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Consumer-Direct Marketing vs The AfBA
by Robert Franco | 2007/06/18 |

There was an interesting discussion on Mark Pilatowski's Active Rain Blog in which Mark disagreed with me on the issue of marketing directly to consumers. Actually, I don't think Mark and I disagree all that much about the issue and if you read the comments on his blog, you will see why. It wasn't the concept of marketing directly to consumers that I disagreed with, it the way that California Insurance Commissioner Steve Poizner was trying to push the idea that I objected to.

Basically, I think that marketing directly to the consumers would be fantastic, if it would actually work. I would actually go a step further and say that this type of marketing may be the only hope of saving the industry from the ravages of the AfBAs. As long as AfBAs are allowed to operate, and I don't see them going away anytime soon, there will be a tremendous incentive for the referring partners to direct their consumers to the joint venture.

Title companies market to those who can send them work. It doesn't make much sense to market to those with no control over where the settlement services are placed. Currently, that means marketing to the Realtors and lenders who actually place the orders.

Marketing directly to the consumers will be largely ineffective if the consumers are not empowered to make the decision of where their title order is placed. For this to work, a more fundamental change must occur. Consumers must be educated so that they understand the process and why it makes a difference whether they close at title company A or B. Furthermore, there must be some restrictions on the Realtors and lenders to limit the influence they exert on the consumers.

Currently, RESPA requires disclosures to inform the consumer when their Realtor or lender is a partner in an AfBA where they are directing the title order, and the consumer must not be "required" to close with an AfBA partner. However, this has virtually no effect in the marketplace where consumers regularly rely on their Realtors and/or lenders to guide them through the process.

I'm not sure at this point how you could ever present a real choice to the consumer when those who the consumer relies on for guidance have a vested interest in the selection of the title company. There is a huge conflict of interest and that is why AfBAs do not make any sense. On one hand, we have the AfBAs whose main goal is to take advantage of the fact that one of the partners has control over the flow of work to the AfBA. On the other hand, we have a push for consumer-direct marketing and providing more choices for the consumers. The two concepts are inherently opposed.

In my opinion, consumer-direct marketing is an excellent concept, but I don't think it can overcome the AfBA model. If consumer-direct marketing can succeed, it will undermine the value of the AfBA and the industries that want them have a great deal of resources invested in their success.

The regulators that want to see more consumer choice and replace kick-backs with consumer-direct marketing need to work on abolishing the AfBA model first. Only then can we actually empower the consumers to choose what is best for them.

Robert A. Franco

Source of Title Blog ::


Categories: Marketing, Title Industry

766 words | 3253 views | 6 comments | log in or register to post a comment

Robert: I have been engaged in con...
Robert: I have been engaged in consumer directed marketing since 2000. It works. I can't tell you how many competing title agents in my market can't figure out why we are always busier than everybody else. It blows my mind because it's not rocket science. My business model and marketing is out there for everyone to see. All you have to do is change the way you think. The consumer is your real customer because they are! Make it your mantra.

Frankly, it's even easier now than it ever was because the media coverage of title insurance helped raise consumer awareness.

by Diane Cipa, General Manager, The Closing Specialists® | 2007/06/18 | log in or register to post a reply

That is great, Diane! I'm glad to ...
That is great, Diane! I'm glad to hear that. It would be nice if it worked everywhere, we could really disrupt the AfBA model.  
by Robert Franco | 2007/06/18 | log in or register to post a reply

Yeah, I believed we were on the sam...
Yeah, I believed we were on the same (or at least a similar) page when it came to marketing directly to consumers. In the end we both seem to agree that it would move the title industry in the right direction. You are right that the first step is to educate consumers so they can take control of the process and make their own choice. If consumers are not armed with the proper knowledge they will be unable to do that. I enjoyed our conversation and believe we agree much more than we disagree (in fact I don't believe we disagree at all).
Diane and I have had a few discussion on this, in fact we had a discussion earlier today, and it seems that once you are able to reach the consumer they are more than willing to take control. And one of the things we discussed was the fact that once you have consumers who are happy with your work their realtors have happy clients and they will be more willing to recommend you in the future. After all, realtors want happy clients because that leads to more business and if you can help them they will have a desire to continue working with you.
by Mark Pilatowski | 2007/06/19 | log in or register to post a reply

Check this guy out.

Check this guy out.
by Diane Cipa, General Manager, The Closing Specialists® | 2007/06/20 | log in or register to post a reply

Hmmm... "Well, the leads we receive...
Hmmm... "Well, the leads we receive over our website can be purchased however, they are free to our title insurance and settlement services clients! many of the applications and rate quote requests we receive via our web network do not have a home found yet and are in the prequal stages."

I'm not sure exactly how this all works, but it sounds like a RESPA violation. Free leads for their clients certainly sounds like a "thing of value" to me.

Is that what you were thinking, Diane?
by Robert Franco | 2007/06/20 | log in or register to post a reply



by Diane Cipa, General Manager, The Closing Specialists® | 2007/06/20 | 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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