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Challenges For The Settlement Agent


As we enter the second half of 2017, the real estate industry continues to grow. Most markets across the country are experiencing healthy growth in real estate sales volume and prices for residential property continues to tick up. Yet, even in an expanding market, there are still challenges that must be overcome. With this post, we look at several challenges facing settlement agents.

NPI / Data Security

Data security remains center stage for settlement agents, and the entire real estate industry, as criminals continue to devise new ways to steal non-public personal information and real estate funds. As we’ve discussed in prior posts, maintaining appropriate security procedures and protocols is a must for all parties involved in real estate transaction. Though this is not always an easy task for the small to mid-sized settlement agents. The cost to maintain the software to thwart cyber-attacks, train staff on the proper handling of non-public personal information and properly secure physical documents in the office can quickly strain the operating budgets of the small settlement agent.

The Young Real Estate Professional

The real estate industry continues to be an aging industry. According to the U.S. Bureau of Labor Statics Current Population Survey (2016), the median age of employees in the real estate industry is 49.5 years. Of the 200+ industries surveyed by the U.S. Bureau of Labor Statistics, real estate falls in the top 10% of industries with the oldest workforce. The lack of young people joining our industry has made finding personnel to fill entry level position very challenging. Not to mention the impact to settlement agents’ succession planning as all too often the “next generation” of leaders and managers is only a couple of years younger than those retiring.

The lack of young, educated individuals entering real estate is frequently attributed to the effects of the real estate crash a decade ago. In their mid-teens at the time, these now 20-somethings saw their parents lose jobs and homes due to the real estate industry. This experienced soured their interest in becoming a real estate professional. However, now that the market has recovered and many young people are considering purchasing their first home, we will hopefully see an influx of young workers entering our industry.

Price Stagnation

As consumers have become more price conscious, the resulting impact can be felt throughout our industry. Realtor’s commissions and increasingly attacked, loan origination fees are more aggressively compared and closing cost are pressured downward. For many settlement agents, it has been years since they were able to increase their closing fees and it is unlikely that they will be able to increase fees any time soon.

To address this challenge, settlement agents will have to continue to find ways to improve operational efficiencies. Whether through the adoption of new technology or outsourcing work to third parties, settlement agents that want to survive will have to find new ways to minimize costs without sacrificing their work product or customer service.

Regulatory

Over the past decade, significant regulations have been placed on the real estate industry. While there is hope that the current Administration in Washington will eliminate some of these regulations, until that time comes they will still present a challenge to all parties involved in the real estate transaction; settlement agents included.

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