Two underwriter appointments on the table, five points apart on the split

Take the split math first. 22 files at $1,450 is about $31,900 a month in gross premium, and five points is roughly $1,600 a month. That holds only if 22 files a month is real from day one. New agencies typically ramp over 12 to 18 months, and mix matters, because refinance files usually carry lower premiums than purchase files under most filed rate structures. At 12 files a month the split difference is closer to $10,000 a year, which is one deal that dies in curative.

The remittance buys claims capacity and access to underwriting counsel, plus the underwriter's balance sheet standing behind the policy you sign. Agency agreements commonly make the agent responsible for a portion of losses on files the agent handled, often through a per-claim deductible or a retention amount. That section is where the two agreements will differ most in dollars, and it is worth having a lawyer in your state read both before you sign either.

Two things you left out. Escrow trust liability sits with you, not the underwriter, so the reconciliation discipline and the bonding requirement should be part of the comparison. And title insurance rates are filed and regulated state by state, with some states promulgating premium and some allowing agents to file their own, so confirm with your state insurance department how much of your revenue you actually control.

On curative turnaround, price it. If two to four days on complex files costs you two dead deals a year at your average fee, that is the five points. If your expected file mix is clean residential resales, it mostly is not. Estimate your share of files needing a counsel opinion before you decide.

Dual appointments are common. Read the exclusivity and volume commitment clauses in both.

I'd take the one whose lawyer picks up the phone. Five points is a spreadsheet. A file stuck for four days with a buyer's lender rate lock running is a phone call you have to make to an agent who then stops sending you work.

@verity is describing the thing that actually compounds. I've been on the other side of it as a buyer twice. The title shop that gets my repeat business is the one that told me on day three that there was a problem, not day eleven.

Halyard, one thing on B's central processing for larger files. Ask what you're allowed to tell the client while their file is in someone else's queue. If you can't answer a status question about your own order you'll look incompetent for something you didn't do.

Working capital question nobody has asked yet. When does remittance leave your account? Some agreements are monthly on a schedule, some want it within days of policy issuance. If B is on a tighter remittance cycle than A your five point advantage sits in someone else's bank account earlier, and you're the one carrying payroll for an escrow officer either way.

I've sent files to four different title shops in three years and I have never once known or cared who their underwriter was. What I cared about was whether the commitment came back in 48 hours and whether the closer could handle a seller who lives overseas. Whatever you pick, the referral base won't reward you for the split.

Reading through the ALTA Best Practices thing, isn't that assessment something you'd end up doing anyway because lenders ask for it? If so, A requiring it in year one isn't really a cost of A, it's just timing. Or does B not care at all and you could defer it two years?

@keystone I pick title by whoever my agent tells me to use, honestly. That's the whole selection process for me right now.

On the counsel turnaround, I lived this last spring. Deceased owner, no probate opened, heirs scattered, and the underwriter's counsel took nine business days to come back with what they'd accept. Seller walked and relisted. Nobody got paid.

If half your market is older housing stock with estates in it, that two to four day number turns into two weeks the first time it's genuinely complicated. Ask B for the name of an agent doing estate-heavy work and call them.

Check whether B's plant access covers the counties you actually want, not the counties they list. Out where I look, half the counties have nothing resembling a plant and you're paying an abstractor $175 to $250 a search regardless of what platform you're logged into. If your two counties are the populated ones, fine, that access has value. If you plan to follow work into the thin counties it's worth zero there.

Five years in on the service side and the terms I'd read hardest are the ones about leaving. Termination notice period, what happens to your pending files, whether there's any restriction on moving your book to another underwriter, and who owns the search data you generated on their platform. That last one is why B's free platform makes me twitch. Free tools that hold your work product are a switching cost with a nice name.

The five points is a two year number. The exit terms are a ten year number.

Does B's central processing actually take labor off your escrow officer's desk, or does it just move underwriting decisions? Those are very different. If it's real production capacity it might be worth more than the split, since one escrow officer tops out somewhere around 25 to 30 files a month depending on complexity and you're planning 22.

Genuine question, if the search and exam is increasingly automated on platforms like B's, what's left that's actually yours? I'm trying to understand where a small shop's value sits five years out.

@pike the assessment cost isn't only the $6,500. It's the remediation, and remediation for a brand new shop is mostly writing procedures you'd have to write anyway. Doing it in year one with A while your volume is small is easier than doing it in year three with 25 files a month and no free hours. I'd almost count A's requirement as a favor.

I send the referrals I control to whoever handles a payoff from a small local servicer without three follow-up calls from me. Boring, repeatable competence. Neither underwriter gets you that, your closer does.

Take the appointment with the lawyer who answers, and get the second one later once you have volume to be interesting to them.

Model it as two lines. Line one is the split difference, $1,600 a month at your stated volume, discounted for a ramp you should assume is slower than you think. Line two is expected deals lost to curative delay, which is file mix times probability of a counsel question times your average fee times whatever share of those become dead deals.

Halyard, you can actually estimate line two. Pull 50 recent commitments from a shop you know, count how many needed an underwriter opinion, and count how many of those had a deadline inside four days. If that share is under 5 percent, take the money. If it's 20 percent, the five points is already spent and you just haven't recorded the expense yet.

And @sable's remittance timing point is the one I'd chase first, because it changes how much cash you need to open the doors, which is a hard constraint rather than a preference.