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Source of Title Blog

The Abstractors' Last Bastion
by Robert Franco | 2007/03/29 |

In other posts I have hypothesised that the decline in title standards and price will lead to a shortage of skilled, professional abstractors. It only makes sense that as the title standards are "dumbed down" to allow for the inexperienced, untrained abstractors and on-line searches to provide "useable" title evidence its value and price will plummet. We have seen that with many searchers providing current owner searches for less than the going rate 12 years ago.

The problem is that with this segment no longer being profitable for "real" title abstractors to expend their time conducting thorough title searches, some are just not able to justify remianing in the business. Source of Title has received an unusually large number of notifications that several companies listed in the directory are no longer in business.

The current owner searches have always been a foundation of the abstractors' businesses. With that market slowing down, and more of the remaining business going to India, inexperienced abstractors, and automated searching alternatives, abstractors are forced to rely mostly on full searches which are not as abundant, nor as profitable. This will have two effects, higher prices and fewer experienced abstractors.

Commercial work may be the last bastion of the abstractor. Clients who need searches for commercial transactions understand the importance of a thorough title search and they generally allow more time to complete them and are willing to pay more for quality work. Unfortunately, commercial work is not as prevelent as the current owners once were. Good abstractors are not able to afford to wait around for the next commercial order and without a sufficient base of other work to fill the gaps, they will not be around to provide thorough searches to those who still desire them.

I bring this up today because I received a call from a good client that does a lot of commerical work. He expressed that he was having a very difficult time finding an experienced abstractor who was willing to do commercial work. This may be the last segment of the industry to embrace the skilled, professional abstractors.

I believe that this may be the first sign that I was correct with my prediction. There are only two reasons that someone would turn down commercial work: (1) they are too busy with current owners, which is not likely; or (2) they do not feel qualified to do commercial work. Apparently those who do feel qualified are getting tougher to find.

I believe that this trend will continue. Without the base of work the professional abstractors rely on to get them through the slow times, there will be fewer of them to train new abstractors to provide the quality of work that is needed. It will be interesting to see how the market compensates for this phenomenon. Either title companies will be forced to hire and train their own abstractors who will travel great distances to do their work, or they will have to reduce their search standards to allow for commercial transactions to close on current owner searches or online alternatives.

The title industry has headed down a path that will cause the extinction of the professional abstractor. Without them, title insurance will become a casualty based line of insurnace because getting a thorough title search will no longer be possible.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com

Source of Title Blog ::




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Categories: Abstractors, Commercial Searches, Title Industry, Title Standards

794 words | 2806 views | 9 comments | log in or register to post a comment


I believe the same holds true for a...
I believe the same holds true for abstractors who specialize in sub-surface searches, i. e., coal, oil and gas. The energy companies who do business in our state are having a hard time finding people. 
by Scott Perry | 2007/03/29 | log in or register to post a reply

That is a good point... sometimes I...
That is a good point... sometimes I have a tendency to lump those all in with the term "commercial," though they definitely have aspects special unto themselves. Can you imagine sending a mineral search to India? Or a asking TitleSmart for one?

Good examiners are still needed for those, but if you take away their base, the easier residential searches, they aren't going to be able to stay in business just to service those special needs.
 
by Robert Franco | 2007/03/29 | log in or register to post a reply

Well said, Robert....
Well said, Robert. 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/03/29 | log in or register to post a reply

We serve five counties in SW Michig...
We serve five counties in SW Michigan. Experience has shown Bob's comments to be right on the mark. We have been asked to perform "Commercial" searches by companies that want commercial depth and content without a willingness to “pay the price”. They have gone elsewhere and returned because they were not satisfied with the quality they received.

Larger companies have reduced their local searching staff and centralized their “plants”. They no longer have anyone available to step into the courthouse. I am finding this provides me with additional orders, but changes the scope of service and of necessity the product description/pricing structure.

Guess vision and flexibility are the now the “hallmark”!
 
by Joe Killian | 2007/04/02 | log in or register to post a reply

I have been in this industry for ov...
I have been in this industry for over 25 years in NJ. It is downright depressing to see the direction this industy has taken. All my years of experience and learning are becoming meaningless. I agree with Robert that it's only a matter of time before title insurance becomes "casualty insurance". And as far as the dying breed of us experienced title people goes...I can't wait to see what happens as more and more foreclosed properties hit the market and the thin title agencies start insuring these purchases, with no knowledge or background in that area.

Let me know when title insurance finally makes it to "eBay".
 
by Shelley Raichelson | 2007/07/24 | log in or register to post a reply

I have been one one of those indepe...
I have been one one of those independent abstractors who has alway passed on doing commercial searches because I was too busy and not sure if I was qualified. Over too many years, I feel like I have done numerous residential full searches which felt like they were much harder than a commercial. Bottom line: how do I know if I am qualified and if I am not, how do I get qualified to do commercial? Thank you! 
by Hayden Millrose | 2007/09/27 | log in or register to post a reply

Hayden: Interesting questions. I ...
Hayden: Interesting questions. I don't know how to determine what makes one "qualified" to do commercial work. Because the vast majority of states don't have any requirements to be an abstractor, the same question could raised for any abstractor.

I would say that typically, commercial transactions involve more sophisticated parties and more complicated financing. A basic understanding of the UCC would be important to interpret the effects of financing statments and leases. These types of transactions are often times in more congested urban areas where easements and agreements become more common and important. Understanding things like appurtenant easements and when its necessary to search adjacent parcels is definitely a consideration.

I'm sure if you asked 10 different abstractors, you would get 10 different answers. I'd say that if you haven't done commercial work, you would probably want to work with someone that has on a few searches before you attempted to do them on your own. At the very least, I would think it would be important to have someone you can talk to about what you find when you are working on a complicated commercial search.
 
by Robert Franco | 2007/09/28 | log in or register to post a reply

OIL, GAS & MINERAL SEARCHES

THE DAYS OF THE "LANDMAN' OF THE 70'S & 80'S MAY NEVER RETURN UNLESS A NEW ENERGY POLICY WHICH INCLUDES THESE MINERALS AS A SHORT TERM SOLUTION. HOWEVER. IT COULD WELL BE UPON US.  THE PROBLEM IS GOING TO BE THAT THOSE OF US THAT WERE INVOLVED BACK THEN ARE GETTING TO OLD AND TIRED TO BE WORKING AT THE PACE THAT WE DID BACK THEN.  YOU HAD TO BE AN ABSTRACTOR, DETECTIVE, SKIP TRACER, AND SOBER PARTOF THE TIME, TO BE EFFECTIVE.  WE WORKED LONG HOURS AND HARD AND PLAYED HARD, HAD MORE MONEY THAN WE HAD SENSE, BUT WHAT A GREAT EXPERIENCE.   I CAN STILL LOOK AT A METES & BOUNDS DESCRIPTION AND KNOW THAT IT'S WRONG EVEN BEFORE IS PLAT IT. MET SOME GREAT AND ALSO UNUSUAL PEOPLE, IN TEXAS, OKLAHOMA, KENTUCKY AND TENNESSEE.  AS LONG AS DRILLING IS DONE OFF-SHORE AND/OR IN ANWAR THE ENERGY COMPANIES WON'T NEED "LANDMEN" OR DARE I SAY "LANDLADIES"?  FUN TO REMEMBER THOSE TIMES THOUGH. JON A SARVER, CUMMING, GA

 
by JON SARVER | 2008/08/06 | log in or register to post a reply

LANDMAN ALIVE AND WELL

Go West young (and old) man! The oil and gas industry, particularly natural gas, are stong and active in Colorado, Wyoming and most of the Rocky Mountain states and southwest. Landmen (and ladies) are in short supply.

 
by Samuel Humpert | 2008/08/07 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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