

Dan: All right. Let me give people an example. I am a realtor, I could own a portion of the title company, correct?

Mark Eibner: Correct.

Dan: That's how that would work?

Mark Eibner: Umhum.

Dan: But I have a buyer or a seller, I am representing one of the two and I direct them to business in my title company; is there a problem with that?

Mark Eibner: No problem with that at all. In fact it is done quite frequently and in fact in most parts of the country, ABAs are used on a regular basis. I think where people run into problems is let's just take ABA or AfBA title companies where the single entity company owns it like ABC Real Estate Company and they actually force or persuade their brokers to use their title company when in fact their brokers are not really owners in the organization. I think that's how most people see ABAs, not a traditional... in an ABA like ours, all the shareholders are actually real estate brokers or mortgage brokers.

Dan: What does the Colorado Real Estate Commission think? Do they say something to the effect of you need to disclose to a seller or buyer that you are directing them to use this title company and I own a share in it?

Mark Eibner: Well, actually that's regulated by our friends at RESPA.

Dan: Okay.

Mark Eibner: And absolutely you have to in fact inform buyer's and sellers on every transaction that you in fact are part of an ABA, you could make a profit, may not make a profit, but you have to give disclosure, yes.

Dan: And you can say to Mr. Buyer or Seller, the reason why I am sending you here is because given our model and structure, we can provide lower rates, lower fees, lower cost and if you don't want to use that, this title company, you are free to go pick whatever title company you want, correct?

Mark Eibner: Yeah, absolutely. I have all my clients sign what we call good faith title estimate, which can be obtained through mytitleins.com and it simply basically lists each for the transaction [music] mortgage is, what the payoffs are etc., how old the existing title's policy was, what the cost is going to be for the buyer, what the cost is going to be for the seller, and lo and behold nine times out of ten Meridian Title and Escrow is usually at least between first, second or third lowest on a cost structure.

Dan: All right. Well, because you have owners who are realtors and other people, mortgage lenders and so forth as part ownership, does that model lend itself to having lower rates in fees for people?

Mark Eibner: Well, I think it absolutely just simply because in most cases you are not really paying title reps, you are not paying all the marketing fees, all the advertising, all the myriads of let's just say marketing schemes that traditional companies, title companies use, just to get you to use their title company. Instead all that marketing money is put aside and in fact you are in fact the best rep for the title company itself and if there are dividends paid to the shareholders, quarterly in our case, then that's usually a result of the fact that we were not having to compensate the traditional marketing and the traditional marketing reps.

Dan: Mark, good information. Thanks. Appreciate it.

Mark Eibner: You bet. Thank you.

Title Insurance Rates and Transparency in the Title Industry is Becoming More Available

Dan: Today, we are talking with Mark Eibner from Meridian Title and Escrow and Mark is one of the principals of the company. Welcome to the show.

Mark Eibner: Thanks Dan.

Dan: Glad to have you here.

Mark Eibner: You bet.

Dan: You know as a realtor, when we are talking about title, you know I have to admit I am thinking, "Okay, title insurance rates, could they vary that much?" but I guess they do.

Mark Eibner: Oh, absolutely. I think the rates that are posted up... I think the real issue is that most agents, most consumers really don't have the time or even the expertise to go online up to the Department of Insurance, check out all the posted rates, check out all the posted fees, you will find if you do that all x amount of[Phonetic] counties in the state of Colorado have different rates from county to county. It's just not the seven state or seven county [Inaudible]. So, there is a huge variable in the published rates that are up in the Department of Insurance site.

Dan: Now, in the past, the rates used to vary widely, but now they are getting much tighter and more competitive, why?

Mark Eibner: I think things are just getting tighter simply because of sites like say mytitleins.com. It's a site that has been on for a couple of years now and it is really putting a little transparency out there for the consumers and actually for the real estate brokers and I think real estate brokers are actually becoming a little more in tune with actually looking out for their clients, being an advocate for their client versus perhaps in the past being an advocate for the guy that gave them free brochures.

Dan: Yeah. Let me see if I understand this right in that there is an agency that governs the rates and then an independent title company takes that rate and then they can add a little fees and things like that and that's what comes up with the disparity in rates?

Mark Eibner: Well, there is no agency in our state here, there is no one that regulates rates.

Dan: Okay.

Mark Eibner: In fact, an underwriter, a national underwriter, could publish for any county any rate they wish and that goes for escrow fees too, anything would go out there effectively when a company files new rates or there is a 30 day period where the consumer could object or question, I would like to see how many times in the last 20 years that any consumer has ever been online and looked at the published rates of a national underwriter and complained to the Department of Insurance. It just doesn't happen.

Dan: So, the difference comes in the fees?

Mark Eibner: Correct, the fees. See, in states like Texas where they have promulgated rates, that is a state where all the rates are regulated by [music] so, once a year, they do get together, they look at losses, claims, underwriting fees, everything, the state decides for x amount of thousand, this is what every title insurer is going to charge. In our state, that is not the case. It's kind of free and wide open and rates can vary, in fact, we re-file even on a monthly basis if that's what you wish to do.

Dan: All right and in the past, it was always thought that the seller picked the title company and that the buyer, poor buyer, didn't have a decision in the process, but as a realtor representing a buyer, you could actually advocate on behalf of your client and write into the contract, "Okay, we are going to offer x, y, and z, but we would like to pick the title company."

Mark Eibner: Yeah, absolutely, if you actually read the contract now, it states that the buyer has a right to choose the title, because we have got two sides to the policy, we have got kind of the seller's side and the buyer's side for what they are paying if they are getting a mortgage. The problem is when the buyer goes and maybe makes a choice of title insurance with another carrier, then they... then their listing agents, underwriter that they are using is you are not going to get the benefit of the simultaneous issue of the rates. So, it's going to in that case actually end up costing the buyer more, that's what... in real life, that's perhaps what the real estate commission ignores is yeah, the seller can buy their title insurance, the buyer can buy their title insurance, but in general the buyer is going to end up paying more money because he is not getting that simultaneous issue rate as the seller has.

Dan: All right. Last question, why do business with Meridian Title and Escrow?

Mark Eibner: Well, I think Meridian Title and Escrow is... it's one of the... it's a newer model ABAs or actually you would be surprised, they have been around for what? 17-20 years now; in a lot of states, very prominent because the model itself leads to transparency. In other words, more than likely the broker that you are dealing with is an owner, more than likely perhaps even the mortgage broker you are dealing with is an owner. They have the transparency and really the ability to choose in our case with Meridian Title and Escrow three different underwriters. So, instead of being married to one particular underwriter, that has a limited reissue rate, okay, you can go and make your selection on each transaction and if you need to have an underwriter that has a 10 year reissue rate, then you go with the underwriter that has it, that's typically what we do, we go with the underwriter that offers the lowest rate to the consumer on that particular transaction.

Dan: And saves you money?

Mark Eibner: Saves... you bet, saves your seller money, it saves the buyer money. I highly recommend using the site, mytitleins.com. It actually will give a side-by-side good faith title estimate for the buyer and for the seller. You would actually be shocked at how many times buyers are paying as much if not more than the seller in a transaction.

Dan: Mark, thanks. Good information. Appreciate it.

Mark Eibner: You bet. [Voice Cross Over].

Economic conditions increasing ABA title insurance company growth

BrokerIPTV: Today we are talking with Mark Eibner from Metro Brokers Realty Oasis and we are talking about affiliated business relationships and so forth. How are you?

Mark Eibner: Great Dan.

BrokerIPTV: Now, of course you are the owner of Meridian Escrow and Title and Escrow, LLC. talk a little bit about how that all came about.

Mark Eibner: Well, I am one of many owners over at Meridian Escrow and Title. I think this was probably seven years ago we first started Meridian Escrow and Title and initially the company was owned as the top fundamental partners only with no broker ownership.

BrokerIPTV: Right.

Mark Eibner: Just a couple of years ago, we opened it up to get more broker participation within our own organization and brokers participating from outside real estate companies as well as mortgage brokers too.

BrokerIPTV: And how has that gone? How has that developed? I mean initially were some other realtors kind of reticent to join?

Mark Eibner: Well, I think it is just depends on the mindset you come from. What I am seeing is the economy is really making things happen. The AfBAs are really growing because people are... they are analyzing everything. Commissions are down. Transactions are down, but what I have seen is most of the brokers are more concerned about their being pushed to this by their clients because clients are becoming more aware that there are big differences in title insurance costs.

BrokerIPTV: Well, you mentioned the economy. What we are starting to see is contraction obviously. There are not as many title companies in business that used to be, they have laid off staff, whatever it may be, is that a problem with Meridian Title and Escrow and how have you been able to kind of survive these times?

Mark Eibner: Well, I think that's the magic of an affiliated business arrangement is the fact that the overhead is so much lower. The bricks and mortar part just isn't there. There is no lower, middle, and upper layer management. You don't have sales reps. I mean it's just the personnel and human power alone, the difference between say an ABA and a traditional title company is huge in what it costs. We also do a lot of on-site closings, at office closings, at people's homes closings, so the ability to maintain 20, 30, 40 locations and pay leases, it's just not there. We can hire staff up and staff down in a day.

BrokerIPTV: Yeah. I did the at home closing by the way and I liked it a lot.

Mark Eibner: Yeah?

BrokerIPTV: Yeah, incredibly convenient. Came to my house, signed the papers, they left, it's done.

Mark Eibner: That's very nice.

BrokerIPTV: All over. Profit - so obviously, it's more profitable because obviously you have got people bringing clients and business and you don't have an outside sales rep. Talk a little bit about how the profits are going.

Mark Eibner: We have been profitable from day #1. In fact, it's one of the few ventures that has been in the black for seven years. So, the ability to remain profitable also has another little caveat in the fact that we broke down our rate structure and where we get our premium from, over 80% of our premium dollars is from re-issue rate. So, literally, we are profitable even though we are doing title insurance premiums at 50% rates over say the traditional companies. So, we are still profitable even doing half rates. That's what we find amazing.

BrokerIPTV: Finally, if a realtor wanted to become involved in Meridian Title and Escrow, how would they do that?

Mark Eibner: I think the easiest thing to do is just go to the website, meridiante.com, just like Meridian Title and Escrow, and there is a e-mail contact us form on there, just fill it out or there are some phone numbers. You can call myself or John Clikeman, who is our attorney partner and we would be glad to talk to you and see if you qualify and if you want to become part of our organization.

BrokerIPTV: Mark, thanks. Great information. Appreciate it.

Mark Eibner: You bet, thanks Dan.

ABA title insurance agency Meridian Title and Escrow is consumer driven

BrokerIPTV Today we are talking with Kirby Smith, Metro Brokers Cherry Tree Properties. Welcome.

Kirby Smith: Thank you Dan.

BrokerIPTV Glad you are here and one of the topics we are going to cover today is affiliated business arrangements and you are with Meridian Escrow and Title, but you are also a realtor with Metro Brokers. Talk about how that all came about.

Kirby Smith: Well, I have been a Metro Brokers... I have in the real estate business for... since 1995. I have been a Metro Broker from that time forward. I have never really looked into affiliated business arrangements until I was confronted with the Meridian Title and Escrow company.

BrokerIPTV Opportunity. Also, a little back on your background we should tell people that you are the 2009 President for Metro Brokers. Congratulations.

Kirby Smith: Oh thank you.

BrokerIPTV What... what is involved there? Is it just a loft title or do they put you to hard work?

Kirby Smith: There is a lot of... there is a lot of time that goes into that and... but, you know Metro Brokers there is a lot of volunteers in the company, it is a volunteer run and we have an excellent staff as well. So, certainly, not alone.

BrokerIPTV Obviously a very strong company. So, great to be president of a company like that I bet.

Kirby Smith: Yes, it is.

BrokerIPTV All right. All the years that you have been in business, what were kind of the things that you heard about affiliated business relationships?

Kirby Smith: I hadn't... have really investigated affiliated business arrangements at all. I think there was a lot of misinformation out there that you know you had to be very careful and watch your step and I... so, I stayed away from them.

BrokerIPTV Yeah and so far the experience has been what? The exact opposite?

Kirby Smith: Oh, it has been absolutely the exact opposite, yeah.

BrokerIPTV And is it that much of a big deal with the consumer? I mean obviously you disclose to the consumer that you think they should have the title work done here and here is why and so forth, but I mean are they all caught up in the legality of it?

Kirby Smith: No. They are not. I mean we disclose that this is you know affiliated business arrangement, but the... it's a pretty easy thing to go... to talk about because they are saving a lot of money by using Meridian Title and Escrow.

BrokerIPTV And I imagine that's why you got into it because it was what? Rates and...?

Kirby Smith: Oh, absolutely.

BrokerIPTV And service?

Kirby Smith: Absolutely. Looking out for my clients to save them money and make sure that they are very well taken of.

BrokerIPTV Yeah. Talk a bit about some of the benefits like re-issue rates and things of that nature.

Kirby Smith: Well, you have a 10 year re-issue rate with Meridian Title and Escrow. That's big. Most people's mortgages never reach a 10 year mark and in some of the bigger companies, you will find that their re-issue rate might end at three years. So....

BrokerIPTV All right. So, your experience to say the least has been positive.

Kirby Smith: Absolutely.

BrokerIPTV Would you recommend other agents to get involved in you know an affiliated business arrangement?

Kirby Smith: Oh, absolutely. If you are looking out for your client, I think you really have to. I think you have to shop and find where they are going to get the best service and you know the best value for their dollar spent.

BrokerIPTV And why Meridian Title and Escrow?

Kirby Smith: I think it's all because of service.

BrokerIPTV All right. Kirby, thanks for being us. Great having you here.

Kirby Smith: Thank you Dan.

Meridian Title and Escrow ABA proves "excellent service at affordable costs"

BrokerIPTV: Today, we are talking with Karra Eveleth, the Senior Escrow officer at Meridian Title and Escrow. Welcome.

Karra Eveleth: Welcome.

BrokerIPTV: Talking about affiliated business relationships for those people who dont know what that is, just refresh our memory.

Karra Eveleth: It is an affiliation between usually a real estate agent and a title company. The real estate agents generally have ownership in the title company. We work in correlation together to close transactions.

BrokerIPTV: One of the things we have talked about in the past is that when you do that, you can be incredibly efficient; it may not require as much staff. You can get things done quicker, at a more affordable price. Does that pretty much nail it down?

Karra Eveleth: Thats correct. Generally with the normal standard traditional title company, you deal with maybe five different people in your transaction whereas with an affiliated business, you deal with one person, you have the processor, closer, post-closing, everything all in one person.

BrokerIPTV: So its you and like one or two other people that are closing the majority if not all of the deals, is that right?

Karra Eveleth: Correct.

BrokerIPTV: Okay and do you find that people like working with a smaller staff?

Karra Eveleth: They do because if they have got a question they know that they are only going to one person. They dont have to try and track down the five different people that may have handled that piece of it.

BrokerIPTV: Is that the only difference between a traditional closer and closing company and an escrow officer for an AfBA?

Karra Eveleth: For the most part thats the only difference is with an AfBA, the closer escrow officer can do all of the functions that all the different people at the big companies do.

BrokerIPTV: All right. Now tell me a little bit about your experience, monthly transactions, service, things of that nature?

Karra Eveleth: It has been a positive experience that agents seem to be very happy with the transactions, they seem to be happy with the service that they are getting with the one person, and it seems to flow well for the buyers and sellers.

BrokerIPTV: And I imagine you get to know the agents and the transactions and the way they do business pretty,

Karra Eveleth: Very well.

BrokerIPTV: Intimately so to speak?

Karra Eveleth: Very well.

BrokerIPTV: Yeah, but again you function just the same as a traditional closing company. You have title policies, you have you know examiners, all of the above?

Karra Eveleth: We do. We still have a traditional title plan that does all the searches on the properties, there is an attorney that oversees everything, and we still have a group that does all the recordings.

BrokerIPTV: Okay. How about underwriters? How many underwriters are you working with?

Karra Eveleth: Currently we are working with three. We have got Southern Title Insurance, Dakota Homestead, and Alliant and we continuously try and look for new underwriters to underwrite our policies.

BrokerIPTV: And you are looking for a couple of things, you are looking for more affordability and more service I would imagine. Is that right?

Karra Eveleth: Yes.

BrokerIPTV: And so far these three seem to work the best for you?

Karra Eveleth: Yeah, the clients all seem to be happy, the agents are all happy with it, and we have been happy with the service that they have provided us.

BrokerIPTV: Thats what I was going to ask you. How is their service?

Karra Eveleth: It has been great. They are local, which is really nice, so we can contact them directly. We usually have monthly meetings with them and coordinate any issues that we do think have risen in the last month.

BrokerIPTV: Karra, thanks so much. I appreciate you being here.

Karra Eveleth: Thank you.

Better service, lower costs and profit sharing, Meridian Title and Escrow owners enjoy it all

BrokerIPTV: Today, we are talking with Tim Gibbs, Owner and Broker of Star Brokers, a Metro Brokers affiliate, welcome. Thanks for being with us.

Tim Gibbs: Thanks for having me.

BrokerIPTV: Tell me a little bit about your business, your history, and so forth.

Tim Gibbs: Well, I have been in real estate for 15 years and I have been with Metro Brokers for 13 of those years as a Broker/Owner of Star Brokers.

BrokerIPTV: And how has it been going?

Tim Gibbs: Its been fantastic. Its been a great career for me having left the consumer products industry years ago.

BrokerIPTV: Yeah, well, you would be out in Vegas right now doing the consumer electronics products and so forth if you werent in real estate, but I understand you are part of an ABA, an Affiliated Business Agreement, and how is that going?

Tim Gibbs: Its going fantastic. I worked with the bigger traditional companies for many years and was approached to join the ABA by Mark Eibner a while back and it has been great for me because #1, the company splits the profits. I am a shareholder in the company and so if the company makes a profit, then I get a share of that and I like that arrangement for one and #2, the service has been excellent. I wouldnt have done it if the service wasnt there for my customers because obviously they come first. The costs are less to them, which was the #1 reason and if the costs are less to my customer and the service is fantastic, there is no reason why I wouldnt do this.

BrokerIPTV: And the company we are referring to is Meridian Title and Escrow and they are in affiliated business arrangement with Star Brokers, but prior to joining and doing the ABA, what were your thoughts on ABAs?

Tim Gibbs: Well, I didnt have very high thoughts of it because the way I had learned about it years ago when I first started in the business was that the big real estate companies owned them, like RE/MAX and Coldwell Banker owned these companies and that the agents had no benefit to use them. It just helped the owners of those big companies, so I thought, well, why would I do that if its not going to help me and if its not really necessarily going to help my customer anymore; I might as well work with people who I really want to work with.

BrokerIPTV: Two things I have heard about Meridian Title and Escrow in reference to the consumers, price and service. Have you found that to be true?

Tim Gibbs: Excellent, yes. They are both excellent. I compared the prices. Like I said I wanted my customers to get a good... a better price because thats most important thing is what their bottom line is to me. So, the prices are better to them and the service is still good. The service has to be good. You cant run a title company if the service isnt good. It just, it leaves a lot of people unhappy with a pretty bad taste in their mouth if the transaction doesnt go as planned.

BrokerIPTV: One of the reasons why they are able to offer that is because they can do more work with less people; is that right?

Tim Gibbs: Thats right and especially lot less overhead, thats the nice thing as you know, we can charge less for title, for title work because there is a lot less overhead. There is not multiple offices and multiple people that that need to be paid in order to close a transaction for a seller.

BrokerIPTV: And there are some other benefits, I mean you have got choice of underwriter for instance right?

Tim Gibbs: Yes; we have a few different underwriters and I also like the opportunity that I have. If I have a question, I can call the plan directly and talk to people who actually do the underwriting and they can assist me with anything I need.

BrokerIPTV: You have got a 10 year reissue rate.

Tim Gibbs: Thats a real biggie. Thats one thing that I really sell people on because a 10 year reissue rate is so important because if someone wants to refinance down the road, they are only going to pay half, whereas with other companies it decreases yearly and typically after five years, there is no reissue rate at all, but if you have a 50% ten year reissue rate, thats amazing. Its a really amazing, its an amazing deal for people.

BrokerIPTV: Safe to say then your experience has been positive.

Tim Gibbs: Oh yes, very positive.

BrokerIPTV: Tim, thanks for being with us; I appreciate it.

Tim Gibbs: You are welcome. Thanks for having me.

Industry Veteran Doug Pierce sold on consumer benefits of AfBA Title Insurance

BrokerIPTV: Today we are talking with Doug Pierce, owner of Pierce Realty and Doug, welcome to the program.

Doug Pierce: Thank you very much Dan.

BrokerIPTV: Glad to have you. I want to talk about affiliated business agreements (AfBA Title Insurance Company) and well, before we get there, tell me a little bit about your background and history.

Doug Pierce: I have been in the real estate business for an awful long time, 36 years. I have been with Metro Brokers since 1980 and I am an independent agent with Metro Brokers.

BrokerIPTV: I understand you are a part of an affiliated business arrangement (AfBA Title Insurance Company) with Meridian Title and Escrow. Tell me a little bit about that.

Doug Pierce: Yeah. I have been with Meridian Title and Escrow for about three years and I had many opportunities to affiliate with some associated businesses in the real estate industry and was always afraid of that kind of exposure, but Meridian Title and Escrow shows me that they have got an awfully good opportunity to provide service and quality to our customers.

BrokerIPTV: Affiliated business agreements (AfBA) for a long period of time kind of had this like little cloud over them, I mean you shouldn't be involved, maybe there is a disclosure issue. I mean... were those some of the negative things that you had heard about joining one?

Doug Pierce: I have been worried about liability really, but Meridian Title and Escrow has outstanding service for our customers and it is a little cross brand, efficiently run, and the delivery of service is prompt and reliable.

BrokerIPTV: Well, I guess you know Colorado title insurance seems to be a bigger and bigger issue these days. In the past, title insurance was all about what the seller wanted. It's slowly changing. Talk a little bit about that.

Doug Pierce: The cost of Colorado title insurance have been very, very high because most of the brands are not efficiently run, but Meridian Title and Escrow is offering a lower cost business model and as a result, my customers benefit with a much lower premiums that they have to pay and we have a 10 year Title Insurance reissue rate so that customers enjoy some benefit and lower premiums and lower expenses.

BrokerIPTV: So, you are talking about controlling costs, choice of Colorado Title Insurance underwriters, you know talk with the other members and owners of Meridian Title and Escrow, that has got to be all part of the benefit, correct?

Doug Pierce: It has. We have a choice of three underwriters, Dakota Homestead, Southern Title and Alliant Title are three of them that I have experienced with. My customers receive their title insurance commitments promptly, same day in many cases and the title policies are issued promptly right after the closing.

BrokerIPTV: So, it is safe to say now you are in 100% in favor of an affiliated business agreement (AfBA Title Insurance Company).

Doug Pierce: I think it is an outstanding way to go and I think it is good for the consumers and I am kind of a booster of it on the sidelines for my own benefit.

BrokerIPTV: Doug, thanks so much for being with us. Appreciate it.

Doug Pierce: Thank you very much Dan.

Meridian Title and Escrow owner Marta Heston works for the buyer consumer

BrokerIPTV: Today, we are talking with Marta Heston, real estate broker for Metro Brokers Realty Oasis and welcome to the show.

Marta Heston: Thank you.

BrokerIPTV: Glad you are here.

Marta Heston: Thanks.

BrokerIPTV: Tell us a little bit about your business and your background.

Marta Heston: Well, I have been in the business for about four years. I work for Metro Brokers Realty Oasis and I primarily specialize on the buy side, working with buyers and relocations.

BrokerIPTV: How is that going?

Marta Heston: It's great. I actually... I know a lot of people that specialize in listings right now. They would love to be in my shoes just because I primarily work with buyers and it seems like buyers these days have the most power I guess and the most say with negotiations.

BrokerIPTV: I think a lot of people don't know, I mean obviously times are quiet and everyone is looking for a buyer, but relocation really doesn't stop. I was talking with our relo[Phonetic] director and she says you know companies are still moving people at a pretty good pace. Are you finding out that to be [Voice Cross Over]?

Marta Heston: Oh, yes, yes and I think with me, we do a lot of Internet leads and that's the majority of where I get my business is through the Internet and most of those, I would say 50% of my business is people relocating from out of state or different cities.

BrokerIPTV: You are also a member of an affiliated business agreement, AfBA Colorado Title Insurance Company.

Marta Heston: Yes.

BrokerIPTV: How is that going and who is it with?

Marta Heston: It is with Meridian Title and Escrow, it is going wonderful. I think a lot of people have the perception that if you work with buyers, you can't be affiliated with a title company because you are not going to get the title, a lot of people think that you have to have a listing in order to get that and that's simply not the case. I on every contract I ask for the title and about 60% of the time I get it. So, buyers have the option, buyers have the choice and it is a win-win situation for both the buy side and the sell side. You know they save costs and it is beneficial to everybody.

BrokerIPTV: Well the Colorado real estate contract has been buyer friendly and now they are making it a little bit more buyer friendly because they want buyers to go out and take a look at Colorado title insurance themselves and maybe making that purchase themselves and shopping that around. Are you finding that the buyers are informed about that?

Marta Heston: They are informed and a lot of times even on the sell side, from what my experience is, a lot of people don't really have a relationship with the Colorado title Insurance company, whether or not it be because the title company doesn't provide great service, but they typically end up using a title Insurance company that's you know I guess well known, but yet their services aren't that great. With... if I mention that I want to get title from Meridian Title and Escrow, a lot of times the broker would say yes on the sell side of things and then because of the services that are provided, they actually end up using that title company over and over again.

BrokerIPTV: Real quick, does a buyer say to you at any time why should I buy the Colorado title insurance? It is traditionally the seller's responsibility and how is this going to benefit me?

Marta Heston: Yes and I tell them it is going to benefit you. Meridian Title and Escrow has a 10 year title insurance reissue rate. In the long term, it is going to benefit you and if it is going to benefit you and the seller when they sell the property, they end up saving money you know essentially your contract is going to be stronger.

BrokerIPTV: And at Meridian Title and Escrow you have got a choice of Title Insurance underwriters. You can control costs and overhead all because of the affiliated business agreement.

Marta Heston: Yes. Yes.

BrokerIPTV: Thanks so much.

Marta Heston: Thank you.

BrokerIPTV: Appreciate having you.

Marta Heston: Thanks.

AfBA title insurnce save consumers money with low overhead and 10 year reissue rates

BrokerIPTV: Today, we are talking with John Clikeman managing partner of AfBA Meridian Title and Escrow and John, welcome to the show.

John Clikeman: Thank you.

BrokerIPTV: Glad you are here.

John Clikeman: Nice to be here.

BrokerIPTV: Now you operate one of the larger real estate broker owned AfBA title insurance companies in Colorado, Meridian Title and Escrow Talk a little bit about that.

John Clikeman: Well, an Affiliated Business Arrangements AfBAis basically a concept where the broker owners of the real estate office or real estate broker become actual owners in the title insurance entity and therefore, are able to refer business to their, in effect their own company and of course, but subject to all the RESPA and Colorado insurance and real estate requirements, disclosure requirements, etc., but it is basically a vehicle for members of the real estate community to in effect create some additional corollary income in the real estate pursuits.

BrokerIPTV: Now, this obviously has worked out fairly well for you?

John Clikeman: So far so good. It is a little slow right now; we would like it faster, but...

BrokerIPTV: You are right.

John Clikeman: We are living through it.

BrokerIPTV: Yeah. Now, are you seeing an increase in AfBA membership?

John Clikeman: We are. I think that has got something to do with the fact that the market is changing and I think the realtors are looking for different things to be able to offer to their customers, i.e., the one stop shop concept and also to be more conscious of how they can deal with the consumer on a more consumer friendly basis; that pertains a lot to the title insurance rate structures.

BrokerIPTV: I am glad you brought that up, because obviously you have got an advantage if it is all housed internally and it's real estate broker owned and you obviously don't have some of the overhead costs that other title insurance companies have and therefore, you can pass that onto the consumer, correct?

John Clikeman: Yes, that is part of the benefit. So, we try to keep the overhead factors comparatively very low. There is not a lot of brick and motor issues. There is... our owners are really the sales force for the company. So, we don't have extra overhead to go out and buy... not buy, but to bring in a sales force as such; we have a built in sales force.

BrokerIPTV: Right. I don't think people know, but how wide of a... or how wide of a range can there be in title insurance costs?

John Clikeman: It can be pretty dramatic when you get into talking what we call reissue rates. Say some companies and these are the underwriters that have the rates filed with the Division of Insurance, but some reissue rates go back as little as two years, some go back three years on a tiered basis. There are underwriters out there that go back six years and then there is also I believe one underwriter in Colorado that goes back actually 10 years on a reissue rate and we, fortunately for Meridian Title and Escrow, have three separate underwriters at this point and we do have the ability to offer that ten year reissue rate. For instance, if you have a title premium that would normally be $2000 on a transaction and it doesn't come into that ten year reissue rate time period, that's what you are going to pay. If you do have one that comes within that timeframe or goes back that far, you are going to pay a $1000. So, you have a basic 50% savings, which can be significant in a real estate transaction.

BrokerIPTV: Final question; Department of Real Estate every year, beginning a new year, we have got new rules, we have got regs[Phonetic], we have got changes to the contract. Disclosures are going to be big again this year. They are really trying to spell out the broker duties with the disclosures and they are really trying to tell the consumer what?

John Clikeman: Well, it looks like where they are going with all this is they want the consumer to be more educated and knowledgeable about the rates, fees, the new RESPA rule was just put into place, that was intended to simplify the process; I am not quite sure it is doing that, but they want the consumer to be more, I would call it, educated in what they are really getting into. Frankly, I am not sure the consumer does understand title insurance all that well, but at least on a rate structure, the goal there is to get people to understand what their options are and do some comparisons.

BrokerIPTV: And they really want to make it clear that agents do not shop around for rates on behalf of the client. John, thanks so much.

John Clikeman: Thank you.

BrokerIPTV: Appreciate you being with us.

RESPA changes-consumers to shop title insurance costs and sign more paper!

BrokerIPTV: Today, we are talking with John Clikeman, managing partner of AfBA Meridian Title and Escrow and John, welcome to the show; thanks for being with us.

John Clikeman: Thank you.

BrokerIPTV: You know in a previous segment, we ended talking a little bit about a lot of RESPA issues, a lot of disclosure information, wanting the consumer to know more, wanting the consumer to go out and investigate things for themselves and of course this morning I read an article in Inman talking about HUD and HUD is making a real push to get consumers to shop for loans and Title Insurance. Will that work John?

John Clikeman: Well, I think it is a lofty goal at this point. I think it is important that the consumers actually realize that there are big differences in cost, not only on the loan side, but on the title insurance side. I think what HUD and RESPA is all about is making sure a consumer at least comprehends that there is available many different types of rates out there and they should be educated about those to make, I guess you would call it, an informed decision.

BrokerIPTV: You stick a GFE, a Good Faith Estimate, in front of somebody, it is two pages; apparently, it is going to go to three pages. I think the purpose of that was to make it simpler, but I am not sure that going to three pages actually accomplishes that. I mean do you find that most people kind of have that glazed over look in their face?

John Clikeman: I would say so. [Inaudible] I don't think that there are that many people who are in real estate, standard residential real estate transaction that totally comprehend it. I think most people if you are a seller, what do you want? You want your property sold, you want your proceeds, and you want to go on buy another house. As a buyer, you want to get the deal done, you want to get your loan closed, and move on. So, there is a problem there. I mean... I think they are trying to address it. I am not sure what they have done so far is solving what they are trying to do. It might be even complicating it [Voice Cross Over] more.

BrokerIPTV: Yeah. Coming in 2009 another change is that they are trying, at least in the real estate contract, to let people know that title insurance is just not the sole discretion of the seller anymore, that they buyer can purchase their own title insurance, they should be encouraged to check out title insurance and various rates and so forth; your thoughts on that.

John Clikeman: Well, again, I think that is a good goal. I think what you are going to see, the evolution of that, would be offers are going to be made by buyers, where it will actually be specified in the contract, which title company they want to use. So, it becomes a contractual issue and the assumption there would be that the buyer again has actually gone out and done his or her homework and done his shopping and selected a title company that is more attractive to the buyer from the rate structure. So, it is... the offer is made with the title company designated. That is not the way it used to be in Colorado. It used to be where the seller pretty much controlled that.

BrokerIPTV: Well, if the seller is paying for the title insurance, do you find that most buyers really care?

John Clikeman: Traditionally, honestly, no.

BrokerIPTV: Okay.

John Clikeman: I mean title insurance is a pretty generic thing. I mean you don't get different product by going to a different title company. You might get different service, you might get different rates, but the product as such is standardized. It is all the same stuff, so...

BrokerIPTV: And until recently we had some title companies that just ended up closing their doors prior to transactions closing, which was even more important that you picked a stable title insurance company.

John Clikeman: That is correct.

BrokerIPTV: John, thanks so much; really appreciate you being here.

John Clikeman: Thank you.