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The quarterly publication of the Title/Appraisal Vendor Management Association

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Page 1: TAVMA Quarterly Newsletter
Page 2: TAVMA Quarterly Newsletter

COMPANY CITY STATE WEBSITE

American Valuation Management Little Rock AR www.americanvaluationmanagement.com

Appraisal Management Services LLC Marietta GA www.appraisalaudit.com

Landmarx Solutions, LLC Williamston MI www.landmarxsolutions.com

Jeder Valuation Consultants, Inc. New York NY www.jederval.com

Republic Real Estate Solutions, LLC Springboro OH www.republic-title.com

Red Vision Gainsville FL www.redvision.com

Validata Lender Services Rockville MD www.validatals.com

To join TAVMAplease visit our website at

www.tavma.org.

Page 3: TAVMA Quarterly Newsletter

Spring 2010 — TAVMA 3

T A B L E O F CON T EN T S

Does A Trusted Advisor Bite The Hand That Feeds? . . . . . . . . . .5

The More Marketing Changes,The More Like Sales It Becomes . . . . . . . . . . . . . . . . . . . .10

Industry Consolidation Can Also Spell Opportunity forLocal Settlement Services Providers . . . . . . . . . . . . . . . . .12

A Discussion With Michael Ousley of Clear Capital . . . . . . . . .14

About TAVMA

Founded in 1998, TAVMA is a non-profit trade association tasked with enhancing publicawareness and promoting ethical conduct to settlement services industry vendors and serviceproviders. The Association acts as a forum for the exchange of vital information and presentsthe positions of its member companies to media, government, user groups and vendors.TAVMA member organizations are committed to promoting excellence and integrity whileadding customer and consumer value to the settlement process.

Find this and more at www.tavma.org

Since the implementation of the HomeValuation Code of Conduct, AMCs haveendured a heap of criticism. Here, we takea look at the value that AMCs provide tobanks and appraisers alike.

Cover Story: FInding the Value in AppraisalManagement Companies . . . . .6

Page 4: TAVMA Quarterly Newsletter

IS YOUR SALES STRATEGYLEAVING MONEY ON THE TABLE?

Good salespeople close on the prospects you know about.

Good marketing closes on the prospects you didn’t.

Unleash the power of your brand.

TM

www.trueimpactcommunications.com

Page 5: TAVMA Quarterly Newsletter

As an independent consultantin my prior career and on amuch smaller scale today—

business development and time andmotion studies mostly—I’ve workedin fields ranging from vendor man-agement, publishing, and informationtechnology, to venture capital, land-scape architecture and disasterrestoration. So one day, a prospectiveclient comes along seeking expertiseto help develop his business model.Trouble is I’m philosophically op-posed to the industry he’s in. Whatought I to do?

Most I suspect would counsel me todecline the engagement. For if I op-pose my client’s industry how can I bea faithful servant? Niccolò Machiavelliwould agree. For it was he, in ThePrince, who observed of secretaries(16th century consultants), “When yousee a minister thinking more of him-self than of you… oneso made will never be agood minister; neverwill you be able to trusthim.” And when thereis a lack of trust hecautioned, “The end isalways damaging ei-ther for one or theother.” I’d say it damages both.

Others might counsel me to takethe contract and do the work. Love thesinner but despise the sin, borrowing abiblical refrain. Give him your bestand the “Old Car” as real estate agentsmight say: Obedience, Loyalty, full Dis-closure, Conf identiality, Accounting andReasonable Care. But can a service

provider who opposes his client’s call-ing flip this switch and honor saidclient’s best interests?

Still others might counsel me to notworry about the moral dilemma. “Givethe devil his due,” the Charlie Danielssong goes. “Men regard it as their rightto return evil for evil,”said Aristotle. Work forthe jerk and take his for-tune. Maybe shirk bycutting some corners.Then blame him! Therake deserves it, right?

So after much grap-pling with conscience Ichoose to contract towork with this client.Yet I harbor resentmentthat it’s a Faustian bar-gain, a deal with thedevil. But whom do I re-sent? My client for making the offer?Myself for accepting it? The consider-ation? I agreed to it after all, but I

wanted more!What sort of minis-

ter can I be given mydistain for what myclient holds dear? Howloyal can I be to hiscause? Can I ridiculehim and remain a val-ued advisor? Evil for

evil, right? Is that what a person of in-tegrity does?

Stephen L. Carter, writing in In-tegrity, defined the integrity virtue as athree-step process: (1) Discerningwhat is right and what is wrong; (2)Acting on that which is discerned tobe right; and (3) Saying openly thatone is acting on their understanding of

right from wrong. Using this formula,if after giving it deep thought I con-clude that it’s wrong to take the jobthen I must decline the offer and ex-plain why. In so doing, I’ve met my in-tegral obligation, as framed by Carter.

I have no problem with either ven-dor or client telling mewe can’t work togetherdue to some conflict.Nor do I have a problemturning down work dueto a trust or Old-Carissue. If there is a deal-breaker conflict thenboth parties would befar better off for it in theend if we simply partways.

What I can’t accept isdiscerning that it iswrong to work with this

or that client on moral grounds andthen turning around and agreeing tothe engagement; keeping my resent-ment hidden from view. Or worse, ac-cepting the contract and thenslamming my now-client and his in-dustry to anyone who’ll listen; perhapsframing myself as a victim!

Faustian or not, in my role as eitherservice provider or client—rememberthat we all play both roles pretty muchdaily—I am the one who owns thechoice to work or not to work withanother. Should the day ever arrive inwhich I discern that we can no longerwork together, I’ll act on what I’vediscerned, tell you, and tell you why.You will honor me by doing the same.

Jeff SchurmanExecutive Director, TAVMA

By Jeff Schurman

Does A Trusted AdvisorBite The Hand That Feeds?

L e a d e r s h i p

Spring 2010 — TAVMA 5

If I opposemyclient's industryhow can I be afaithful servant?

Jeff Schurman

Page 6: TAVMA Quarterly Newsletter

6 TAVMA — Spring 2010

National lenders have alwaysworked with third party serviceproviders to complete tasks that

depended upon workers or informationtied to a specific geographic area. Titleunderwriters, which base their policieson public record information, title exam-iners and abstractors, and appraisers,whospecialize in certain communities orneighborhoods,have long beenhired through vendor manage-ment companies (VMCs).

Traditionally, these firmshaven’t garnered much atten-tion from the general public.ey work largely behind thescenes to facilitate transactions thatbenefit both lenders and home loanborrowers. Lately however, in an at-tempt to stop some practices that haveled to mortgage fraud, New York StateAttorney General Andrew Cuomo ad-vanced the Home Valuation Code ofConduct (HVCC), in association withFannie Mae and Freddie Mac.

e HVCC has had many conse-quences; some positive, and others, notso much. One of the consequences ofHVCC is that it thrust certain of theseVMCs, specifically appraisal manage-ment companies (AMCs), into the spot-light. In the process, some people haveraised questions about why these compa-nies are even in the process and questiontheir value to the transaction. It is rea-sonable for us to provide some answers.

We can look at the way AMCs servemortgage lenders and appraisers in a

number of ways. ey can be comparedto a wholesaler selling collateral valuationproducts to lenders, they can be com-pared to any other provider offering alender a fee for service or they can becompared to a marketing contractorworking for individual real estate ap-praisers. In all cases, AMCs work to geta collateral valuation product from the

appraiser to the lender while keeping theappraiser and the lender’s sales organiza-tion at arm’s length from each other, a re-quirement of HVCC.

The AMC as wholesalerMerriam-Webster’s dictionary defines

the term “retail” to mean “to sell in smallquantities directly to the ultimate con-sumer.” In the appraisal world, one envi-sions an appraiser or appraisal firmselling appraisals individually or in smallquantities directly to end-users. e bigbox retail trade, say Home Depot orLowes, sells hammers and nails and lum-ber at or slightly below retail to the do-it-yourself crowd. In the mortgage bankingindustry, lenders charge borrowers retailfees for various loan products. In each ofthese examples, the product or service issold in small quantities directly to theconsumer.

e same dictionary defines wholesaleas “the sale of commodities in quantityusually for resale (as by a retail mer-chant).” If in the real estate transactionwe view the end-user as the mortgagelender, who relies upon the appraisal toassess the risk inherent in a prospectiveloan transaction, this model applies wellto the modern AMC. In other words,

AMCs do not operate in a re-tail environment but rather asa “reseller”of large numbers ofappraisals to the end-user.

Just like wholesalers inother industries, the AMCpackages up collateral valua-

tion reports for the lender, adding valueby handling the relationship with the ap-praiser, providing a layer of quality con-trol on the reports and simplifying thelender’s transaction coordination andbilling processes.We would never expecta grocer to write a check to every brandowner that is represented on his shelves.ey’d much prefer dealing with a dis-tributor of many brands. So too a na-tional lender, which could managerelationships with appraisers across thecountry, but if given the option will usu-ally outsource supplier and pipeline man-agement to a third-party whose corecompetency is managing supplier con-tracts and workflow.

Appraisers often criticize AMCs foraccruing benefits to only the lender.However, upon closer look, benefits alsoaccrue to the appraisal provider. Likethe brand owners in the grocery store

Finding the Value in AppraisalManagement Companies

C o v e r S t o r y

Finding the Value in AppraisalManagement Companies

How these companies add value to the mortgage industry.

By Jeff Schurman and Rick Grant

An AMC's core competency is managingworkflow and contracts - with clientsand appraisers.

Page 7: TAVMA Quarterly Newsletter

Spring 2010 — TAVMA 7

example, or tool and lumber wholesalersin the big box retail trades, appraiserswould have a difficult time forging re-lationships with the nation’s largestlenders and servicers, unless they con-trol companies that provide valuationsfor a large geographic area. But thatwould require them to hire and managelarge numbers of local appraisers, whichis how the nation’s largest and most suc-cessful AMCs were formed.

Just like the brand owner-whole-saler relationship in other industries,appraisers also get an importantrisk mitigation benefit by workingwith an AMC, according to T.Michael Ousley, executive vicepresident of appraisal services forClearCapital.com, Inc.

“One appraiser told me, heworks with AMCs because healways gets paid,” Ousley said.“They may not get the “full fee”on every file, but they get paid onevery file.”

He pointed out that many ap-praisers who worked directly with thenation’s largest subprime lenders re-ceived a rude shock when the lightssuddenly went off in those companies.Some appraisers lost tens of thousandsof dollars.at probably would not havehappened if they had been workingwith reputable AMCs. In fact, I recallonly two instances of large-volumeAMCs that folded in the past 5 years.One was an independent VMC that, inmy understanding, went under due totitle-side matters; the other was alender-captive that ceased operationswhen the parent company failed. usstability and payment of appraisers’ in-voices are additional benefits for ap-praisers working with AMCs.

The fee for services modelIt is perhaps even simpler to think

of the relationship between the ap-praiser, AMC and mortgage lender interms of the lender trying to minimizeits fees for certain products and services

Page 8: TAVMA Quarterly Newsletter

8 TAVMA — Spring 2010

without sacrificing quality. Likewise, theprofessional appraiser is in need of cer-tain services and is willing to discounttheir fee to get them.With these facts inmind, the fee for services model seemsan appropriate consideration as well.

When a local lender does business in amajor U.S. market, the institution mayhave up to 20 licensed or certified ap-praisers who specialize in that geograph-ical area to choose from. Of thoseappraisers,perhaps half have relationshipswith local lenders that keep them fully en-gaged and thus out of relationships withAMCs. Left with 10 possible partnersand only a few loans to originate in thatparticular MSA,even a large lender does-n’t have much bargaining power and is leftpaying the fee the appraiser asks, andpassing that on to the borrower.

An AMC working in the same MSAis likely to have many more loans inprocess from the many lenders it servesand can therefore negotiates froma better leverage position. Plusthey typically have the technol-ogy to track and report things likefees, turnaround times and serv-ice levels, something most locallenders cannot do with such pre-cision. An AMC’s core competency ismanaging workflow and contracts – withclients and appraisers. Which presentsappraisers with a choice: compete for say1 in ten full fee appraisal orders fromlocal clients, or offer the best combina-tion of quality, service, and price to com-pete for 3-4 in ten appraisal orders fromone or more AMC?

On the other side of the table, theprofessional appraiser is working hard tocomplete reports and return them to cus-tomers to collect a fee. ere are manytasks that must be completed in order torun a successful appraisal business be-yond the development and reporting ofan appraisal. In addition to the appraisalproduction cost, every entrepreneur, in-cluding an appraisal business owner, ex-pects to incur costs for businessdevelopment, sales and marketing, ac-

counting, public record or other data, fa-cilities, technology, and billing.

Some of those expenses are paid toadministrative staff workers, informationtechnology professionals, and Web serv-ice providers, among others. Increasingly,appraisers are contracting with AMCs toprovide some or many of these services,reflecting the work of the AMC in theirpricing schedule.

I can hear howls that ‘AMCs add novalue to the appraiser!’ right now. So let’stalk about a few value-adds for apprais-ers who work with AMCs. One areawhere AMCs benefit appraisers is infor-mation technology and connectivity.Computer hardware and software arevery expensive.Likewise, software devel-opment is beyond the reach of manysmall business owners. AMCs assumeresponsibility for getting appraisal re-ports from the appraiser to the client’sdesktop; the appraiser doesn’t have to.

ere’s value in this.Another area relates to the property

information locked within databases thatcan help appraisers do a better job ofevaluating properties. Data, even whenit’s in the public record, can be expensive.AMCs can help with that.

“We have sources of data that aremore affordable for local appraisers,”saysClearCapital’s Ousley.“We do aerial im-agery and historical sales informationand listing information and even have ahome data index that can help an ap-praiser identify where a market is going.We might do 100 files in their zip codeover a month or two where they may do15, so this is a real benefit to them.”

Another added benefit to appraisersunder this model revolves around risk.Every business runs the risk that workwill be completed, and accounts billed,

but payment is never received. eAMC mitigates this risk for the profes-sional appraiser by agreeing to pay forevery job, whether the lender acceptsthe work, closes the loan or goes out ofbusiness. Very often, the appraiser ispaid before the AMC is. Fewer ac-counts receivable, collections, andcharge-offs add value to the appraisalshop and protects cash flow, the life’sblood of any small business enterprise.

The AMC asmarketing contractor

A specialized case of the fee for serv-ices model as it pertains specifically tothe appraiser is the case where the valu-ation provider contracts with the AMCto provide all of the tasks required to getnew business in the door.

In 2008, a national survey of apprais-ers discovered that over 60% of residen-tial appraisers rely on referrals and

networking as their primarymeans for business development.Less than 10% of the respondentsindicated telephone and internetmarketing are primary sales vehi-cles. Although referrals and net-working are terrific ways to

market to local audiences, the marked in-crease in centralized loan production hasmade these methods somewhat obsoletein the residential mortgage industry. Soappraisers increasingly rely on AMCsthat employ national business develop-ment and client relations managers, in-side and outside salespeople, advertisingand public relations firms, and complexWeb-interfaces to engage and serve thenational sector of the mortgage industry.

Business development,marketing andsales are areas of particular expertise forthe AMC.I can tell you from experiencefielding calls from AMC business own-ers that highly connected national salesrepresentatives are in great demand.Andthey’re not inexpensive. Companies relyon sales and client relations teams to cul-tivate and maintain relationships withnational lenders.is takes the sales bur-

C o v e r S t o r y

One area where AMCs benefitappraisers is information technologyand connectivity.

Page 9: TAVMA Quarterly Newsletter

Spring 2010 — TAVMA 9

den off the appraisers who work withAMCs, so they can focus on being in thefield and doing appraisals. And there’svalue in that too.

Meanwhile, the industry downturnhas put even more of the nation’s origi-nation volume in the hands of fewer na-tional lenders who cannot maintainrelationships with individual appraisersacross the country. Just look at the quar-terly rankings of mortgage lender size byloan originations and you’ll see that thetop 10 retail lenders control over 73 per-cent of all loan originations.

“e number of lenders has decreasedfrom what it was a number of years ago,”said Jeff Dickstein, chief appraiser forPro-Teck Valuation Services.“ose thatare still operating are doing so on a na-tional level. ey need AMCs to out-source that business to so they can get thequality that meets their expectations.”

It makes sense for appraisers, too, ac-cording to Dickstein. “An appraiser thatis a local expert in an area doesn’t alwayshave easy access to a large nationallender or servicer. e AMC takes overbeing their sales department, their ac-count manager, their resolution depart-ment, and their billing department. Wepay all of our appraisers whether a dealcloses or not. ey don’t spend timechasing past due invoices. ey don’thave to deal with the minutia that comesthrough from the lender.”

One of the biggest challenges that thesmall business owner has is erratic salesperformance. It’s often “feast or famine”for these operators, and over the past fewyears as the real estate market has suf-fered, appraisers have shared in this un-fortunate circumstance.

Lenders have a related problem. Fi-nancial institutions have learned to resistthe urge to staff up when business in-creases because they know they will onlyhave to lay workers off when the businessreturns to normal levels. is involvesreputational and other risks to the lender.

Even as the appraiser wants consis-tency of work, lenders want consistency of

workflow. National lenders need to knowthat the appraisal will be delivered withinthe agreed-upon time, in the proper for-mat to be used by its technology and atthe proper quality level. AMCs are in aperfect position to give appraisers andlenders what they both want.

The AMC as adversaryRegardless of which business model

we use to explore the business benefitsthe AMCs deliver to both appraisers andlenders, there will always be some lenderswho do not outsource to AMCs andsome appraisers who won’t work forthem.at is their choice.

e idea that any lender or appraiser isforced to do business with an AMC byHVCC or any other market force is nottrue. ey enter into contracts withAMCs (or not) at their own volition.Offer, acceptance, and consideration aregenerally considered the hallmarks of en-forceable contracts.An appraiser say,whochooses not to work with an AMC, doesnot have to; nor must an AMC work withan appraiser if it chooses not to. And thatis fine.It is what makes our free enterprisesystem great.But the majority of residen-tial appraisers do work with AMCs. Myconcern is that bashing AMCs under-mines the appraisal profession.

ere are success stories in our indus-try among both individual appraisersworking directly for lenders and thosethat have made a success out of workingwith AMCs. Others work with both.

I often suggest to appraisers that theycompare the net income of a professionalappraiser who hires and pays staff tohandle all business development, tech-nology-related and accounting dutieswith what the same appraiser could earnworking for one or a few prominentAMCs. A sole proprietor communicat-ing candidly about these costs will tellyou that, at the end of the year, they arenetting somewhere between 60% and70% of the retail fees that they earn di-rectly from the lender.

Doesn’t that make sense? Aren’t there

marketing costs in securing and servingout-of-area lenders? Technology costs?Accounts receivable and charge-offcosts? Administrative costs? While wecan argue about “how much” of a gapthere is between gross and net income.However,we must agree that a do-it-all-yourself appraiser or small shop appraisalfirm has some expense that can beavoided working with an AMC.

It is true that AMCs work on behalfof the lender and will always work to getthe best price for each collateral valua-tion product they order. In the same way,mortgage lenders will always look forways to reduce costs associated with loanproduction and to improve productivity.

In the end, characterizing the AMC-appraiser relationship as adversarial isunfair both to the parties as well as tothe lender and ultimately the consumer.It behooves the industry to determinewhere AMCs make sense and to makeit easy for them to operate there, servic-ing both lenders and appraisers in theprocess. But yelling at each other willonly push down the perceived value ofappraisal in the mind of the client andconsumer. Which is counterproductiveto us all. �

Page 10: TAVMA Quarterly Newsletter

10 TAVMA — Spring 2010

Once upon a time, there wassales, and there was marketing.The differences were obvious,

and the gap between was large. If youwere delivering the mes-sage from afar, be itthrough advertising, apostcard or even a good,old-fashioned news re-lease, it was marketing.The basic message wasusually little more than“Here is what my prod-uct can do for anyonewho happens upon mymessage.” Marketingwas a glossy “leave-be-hind” flyer or a large di-rect mail campaign.And there was absolutely nothingpersonal about it.

Sales, however, was more cus-tomized. It had to be. It was a hand-shake at a trade conference, aface-to-face conversation. First nameswere used in the course of the conver-sation, and the “pitch” (a good one,anyways) was tailored to the needs ofthe prospect or customer.

Marketing? Not so much.at’s all starting to change, however.

In today’s settlement services industry,the prospect is bombarded on a dailybasis by old-fashioned marketing. Andits effectiveness is questionable. Someresearch suggests that the averageprospect must see a marketing messageNINE times before the message beginsto register. at’s quite a bit of market-

ing, and quite a bit of expense for amarginal return. e bottom line isthat, when it comes to traditional,“broadcast-style” marketing, it takesmore these days to get less.

The good news, however, is thatmarketing tools are be-coming more sophisti-cated. We are now ableto customize our mes-sage more and more.Whether using e-mailmarketing or socialmedia, businesses arenow able to tailor a mar-keting message tosmaller and smaller seg-ments of prospects. So,where marketing wasonce just the standardfeature/benefit flyer a

salesperson handed to his prospect, itis now morphing into an early start toa real conversation.

Conversation, not broadcastingWe don’t have time to read much ad-

vertising any more. It’s just that simple.A challenging market and industry con-solidation mean that we’re being askedto do more in less time. If we have timeto read a trade publication, or check oure-mail, we’re not reading every wordcarefully. If we didn’t ask for the mes-sage, and it’s not from a prospect, we’reprobably not bothering to read it at all.

It is also resoundingly clear that werecognize an advertisement—andperemptorily disregard it—when we seeit. Some studies suggest that we sub-consciously avoid looking at the top andright hand margins when we look at a

Web site. Why? Well, that’s the tradi-tional home for Web site advertising.We’re in a hurry, and we’ve come to theWeb site in our limited time to read thecontent, not the ads.

After all, it is so easy these days to getinformation about a product or servicewe need that we can seek the informa-tion we need on our terms. In otherwords, we’ll listen when we’re ready tomake a purchase. Don’t call me—I’llcall you.

Ergo, the transformation (return?) toconversational marketing. Relation-ships still rule this industry. A sales per-son I don’t know who is approachingme at a conference, barking out the fea-tures of his new product, is probably oneI’m running away from. But if he or shestarts the conversation with a commentabout the key note speaker, a questionabout my product or even an observa-tion about the weather, well, now we’rein a conversation. Somewhere down theroad, this may turn into a sale.

The parallels of content market-ing and consultative sales

e focus of marketing is changing.e new question in this dizzying era ofinformation is “what does your messagedo for me?” In other words, “whyshould I bother to read your marketingmessage?” If it’s just a statement aboutthe virtues of your service, the prospectcan find that (theoretically) when he orshe is ready.

So what can you do for me,even if I don’t use your product?

Sound familiar? It should. In thisindustry, the consultative approach

By Brian Rieger

The More Marketing Changes,The More Like Sales It Becomes…

Latest marketing techniques finding new similarities with consultative sales approach.

Ma r k e t i n g

The More Marketing Changes,The More Like Sales It Becomes…

Brian Rieger

Page 11: TAVMA Quarterly Newsletter

Spring 2010 — TAVMA 11

has always been favored. The desiredposition for the best salespeople isthat of the “trusted advisor.” Not onlydoes the trusted advisor make the sale,he or she maintains an ongoing con-versation with the client. He clearsservice hurdles when necessary. Sheforwards articles of particular rele-vance to the customer. He can referthe customer to new prospects (withinthe bounds of RESPA, of course) ormake a call when needed—even if theaction, in and of itself, doesn’t directlylead to a sale.

In the past, marketing didn’t do this.Marketing was just a product brochureor a postcard. It was something we heldonto until we were ready to make a pur-chase. It was nothing that could helpus, unless we wanted to know what theproduct claimed to do for us.

The real benefits ofcontent marketing

e new rule of marketing is simple.Provide value. And no, it’s not enoughto assume that telling someone aboutyour product provides a solution any-more. at’s part of the deal, but in-creasingly, it’s being consigned to thecollateral marketing and sales elements.Instead, if you want to engage theprospect before you get to the face-to-face meeting (assuming you can get tothat point) your marketing needs toprovide value. It needs to providesomething the prospect can use, even ifhe or she never uses your product.

Is that fair? Maybe not. But it’s ef-fective. And it’s becoming the only wayto really engage future customers withyour marketing.

is is not an industry easily able toprovide value by offering coupons ordiscounts in advance (a la any numberof retail businesses able to draw trafficby offering coupons or special deals ona Facebook page or fan Web site). Sowhat is of “value” to your customer?

Needless to say, in a market like this,information is valuable. Hence, e-

newsletters or blogs are springing upacross the industry. But the successfulnewsletters and blogs are not just glo-rified advertisements. Instead, theyoffer information useful to theprospects: legislative/regulatory up-dates (fertile ground for discussiontoday); state-specific news…things thetypical lender, underwriter or agencyneeds to do its jobwell. In the olddays, the solidsalesperson wouldforward a newsarticle when shethought it wouldhelp the customer.Today, we do thisin any number ofways, via contentmarketing. Andthe benefits arethe same. Con-versational marketing helps build therelationship and facilitates trust in youor your brand. It focuses the conversa-tion on the prospect instead of you(playing on the tried-and-true featuresof human nature). And it maintainstop-of-mind awareness, a critical ele-ment for most sales. Indeed, market-ing is much more psychology thantrigonometry, and the success of con-tent marketing only confirms this.

Make content marketing workfor you by making it work for

your prospectWhether you’re doing a newsletter, a

blog or a podcast, you need to keep thefollowing things in mind when produc-ing content marketing.

Be consistent. If your prospectscome to expect a regular newsletter orblog, they’ll be disappointed when youdon’t have new content available regu-larly. They’ll abandon the site or blog,and it will be twice as hard to winthem back.

Build traffic. If you’re using socialmedia or sending a newsletter, you need

eyeballs on the content. Spend the timenecessary to grow the base—it’s basi-cally a marketing list for you.

Talk with your prospects, not “at”them. One-way conversations are rarelyeffective in any medium.

Put yourself in your prospect’s shoes.Why are they looking at your material?What value are they hoping to derive

from it? What isof interest tothem, beyondpurchasing yourproduct?

It’s pretty sim-ple in concept. Abest-practices ap-proach to market-ing is rapidlyconverging withthe establishedbest-practices ap-proach to sales.

e communication should approach aconversation, a give-and-take exchange.It’s not enough to broadcast your valueproposition anymore. Save the majorityof that for the closing of the deal, or, formarketers, the collateral. Marketing hasa more significant role than ever beforein building relationships, and there arenumerous cost-effective ways to do it.It just takes a little time, and a lot ofcommon sense.

About the Author:Brian Rieger is the principal ofTrue ImpactCommunications (www.trueimpactcom-munications.com), a full-service marketingand public relations agency serving themortgage and settlement services industry.He has served as a trusted advisor to largeand small firms in the industry for sevenyears. Brian was also the Vice President ofSeminars and Studies at publisher OctoberResearch Corporation for five years. You cancontact Brian at (330) 348-1678, or [email protected],and you can see his weekly blog (on similartopics) at www.trueimpactcommunica-tions.com/blog.

Page 12: TAVMA Quarterly Newsletter

12 TAVMA — Spring 2010

The bigger the current marketslump gets, the smaller the fieldof participants and businesses.

Or so it seems, sometimes. ere is nodoubt that the settlement services in-dustry is not quite as big in 2010 as itwas in 2005. Consolidation is the nameof the game, and has been for a few yearsnow. With firms competing for marketshare as originations decline, acquisitionhas been a major strategy for several ofthe larger companies. Additionally,many small to mid-sized settlementservices providers, faced with a dramaticdrop-off in home equity and purchasetransactions, have been forced to become“one-stop shopping” providers, oftenbranching into lines of business that in-clude real estate-owned (REO), shortsale and foreclosure-based services.

In short, there are today fewerproviders competing for even less busi-ness. One of the results of this new mixis a forced growth in geographic coveragefor many local and regional firms. It’s justnot enough anymore for a title companyor settlement services provider to stake itsclaim in a single state. Lenders, origina-tors and brokers want partners which canhandle multiple kinds of transactions ina wide range of jurisdictions.

Or do they?While the above assertion is true to a

degree, it competes with a second and,often,overlooked mandate. Quality con-trol is once again moving up on the prior-ity list for all parties and providers in themortgage transaction. “Faster” is still in-credibly important, but not the only re-quirement for lenderbusiness—not in a com-pliance-driven climate ofrisk aversion and litigation.Today, even the largestmortgage lenders rely to asignificant degree on theknowledge and local expe-rience of each and everypartner or vendor.

So while title compa-nies and settlement serv-ices providers may nowneed to offer more thanjust refinance transac-tion-based services in asingle metropolitan area, it still remainsthe unquestioned truth that real estateis, indeed, a local business. Why? Firstand foremost, whether your geographicfootprint covers Pittsburgh or Pen-sacola (or both), your services will begoverned by the laws, ordinances andregulations of that state, county andcity. Moreover, the regulation or ordi-nance governing your foreclosure serv-ices or REO package today may easilychange again tomorrow. It’s a real chal-lenge for even the biggest nationalproviders to stay on top of the convul-

sive regulatory and compliance climatein which the industry finds itself today.

But wait—there’s more. Even themost compliance-savvy nationalprovider is not always a match for thecolorful patchwork of local county

recorders, county clerksor city personnel chargedwith the keys to the realestate data kingdom on adaily basis. It’s one thingto understand the subtlenuances of a tax lien andthe way it is recorded inNew York. It’s another toknow the difference inthe way those liens arerecorded from county tocounty. And while mostprofessional firms areable to overcome the in-evitable eccentricities

that tend to pop up from one court-house to another, only those who knowtheir way around can do so quickly. Ac-curacy may have growing importance inthe mortgage transaction, but fast accu-racy is irreplaceable.

So how does thisapply to your business?What’s the lesson here?

First, it’s ok to branch out into newlines of business, if you are ready to dothem well. ere’s almost no home equitybusiness to be had right now,so if yours is

By Jim Hollerbach

Industry Consolidation CanAlso Spell Opportunity for LocalSettlement Services Providers

Instead of being all things to all customers, remember thatreal estate remains a local endeavor.

I n d u s t r y I s s u e s

Industry Consolidation CanAlso Spell Opportunity for LocalSettlement Services Providers

Jim Hollerbach

Page 13: TAVMA Quarterly Newsletter

Spring 2010 — TAVMA 13

a firm that once made much of its revenueservicing HELOC transactions, it is notonly reasonable to expand your service of-fering, it’s probably necessary.

But as you roll out your new service of-ferings, it’s not acceptable to hide yourlocal understanding and experience.Lenders and title insurers are increasinglylooking for just that. “One-stop shopping”is not as positive a statement as it oncewas—not when it can mean “we’ll do any-thing for a buck,but can’t promise it will bedone well.” If you understand BexarCounty in Texas, that’s a good thing.

Secondly, if yours is a business that isnewer to the industry or the area you areserving, get to know your jurisdiction.Do it now, and do it well because yourcustomers won’t wait for you to navigatethe daily, routine hurdles awaiting set-tlement services providers unfamiliarwith the dozens of small delays awaitingthem from jurisdiction to jurisdiction.

Similarly, you don’t need to be an at-torney to understand the niceties of yourlocal compliance climate. Stay in touchwith your local bulletins, your local newsand knowledgeable local professionalsabout the ever-changing rules governingproperty data, foreclosure or REO. Makethe time to understand what the latestcity ordinance really means to your na-tional clients. Is it being enforced? Whatare the red flags for the regulators? Whatdoes the rule mean for your clients? Howare others staying in compliance at thelowest cost and with minimum impactupon workflow? Large national lendersand underwriters will probably be awareof new rules and regulations at all levels.But they’ll look to you for guidance onwhat the letter of the law really means forthem. And if you can’t help them, they’llgo to someone who can.

It is a tough market, and the only peo-ple who claim to be sure of exactly when

it will improve are likely trying to sellbooks they’ve authored. at doesn’tmean, however, that you can’t succeed.Consolidation is actually a way for youto make your local business knowledgeand experience work. Relationships stillrule the mortgage industry, and your“mom and pop”background may actuallybe something the big boys are lookingfor. Make your strength a part ofyour marketing package, and help yournational customers to navigate theintricacies of your local market.

About the Author:Jim Hollerbach is the owner and presidentof Hollerbach & Associates, a Texas-basedtitle research and abstracting companybased in San Antonio, e firm hasserved the mortgage, title and vendormanagement industry nationwide for25 years. For more information, go towww.Hollerbach.com.

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14 TAVMA — Spring 2010

Q & A

Q:What are the most important questionsfacing your industry today?

A: Mostly, we’re facing a lot of questions about where we fitin the industry, what we do and the value that we offer. Thetruth is that appraisal management companies can offer a lot ofvalue to both appraisers and lenders. But there is a certain fac-tion at work out there in the industry that would like to be-lieve that we exist to put appraisers out of business or treatthem poorly or to seek out the least experienced appraisers.That’s just not true.

Quality is not something you can negotiate on, not in ourbusiness. Our customers depend upon us—now more thanever—to give them a collateral value answer that is reliable andthat they can make a solid lending decision on. That means weneed to work with the very best appraisers we can find.

And we don’t work with them for just one deal. We’re outthere establishing relationships with these professionals, so wecan work with them again and again. That’s what provides themost benefit to both their company and ours.

Our challenge is to overcome those perceptions by answeringthose questions. It’s a challenge because we’re fighting against abad first impression that hinders our business but that was per-petrated by people who use anecdotes instead of evidence.

Q:How important is technology in your busi-ness and are you worried that technology

will ever replace the VMC?

A: Technology is a very important tool and we certainly em-brace it to help us be more accurate and consistent in what wedo. We use technology to help us find the most proximate ap-praiser, with the idea that the closest appraisers will be the mostknowledgeable and will give us the highest quality product.

We also use technology to find new ways to help appraisersdo their jobs more efficiently, to help them interface with usmore easily so they can be more productive in their day andwork smarter instead of harder for their money.

I remember when I was appraising real estate full time, back30 years ago now, when everything we used to rely on to comeup with a value came out of books that were dated. Today wehave aerial imagery so appraisers know what they are facing

About Mike OusleyMike Ousley is Executive Vice President of

Appraisal Services for Clear Capital™. Heoversees the direction and growth of the ClearCapital team responsible for providing reliableAppraisal products nationwide to mortgageservicers, mortgage originators, mortgage in-surers and government sponsored enterprises.

Ousley’s professional background spansmore than 30 years of real estate collateralassessment, mortgage banking, and privateand public business. He was Vice Presidentat California Federal Savings Bank, instru-mental in setting service and quality stan-dards throughout Northern California andNevada.

He also founded Foster Ousley Conley andled it through its growth from a small two-person operation to a nationwide companyemploying more than 400 people, thousandsof contractors and managing multiple officesin dozens of states. After Foster Ousley Con-ley, he founded a multi-office national firm,Appraisal Enhancement Services (AES). Uti-lizing web-based technology and proprietaryanalytics, AES assisted mortgage originatorsand the investment banking community inmanaging thousands of real estate transac-tions daily. AES also provided collateral riskaudit tools and scoring models, appraisal re-view and real estate valuation services.Clients consisted of the largest real estatelending, mortgage insurance companies, rat-ing agencies and investment banking firmsin the United States.

His company was recognized as the seventhfastest growing private firm in the San Fran-cisco Bay Area in terms of revenue by the SFBusiness Times, growing in excess of 400 per-cent annually. In 2003, AES was acquired by afortune 500 company. Ousley has served as theChairman of the Chief Appraiser’s Council andthe President of the California Association ofResidential Lenders.

A Discussion WithA Discussion With

Page 15: TAVMA Quarterly Newsletter

Spring 2010 — TAVMA 15

before they even get out into the field. It’s wonderful.

Technology can make people more efficient and more suc-cessful, but it can’t replace them, not in our business. It willnever take the place of a professional fee appraiser and it willnever replace the AMC that works hand-in-hand with thatappraiser to serve the lender.

The firms that are trying to selltechnology as a replacement for anAMC are really selling the concept ofa bank-owned AMC, because they’restill going to need a staff to run it.

Q:What do you think ittakes for a

VMC to be successful intoday’s environment?

A: We have a very hard time differ-entiating between our customers, ourlender clients and our vendors. We’realways working to make that relation-ship smooth across the various bound-aries so you can’t really tell where oneends and the other begins. That’s certainly true when itcomes to success, because everyone’s success depends uponthe others in this relationship.

For us, it comes down to building partnerships that willlast. ose relationships are built on mutual respect, whichreminds me of a pet peeve I have. Sometimes, when we wina new account, a lender will smile and tell me that his com-pany is going to use us. I always smile back and tell him thatI certainly hope not. Work with us, let us serve you, build agreat relationship with us, but don’t use us. at just doesn’tsound right.

Of course, they never mean it like that, but I think it’s im-portant that we take care in how we talk to and about ourpartners. We don’t use appraisers and we don’t like anyoneelse to use us or our appraisers. We want a relationship andthat’s how we measure success.

Q:Looking back over your career,what are you most proud of today?

A: I’m really excited about the opportunity to bringchange to our industry. If you look at the Broker PriceOpinion and the real estate appraisal, those are just twoproducts that make up a small segment of the marketplace.Lenders are embracing new tools which brings with it newopportunities for both real estate brokers and real estateappraisers.

I’m excited about helping appraiserslook at their workday differently. In-stead of just focusing on how many ap-praisal assignments they can complete,they can profit from spending time onthese other new products. is expandstheir horizons, makes them moremoney and gives them a heightenedsense of satisfaction.

Measuring their performance by theappraisal is a one-dimensional measurethat doesn’t fully capitalize on their skillset. We’re helping appraisers go beyondthe appraisal report to become valuationprofessionals.

Our brokers have the same opportu-nities. We want to help them do and profit from all of thethings they are capable of doing.

Q:Are you seeing any trends today thatyou think will impact our industry in the

near future?

A: We are seeing some stability in a variety of markets,more markets then not. But there are many factors that makepredicting the future difficult.ere are always the questionsof the shadow inventory, the new programs the governmentmight implement to keep people in their homes, as well asother forms of government stimulus.

I’m hopeful that we’re finding a bottom and seeingstability and jobs return to the market. We’re certainly notout of the woods and there are plenty of questions to beanswered. If we go about it in a measured way and don’tpanic, we should get back to more of what we would term anormal, rational market in about 18 months. �

Michael Ousley of Clear CapitalMichael Ousley of Clear Capital

Page 16: TAVMA Quarterly Newsletter