Posted on: Friday, October 1, 2004
Coldwell adding title and escrow
By Andrew Gomes
Advertiser Staff Writer
Hawai'i home brokerage giant Coldwell Banker Pacific Properties is getting into the title and escrow businesses in a move to keep more of the fees people pay when buying homes.
The firm with about 350 sales agents on O'ahu has sought state approval to form title and escrow companies in partnership with one of the nation's largest industry players, Oregon-based First American Title Insurance Co.
The joint-venture is part of an industry trend in which real estate brokerage firms are adding mortgage lending, title and escrow business and other affiliated services to increase revenue and make themselves a one-stop shop for real estate transactions.
Title and escrow services involve researching property ownership, preparing documents, transferring money and recording transactions. Such fees can amount to a few thousand dollars on a $500,000 home purchase.
It's up to buyers to choose title and escrow providers, but because many consumers have limited understanding of complex transaction procedures, sales agents or loan officers often influence the decision.
Coldwell Pacific agents wouldn't be required to use its in-house title and escrow service, and the company expects it will continue to give significant amounts of business to other companies.
"It's absolutely up to the customer," said Scott Bradley, Coldwell Pacific managing director. "Adding a title and escrow company allows us to offer homebuyers and sellers a one-stop shopping experience."
According to a May study cited by Coldwell Pacific, real estate analysis firm REAL Trends Inc. said 182 of the 500 largest brokerage firms are in the title business, while 270 are in the mortgage business.
Many other brokerage firms, including some in Hawai'i, have more informal relationships with preferred escrow and title companies.
First American, which reported about $4 billion in title insurance revenue last year, is involved in about 300 partnerships similar to the one with Coldwell Pacific.
James Pietsch, chief operating officer of the state's oldest and largest escrow firm, Title Guaranty of Hawai'i, said such partnerships were expected to become new competitors in the industry.
"Companies are trying to get together in affiliated business relationships basically to control the entire real estate process," he said. "We believe they will discover that the escrow business is very complex and challenging."
Coldwell Pacific last year handled 3,900 transactions. The company expects to begin escrow and title services in the next 60 days if approvals are received from the state Insurance Commission and Department of Consumer Affairs.
The Coldwell Pacific-First American companies are to be called Pacific Access Escrow and Pacific Access Title. First American, which has seven offices in Hawai'i, would be the managing partner.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
