On the Internet, nobody knows you’re a dog

I started poking around the Internet in the early 1990’s. And one of my favorite cartoons from that time was from the New Yorker. It satirized the fundamental anonymity of the internet, but it raised a serious question: Who are you dealing with?

The other day I was surfing title insurance web sites, when I happened on a consumer-focused site. Sophisticated web design, great copy writing, nice logo, a BBB logo, and even a chat widget. Now, I believe that this particular site is legitimate, but when you spend some time on the site, you begin to wonder.  Here’s what I noticed:

Looking the other way

The real estate transaction is made up a conglomeration of professionals, each one with a real or a preceived duty to the parties at the settlement table.

Through our inattention to ethics and principle, we, the real estate industry, find ourselves surrounded by a vast quagmire of self-dealing, failed duty, and ethical breaches.

ALTA Principles of Fair Conduct

ALTA has published their Principals of Fair Conduct.   It appears to be a good start.  Let me know what you think.  My thoughts to follow.

Bad Pennies and Title Agents

Bad Title Agents are like bad pennies – they keep coming back.

If you’ve been in the title business long enough, you’ve heard the story:  A Title Agent bends the rules, overcharges clients, skims money,  or participates in fraud (multiple choice, pick all that apply).  Their underwriter discovers a problem, scratches the surface and decides that they want no more of the relationship.  The relationship is cancelled.  

Game over for the agent? Not even.  No charges are filed, no licenses are revoked, and the bad penny Agent stays in business.   In many cases, it doesn’t even slow them down.

The Agent may only lose one of several underwriters.   Underwriters talk, but they don’t always share. Concerned about litigation, they leave their peers to their own discovery.  There’s no clearing house of agent information and no one is keeping score.  The other underwriters may not even suspect there’s a problem with the agent.

Occasionally another underwriter comes rushing in, knowing of the problem, but deliberately overlooking it.  The bad penny still has a license and a book of business.  If you have the tolerance for risk, why not, there’s money to be made.

And there are underwriters who just don’t want to know – don’t ask, don’t tell.  If you don’t go looking for it, you can’t find it.  The premiums keep flowing.

The details don’t really matter, the result is the same - an entire industry starts to look sleazy.

The title industry needs to weed out the bad pennies and do it now.  There’s been talk about standards (Source of Title, Title-opoly), but standards are empty words unless someone enforces them.  There are those in the industry who have problems with following the rules, let alone moving to the higher plane of standards.  Let’s clean that up first.

Agents and those who care about industry need to take a stand:

Support those who support the industry.  Let the underwriters know that looking the other way isn’t acceptable anymore.  The bad pennies hurt the consumer and hurt the industry.  If your underwriter doesn’t seem interested, vote with your feet – find an underwriter who is interested in protecting the industry. 

Lobby legislators and regulators personally and through our professional organizations to:

End the Secrets.  Allow the underwriters to share information about cancellations for cause without fear of litigation.

Get the Bad Pennies out of our Business.  Revoke the licenses of those involved in misdeeds. Forever. 

Keep them out of Real Estate.  Change or modify the governing laws so that those found guilty of misdeeds cannot practice law, or hold licenses for mortgage, real estate or appraisal.  Otherwise, like cockroaches, they will scurry to a dark corner of the industry and continue business as usual. 

Prosecute.  Insist that those that violate the law be turned over to the authorities and prosecuted to the fullest extent of the law. 

We need to clean up the industry and do it now before someone else comes in and decides to clean it up for us.  We won’t like it.

Integrity Counts

Back in March, John Corey asked a question on what to avoid in Real Estate Transactions.  Since his post,  I became increasingly conscious of my day-to-day interactions with others – the good, the bad and the ugly.

It reinforced what I’ve always believed.  Integrity counts.

People are amazingly consistent.  Good people usually behave well in all aspects of their lives, while the not-so-good ones tend to behave badly all the time.   Those who treat their employees, clients, and partners badly also seem to be the same ones that break, bend, or mutilate the rules. 

What is integrity? The link above provides the standard definition.  I’d like to borrow from Supreme Court Justice Potter Stewart’s famous quote – “I know it when I see it.”  But how do you find it?  When I build new relationships, here’s how I do it:

Rely on referrals.  If someone you trust recommends someone, then you are pointed in the right direction. 

See what they say publicly.   The Internet is a great tool to find out what people think and how they act.  Check out their web presence(s).  What does it say?  More importantly – what doesn’t it say?  Look for a clear articulation of values and a business philosophy similar to your own.

Look for a trail of satisfaction.  Do you hear good things about them from others in the industry and community?   Do clients and colleagues go the extra mile to say good things about them publicly? 

Observe how they treat others. Do they treat their employees well?  How do they treat their vendors?  Others?

The title business has evolved into two distinct business models – Client Focused and Transaction Focused.  The agency’s operating model can have a dramatic impact on your experience. I’ll follow up with another post that explains the service models and how they impact the client experience.