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Not For Sale
by Robert Franco | 2007/05/31 |

With all the homes for sale around here, I thought that it might be easier to place "NOT for sale" signs in front of the homes that aren't for sale. Getting rid of the unsightly for sale signs would certainly reduce the clutter along the streets. Besides, who wants to move into a neighborhood with for sale signs as far as you can see down the street. That doesn't say much for the neighborhood, does it?

The title business has been slow around here, so we have had time to ponder the issue. We began to speculate at how long the market would remain soft. What will it take to see busy days like we had a couple of years ago?

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There just wasn't a great answer to that question. My prediction was that it would be at least a few years before we see that kind of activity again. A lot has to happen, and none of it good, to set the stage for another refinance boom. Rising home values and falling interest rates cannot happen again until we see homes become undervalued and interest rates high enough to start dropping again.

Even in the current market there will be some home sales, but there won't be a lot of people "upgrading" to bigger and better homes because they won't have the extra down payment from the appreciation of their current home and they won't be able to borrow as much money as interest rates rise. Those who are buying will mainly be doing so because of change in circumstances: e.g. moving to new area for a better job, out growing their home due to a growing family, etc. That will generate some activity, but it won't be like the good old days we had in the late 90's.

Refinancing activity, which was a large part of the business a few years ago, will be pretty much stagnant. If you consider the reasons people refinance, such as to get a lower rate, consolidate bills, or send kids to college, you have to admit that there won't be much of that going on now. The lower rates have come and gone... they have to go back up before they can come back down again. Bill consolidation requires that borrowers have equity in their homes and not many do anymore. They have either already refinanced it away, or they bought their home with little or no money down. Because home prices are actually falling now, it will take considerable time before the equity is there to draw out. As for sending kids to college, student loans are cheaper and they don't require any home equity.

There will still be some refinancing, though, for those who have rising variable rate loans. Many of those people will still be in need of refinancing, but they may not be able to afford it. Many homeowners have already financed the maximum amount they could afford and thus cannot qualify for a higher fixed rate.

So, what will take to see the busy days we used to enjoy? Its going to take a whole lot of getting worse and some pretty lean days ahead. I think we will see interest rates getting close to double digits again before we see the flurry of activity we had in the late 90's. That will obviously take time. Interest rates cannot rise too sharply with out devastating consequences to our national economy. Likewise, home prices cannot continue to experience the rates of appreciation we have seen the past decade or so; especially when interests rates are rising, making it more difficult for people to afford more expensive homes. So... we will have to be patient and wait it out.

If you haven't already done so, this would be a good time to think about self-preservation. What can you do to weather the slow months, or years, ahead? Have you managed to save for a rainy day? There is no doubt that we have a glut of title people after the refinance boom and some will not be here in another year, or two. Will you?

If you are curious, the "not for sale" sign shown above was a part of a marketing campaign in London nominated for a Construction Marketing Award. See more at

We wanted to juxtapose a notorious medium with an unusual message: “Not For Sale”. The signs appear in the front garden of recent customers. Where neighbours expected to see a "for sale" sign, we erect a "not for sale" sign. The idea being that you are so proud of your house and your new refurbishment that you are happy for your neighbours to know that your place is not for sale.

As the conversation turns to who helped you refurbish your house, Onis is mentioned and we benefit from the single best bit of marketing ever created: word of mouth. Because we know that someone will only recommend a supplier if they had a positive experience and are prepared to put their name to it.

The campaign also stands for something much bigger. Moving home has a financial and social cost. Recent figures from Barclays Bank shows people are spending in the region of £25,000 each time they move house. And there is the social cost in uprooting years of friends, local customs and amenities, moving schools and so on. It’s not just the house that is Not For Sale; the fabric of the community is Not For Sale too.

At Onis, we make it easier for you to refurbish your home. And in doing so, we also help families realise a little extra intangible value.

Robert A. Franco


Categories: Abstractors, Marketing, Small Agents, Title Industry

1281 words | 2925 views | 5 comments | log in or register to post a comment

Hey, don't sound so down. I've bee...
Hey, don't sound so down. I've been doing this stuff for over 30 years and this is just a correction. Those who have embraced the industry as their profession will find a way to hunker down and survive. Those who thought it was an easy way to make a buck won't.

It's a smaller pie and there will be less players, keep overhead down and don't afraid to charge for services rendered.

I see this as a very positive moment - one of transition. Use it well. Make the changes now while you can. We are immersed in opportunity. The old is leaving and the new is arriving and you can help to mold the new.
by Diane Cipa, General Manager, The Closing Specialists® | 2007/05/31 | log in or register to post a reply

I know it seems a little pessimisti...
I know it seems a little pessimistic, but I don't really see things getting much better any time soon. There just isn't much that can be done to spur "much" new business rights now. Rates can't come down, I don't think we can depend on new, creative loan products after the disaster in subprime lending, and with home prices starting to decline there isn't much equity left to play with. I don't think the sky is falling, though. Its just going to be a little slow until the market corrects itself and the stage is set for the next rally. Its just going to take some time.  
by Robert Franco | 2007/06/01 | log in or register to post a reply

Plus players will leave the field s...
Plus players will leave the field so what business if left will be processed by fewer providers. I truly expect many ABA players to close shop. Most were shams and there just won't be anyway to hide that fact moving forward. 
by Diane Cipa, General Manager, The Closing Specialists® | 2007/06/01 | log in or register to post a reply

That is interesting... I see more A...
That is interesting... I see more AfBAs in the future. They may be forced to jump through more hoops to avoid RESPA troubles, but now that it has been made legal, lenders and realty companies aren't going to pass up on the chance to profit from it. And, the more of them that pop up, the more pressure it puts on everyone else to get on the band wagon. Besides that, with things slowing down for everyone, it is an excellent way for the lenders and realtors to increase their revenue... they will be demanding to get in on it. 
by Robert Franco | 2007/06/01 | log in or register to post a reply

I humbly disagree. It's been "lega...
I humbly disagree. It's been "legal" since the 80s. It's extremely difficult to set up an ABA that really meets the requirements of state and federal law/regulation. Most do not measure up.

Looking at title agent ABAs, when you truly put capital at risk, set up an independent office and actually perform the core services, it's far more work and expertise than most lenders and Reators have at their disposal or are willing to pay for.

Add to that scenario the focus on fiduciary duty and there's just no good argument that the ABA serves the consumer well. The only argument that survives the test of fiduciary duty considerations is that the ABA had lower pricing and better service than independent title agencies. That's an unlikely outcome. Most title agencies have a hard time producing a profit beyond the salaries needed for key personnel. Getting the highest quality people to provide great service and reducing fees to the consumer will eliminate any layer of fat left for the creator of the ABA.

If the motivation for the ABA is service and quality - which is a motivation that should be lauded - it would work. In reality, the motivation for the vast majority of ABAs is revenue sharing and that's going out the window - slowly and surely.

It's not "new" - it's as out of fashion as the 80s hairdos we all were wearing when they made ABAs "legal".
by Diane Cipa | 2007/06/03 | 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



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