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Outsourcing Steps Vs. Processes

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Articles and online posts that cover the topic of outsourcing frequently present the business activities that are outsourced as multi-phased processes. Activities such as loan processing or title review and policy production are common examples. Even the industry’s moniker, Business Process Outsourcing (BPO), has the connotation of a multi-phase process and we too have discussed outsourcing in this manner. Yet BPO is not limited to just the larger multi-stepped process that can be found in every real estate transaction. While users of BPO services will reap the greatest benefits by outsourcing these larger process, BPO services can be utilized for individual steps that make up the larger multi-stepped processes. In this post we’ll look at a few of these individual steps that are ideally suited for outsourcing.

The majority of real estate transactions include the paying off of liens recorded against the property. Settlement agents must determine which mortgages, judgement liens, taxes liens, etc. must be paid off at closing and then obtain the appropriate payoff statements from the applicable lien holder. Obtaining payoff statements is often considered a necessary but minor step in the real estate transaction. While this may be so, it is a step that can take a surprising amount of staff time. To but some rough numbers on it, if you’re closing 200 transactions per month with each transaction paying off two mortgages and it takes 5 minutes of staff time to obtain each payoff statement, it’s costing you 33 hours of staff time per month just to obtain payoff statements. A hefty price for such a minor step and a key reason why obtaining payoff statement is ideally suited for outsourcing. At String, our staff will obtain the appropriate authorizations from the borrower, identify the correct lien holders and obtain the payoff statement at a fraction of the cost you are currently paying for staff to handle this step. Plus, by outsourcing, your staff gets back 33 hours a month to focus on revenue generating activities.

Along the same lines as obtaining payoff statements, processing subordinations is another step that is well suited for outsourcing. While subordinations are required less frequently, they are much more time intensive. Obtaining the subordination requirements, completing the subordination agreement, submitting the documents to the subordinating lender and recording the subordination all eat up staff time that could be better used elsewhere. By outsourcing this step to a firm like String, you again free up your staff’s time while completing the subordination at a fraction of the cost when compared to doing the work in-house.

The last example we’ll give is post-closing document recovery. For the settlement agent this could involve steps such as obtaining the lien release documents need to issue a final policy. For a lender it may involve tracking down missing closing documents. Since this step is handled post-closing, you’ve already collected your fees and, as such, every minute your staff spends on this step negatively impacts your profitability. Again, by outsourcing this step to an outsource provider such as String you can complete the document recovery process at a fraction of what it would cost to handle the work in-house.

When it comes to outsourcing, keep in mind that savings, both in staff time and overhead costs, can be gained not just from outsourcing major processed but from outsourcing minor steps in the closing process.