The “Hurry Button” Test For New Hires

If you’ve ever hired someone with “title experience” who still couldn’t run the file when it mattered, we get it and we go straight at why that happens. We talk about what actually predicts success in title insurance and escrow roles, and how to spot real potential even when a candidate comes from banking, sales, or a completely different industry.

We break down the traits we look for first: attitude, energy, curiosity, honesty, and that hard-to-fake sense of urgency we jokingly call the “hurry button.” We also share practical interview tactics to cut through vague job titles, including bringing a sample title commitment into the room and asking candidates to walk through Schedule C so you know what you’re starting with. Just as important, we cover why the person who will supervise the role must be part of the hiring process, and how culture fit can matter more than a single high producer.

Then we shift from building great teams to building a business that can stand up to investor scrutiny. We explain why valuing a title company isn’t as simple as finding perfect comps, why a normalized P&L is a must, how profit multiples typically work, and why buyers often want the owner to stay through a transition with earnouts. We also unpack joint venture conversations happening more often right now, including capitalization, operational control, and compliance realities, especially in restrictive states like Texas.

If you’re hiring, planning an exit, or exploring a partnership, listen through and take notes. Subscribe to Shift Happens, share this with a business owner in your network, and leave us a review. What’s the one trait you’d never compromise on when building your team?

Transcript

Introductions And Title Career Paths

Brandi Abercrombie 0:00

Welcome back to another episode of Shift Happens with National Investors. We've got Tom Berry with us today, who is our fearless leader. And so I'm Brandy Abercrombie. We have Lisa Monte with us again. We've both given our probably extended introduction, but wanted to let Tom have that opportunity. And fun fact, he too is a recovering closer.

Tom Berry 0:21

Yes, I'm a recovering many things in the title industry, as it turns out. Yeah, I uh like many people, I fell into the title business. Unlike many people, I fell into the title business by starting my own title company, knowing nothing about title, nor did my my three partners who were who were the money behind it. None of us had any business being in the title business. So that's a turns out to be a very expensive way to learn the title business, but we did. And uh did that for a couple of years, or I guess about four years, and then I always told people I sold it to a larger company, which is a fancy way of saying we all got to have jobs the next day. It was with paychecks. Yeah, with paychecks and good benefits and more importantly, actual title expertise. So I went from being the COO of my own company to being an escrow assistant for a very busy closer, which was a humbling experience, to say the least.

Brandi Abercrombie 1:18

We we know that closer pretty well. She's a she's a great person, but I can just I would have loved to have been a flower.

Tom Berry 1:24

Yeah, I wasn't I wasn't a very good assistant, as it turns out. So uh she taught me a lot. And then I uh you know, the other thing I always mention is I think, with the exception of examining, nobody will let me examine. I've done every other job. I've been an escrow assistant, I've closed, I've been a business development officer. I have even done three-way reconciliations and escrow accounting, which I hated. I was briefly a receptionist. I got fired as a receptionist, not a good receptionist. So it was it was it was it was an interesting experience to go from thinking, well, I'm a I own my own business to oh, I should probably know the difference between a deed and Adidas Trust, you know. So it was but I love it. Of you know, now it's been 20, it's that makes me feel old to say, but it's been 20 22 years or something like that. So it's been a long time.

Lisa Monti 2:16

Yeah. Well, and so Lisa, just a quick reminder of tell tell our guests who you are and kind of what you do. Okay, Lisa Monti, business development rep for most of South Texas. And my share this role with Lauren Blair. And I started as a receptionist closer. I've kind of like Tom, done a lot of things, but not not through reconciliations and not anything on the search and exam side.

Tom Berry 2:38

Didn't get fired as a receptionist either. Yeah. Yeah.

Build Talent Instead Of Poaching

Brandi Abercrombie 2:43

Well, so today what we want to talk about is how to talk how to spot talent in the title insurance world, or more importantly, maybe outside of the title insurance world. So I know in a lot of large markets, closing teams tend to move around. So, Tom, you've seen a lot of that as far as in your history, and Lisa, you have too.

Tom Berry 3:04

Yeah, I mean, that's that is fairly typical in a large market. I mean, I've, you know, for a long time that was my job was to go and r try to recruit talent from competitors in large markets, which almost becomes an industry in and of itself. You know, that's and I have mixed feelings about it. I mean, obviously, there they're uh people that I recruited to come work at a company that I was at that I still know to this day that are wonderfully talented people with big books of business, and it was it was it was a great thing. On the other hand, I do think that as as business operators, it's easy to lose sight of how important it is to do two things. I mean, first and foremost, to develop talent within your company. It's surprising how many talented people are frustrated because they don't feel like they're getting an opportunity to develop inside of the company there are, and you, and you know, and you might be, you know, as as they would say, stepping over quarters to pick up pennies, right? Which is it, there's a we all tend to fall into the short-term thinking of I've got to go get more revenue and I've got to do it now. But that becomes a, it can become a race to the bottom, which is okay, well, who's who's willing to pay just a little bit more and you know, shrink margins just a little bit more to get some revenue in the door. I I do think at this stage of my career that a more sustainable and better learned long-term strategy, I think you're always going to do some of that. But I think it's really important to be identifying talent and more importantly, putting a framework together inside of your business to develop that talent. I think that's a really important thing that quite quite often gets overlooked in our industry.

Lisa Monti 4:45

Yeah, I think many times we've got um escrow officers who's worked with a team for a very long time, had their same assistant or multiple assistants, and those assistants are pretty much overlooked. They're kind of stuck in the assistant role, and they may not feel stuck. They may want to be there and be very comfortable, but that could very well be your next, you know, good department or good team that is, you know, bringing in revenue for you.

Tom Berry 5:08

Well, and I I think that brings up an important point, which is there are a lot of folks that are really talented and you know they are, and they might even tell you, hey, I don't, I'm fine. I don't want to, and and you know, an important part of developing talent is challenging people to step a little bit outside of their comfort zone. And there are a ton of people in our industry who just because they're scared, don't want to, you know, don't want to take that next step because it is, I mean, there's a lot of responsibility and stressful, but uh finding ways to encourage those people, you know, very rarely do I think those people take that next step and then go, Well, I wish I'd never done that, right? But it's really easy for them to I have one.

Brandi Abercrombie 5:44

I sent her to Land Toddle School and she said I and she quit literally the next week. She's like, they terrified me.

Tom Berry 5:50

Well, I I do also have one that when I was at the company that Lisa and I were both at before that was a an enormously talented person. And I was, I would, I was like, We're gonna, you need to be an escrow officer and we're gonna turn you into an escrow officer. And and she would very politely say, Oh, okay. And I'd say, so here's the the training module, you know, for for the next step. And you know, I'll come back next week and we'll go through it and then I'd come back. Well, I didn't get to it. And on about the sixth week, I'm like, hey, do you do you want to do this? And she was like, no. And I'm like, oh, and she's like, Well, you never asked me if I wanted to do it. So I mean, I think, you know, it goes both ways, but I also think there are, to your point, there are folks who get stuck and they may not even know they're stuck. And if you're, you know, part of part of your job as a as a leader and a business owner, I think, is to identify those people and give them the opportunity and sometimes nudge them. But if they quit, you know, maybe it wasn't the right move.

Brandi Abercrombie 6:43

Right. Well, we promoted her, paid for her to go to school, and then she bashed like that. There's so many rules. Well, we've talked about them, you know.

Tom Berry 6:50

Yeah.

Brandi Abercrombie 6:51

Anyway, so yeah. And so, and the difference in large market and small markets. So, you guys have typically spent the majority of your career in large markets. I've spent the really my career in rural markets. And so a lot of times that developing those people that live and are in and around your town, that's the the really important part. And so let's talk now about ways to identify potential good, you know, traits

Traits That Signal Real Potential

Brandi Abercrombie 7:15

that we look for, things that are really make someone, somebody that we would like to recruit or really attractive when they apply for an open position at a title agency.

Tom Berry 7:25

Well, I think you said it right there, and it's something that I think we we as an industry don't pay enough attention to. Number one is you should before you go talk to anybody, you should identify the traits that you're looking for. And and you know, we've talked a little bit about it before. Write a job description, you know, create have some idea of what you're looking for because it's it's really hard to find the right person if you haven't thought about who that right person is. And and I think that is something that we as an industry don't always do a good job of, which is well, we, you know, we're going after this person because they've been in the industry a while. Well, are they the right fit for the position that you're looking for? And should you even be looking at somebody in our industry? Should you should or should you at least expand? You know, I've said before, two of the best sales reps I ever hired had no knowledge of real estate, had no knowledge of the title industry, came from a completely different industry, but they knew relationship selling, they were competitive, they wanted to win, they understood that they also had internal clients, their escrow teams were their clients, and they were running circles around other BDO reps in the industry who'd been in it for years. With within a month or two, they were running circles around them. And uh I'd love to say that that was some genius move on my part. It was totally accidental in both cases. It was they were referred to me actually by real estate agents who are like, hey, this person, I they would be great. And uh, they were right, you know, and I probably would never have gone and looked for those people. So that was a learning experience for me.

Lisa Monti 9:04

I would say attitude obviously is a huge part of it. Energy and enthusiasm, no matter what position, whether it's the front desk where I started, sales rep, all of those positions need to have like openness to learning. I don't know. I think there's just you can tell.

Brandi Abercrombie 9:21

Well, and I think there needs to be a little bit of a drive. They need they need a little bit of a motor behind them. It can't be like kind of a sit and get person. I'll never so I was also hired. I was the backup receptionist in my first job at a title company, not even frontline, but they also not fired, probably. So not fired as a receptionist. But but you know, it was one of those things that they didn't have enough for me to do. So, like at lunch, like a couple first, you know, first week I go and they have the basic manual in the lunchroom and I pull that off the shelf. Open it up. I'm like, I'm gonna learn what I need to know. These words don't even make sense together. I'm gonna close this and maybe nobody saw me look at this, you know, is literally like what went through my mind. But, you know, because of that, I was actually in an office where the title plant was and where the commitments were produced. And so not only did I have closers, but I also had the examiners. So they were, you know, I had the opportunity to type legal descriptions and be like, oh, like is that a tree? Like, do they think it's never gonna fall, be cut down, I don't know, get struck by lightning, you know? Those were questions. But I mean, just that thirst for knowledge, people with a thirst for knowledge and and a low, like you, a low boredom threshold.

Tom Berry 10:26

You have to not want to be bored.

Lisa Monti 10:28

Yeah, yeah.

Tom Berry 10:28

There's always plenty to do.

Lisa Monti 10:30

There, yeah, you just have to look for it. I've worked with people that we've said they don't have a hurry button.

Tom Berry 10:35

Yeah.

Lisa Monti 10:35

Because that that isn't gonna last very long, sadly. You know, you really do I think it's the drive, like you said, they've got to in the thirst for knowledge, they've got to be willing to take the next step, brave enough to try something new.

Brandi Abercrombie 10:47

And say when they, you know, don't enjoy something. Like I did examine, I can examine, but the plant people were like, you have to go sit somewhere else. Like they need you to do the work, but you talk too much. So, like that balance too. Yeah.

Lisa Monti 11:00

I would say something interesting that I'm thinking about is someone who's still in the title business right now. They came to me with a resume. I think they had some banking background and they were applying for an escrow assistant position. And I interviewed her, and afterwards I was like, She's in the wrong role. This person needs to be a sales rep. So, anyway, it I think we also as interviewers have to be open to saying this could be the right person, but for a different role than we first thought of. So, would you consider that a green flag in an interview? Yes. That leads us to our next

Interview Tests And Team Fit

Lisa Monti 11:30

question. I think that's a green flag in an interview. I also got some really good interview tips from somebody one time that I think this made me look at it completely differently. So, first of all, I think that people could use the word escrow assistant or processor in many different ways. So you could have a job posting and you get 10 applicants for your escrow assistant position and they're gonna all say they have experience, right? I think you really need to drill down and find out because they might have uh cut checks, right?

Brandi Abercrombie 12:03

Which means they pushed a button. That's right. Or or or ordered payoffs. Right.

Lisa Monti 12:07

I don't think people necessarily are trying to be misleading. That was probably their title of escrow assistant, but there's a front end, there's a back end, there's recording, there's knowing the flow. Some assistants have so much experience. And so somebody very wise once told me when they were interviewing people, they actually brought like a commitment in. Now, obviously, if you know that you're working with a seasoned person, a team that you're bringing over, you don't really necessarily need to do this. But if you're working with someone that you really don't know well, or from maybe they're outside your market, just moved in from another town, another city or state. Bring in a commitment, bring in a survey, ask them what they see on Schedule C, ask them to go over the commitment with you. You'll know right then what it doesn't mean you're not gonna bring them on, but you actually know what you're starting with, right? That's the opportunity to say, okay, well, when you said you were an assistant, what exact tasks did you do? Because I've made that mistake before, just kind of trusting that someone was gonna fulfill the role I needed. And they really didn't know all those skills yet.

Brandi Abercrombie 13:06

Well, we hired a closer one time that she was like, I was a closer. She was a glorified notary. Yeah, she couldn't read Schedule C. She couldn't cure a title if you held a gun to her head. I mean, like she and she wouldn't. Like she wouldn't. And she literally wanted you to hand her the file when she walked in, and she wanted somebody standing there to take it from her when she walked out.

Tom Berry 13:25

Well, kind of to tag on to what you said, Lisa, you know, the other thing I think is important is, and this happens a lot, and there's a couple of reasons why I think it's a mistake when you're interviewing someone. Quite often it is an owner of the company or or someone in leadership or a manager that's hiring for a position, but they're not going to be the person ultimately supervising that position, right? Escrow assistant's a good example. And some of it is sometimes you have escrow officers are like, well, just get me an assistant. I'm too busy to deal with this. And I think that's a a mistake because then the minute that that person doesn't work out, they're coming back to you and going, Well, you hired them. So I think having multiple people interview for a position is important. But at a very bare minimum, at least having the person who's going to be ultimately responsible for supervising that position, making sure that they're involved, it which sounds obvious, but it's surprising how often, you know, in the when everybody's busy, you know, an owner of a of a business or a or an escrow manager says, Well, let me just go interview somebody, and you know, they're going to be Lisa's assistant. And then Lisa's like, I would have never hired this person if my life depended on it. And now I'm the person responsible for them. And that goes both ways, which is, you know, well, if if you interview them too, then don't complain at me when they, you know, because that's then quite often getting back to the talent development, which is also if you're going to hire somebody and Lisa and I interview them, and then, you know, you do find no matter what, no matter how diligent you are, that people have gaps in their knowledge or things they don't know that you expected them to know. And it is your responsibility then to develop them. You know, it's it's you you can't just be in the uh the habit of, okay, well, you know, we thought you knew how to fund and you don't, so you're gone. Well, I think you owe them the opportunity to then, okay, well, we you we A, we should ask you that question, and B, uh, let's let's teach you how to fund, right? And let's take the time so that you know that we then have somebody who can do the job that we hired them to do.

Brandi Abercrombie 15:35

Okay. So next question. Do you think talent can be taught?

Tom Berry 15:42

No.

Lisa Monti 15:43

I think skills, yeah.

Tom Berry 15:44

They can learn the skills knowledge and skills can be taught. I don't think, and that's why it's important to look, you know, we've said it, to think about what it is that I would you you would take a talented person over a knowledgeable person all day long, because you know, this is not differential equations. I'm not saying that title business isn't complicated, but any reasonably intelligent person, given enough time and the right resources, can learn, can learn, can acquire the knowledge that's necessary to do the job. So I don't think you can teach talent. I think that, but in order to identify talent, you need to have some idea of well, what is it that a person setting knowledge aside, what is it that a person has to have to do this job? And we've talked about it. Do they have a hurry button? Do they are they competitive? Do they do they have a thirst for knowledge? Can they, you know, can they acquire knowledge? Can they be nice to people? Can they be nice to people?

Brandi Abercrombie 16:42

Are they inherently a nice, honest person? And sometimes those are questions that in an interview is, you know, you can ask, you can't say, are you an honest person? But you can ask questions if you were faced a situ with this situation and you can tell, maybe not by their words, but by their body language, because again, there's so much like 80% of like things you say are in your body language and all that comes out of your mouth.

Tom Berry 17:06

I've got a funny story around that, which is un non-title industry related. But when I was in in college, I had a job. I was the assistant manager for the warehouse at service merchandise, which dates me a little bit. And I was trying to get it.

Brandi Abercrombie 17:19

Who even remembers that? I do.

Tom Berry 17:21

I was trying to get two of my best friend college buddies jobs there. And they're they're upstand. I will say, I'll I'll start the story by saying they are to this day upstanding citizens, but uh service merchandise gave gave you a questionnaire that you had to answer.

Brandi Abercrombie 17:40

And they sold jewelry and electronics and all kinds of stuff. Yeah.

Tom Berry 17:44

And the it was it was the most transparent test you've ever seen. It just asked you questions like if you know that another employee is stealing from the warehouse and they're your friend, would you turn them in? Right. Which whether you would or wouldn't, you would think you would know, yes, I'm going to answer that question correctly. And so I brought in two of my friends who failed that test.

Brandi Abercrombie 18:07

He just didn't want to work.

Tom Berry 18:08

And we're not, and subsequently, we're not offered positions at service merchandise. And they're like, Well, I wouldn't turn my friend in. And I'm like, okay, well, who wouldn't answer, even if you wouldn't, why wouldn't you answer that? So I guess you could look at that as either they were they were too honest, which maybe was a good thing, or uh anyway, I didn't argue with service merchandise, not wanting to hire. Right. So, but yeah, that's a good, you know, are people uh honest? Are they are they people that are interested in being polite to people and being service-oriented? And more importantly, are they going to be that way to, you know, you spend eight hours a day with with the people you work with. You you really want to work with people that you like and like you. I mean, that makes the the jobs hard. And, you know, if you're if uh that's another thing that I think sometimes doesn't get enough consideration is hey, this person might be really talented and they might also have the knowledge that we need, but are they going to gel with our team? And are they gonna be a good fit for our team? Because if they're not, then they're not gonna be happy. Other people in the office aren't gonna be happy, and that's equally important.

Brandi Abercrombie 19:18

Yeah, because it's you don't want to bring anybody in that's gonna disrupt your culture because I think we spend so much time building a good culture that it is important that they are a fit and maybe not just a high producer sometimes. That that that can actually have a negative effect on your business. It can run your good people off.

Tom Berry 19:38

Yeah.

Brandi Abercrombie 19:39

That's what it can do.

Tom Berry 19:40

Yeah. And it and it does quite often. It does. Yeah.

Brandi Abercrombie 19:44

How do you, when you're interviewing somebody, how do you identify future leaders that are really early in their career? Or have you ever been in an interview where you've looked at somebody and thought, you know what, in six months I could have them, like you're already charting their career path.

Tom Berry 19:59

Like, how do you identify? I think number one, people that ask a lot of questions, if they interview you when they're coming in for an interview, that's a good sign that number one, they're they're actually evaluating, is this a fit for me? Which I think is a leadership quality. Number two, they're also deciding, is it a fit for me? And and do I like you? And do I want to, you know, and I think that's equally important. And I, you know, I've said it a lot, I've said it many times in interviews, you know, if if you don't like me, don't come because you'll have to deal with me. And it's okay. You know, not everybody, shockingly, not everybody likes me. I I never understood that, but I think that's one asking a lot of questions. I actually sometimes find that people who are very honest, well, I don't know if I want this job. I think that's that that is often shows that they're they're critical thinkers and they're like, well, I'm really evaluating this. So questions, you know, not when you know, it's quite often you get the sense that they're just telling you what they think you want to hear. So if they're willing to just you you brought it up. Honesty in an interview is a is a leadership quality, I think. You know those are the things that that I look for. And then also I guess this is a little harder to tell from a resume, but have they tried things? You know, sometimes people are like, well, I don't want to show that I've had all these different experiences on and that that can cut both ways, right? But people that have tried things and you can see it from their resume, that's often a good indicator that they're they're looking for something, they're curious.

Brandi Abercrombie 21:45

So those are you know, those they can spark good conversation. Well, you try, you know, you worked here. What did that, you know, what'd you think about that? And then you find out, well, it was boring and redundant, and you're like, okay, well, they're not a good funder or examiner. I mean, like, you know, Things that have to be done.

Lisa Monti 22:01

Yeah, it can be tried things within the same industry. Yeah. Like you said, you went to exam, but you learned it. That wasn't really where you saw yourself staying.

Tom Berry 22:09

Yeah, I agree with that.

Lisa Monti 22:14

I had a thought and I lost it. Well, I'll tell so I have an answer to that. I think people who are calm definitely listening, actually listening, and like Tom said, asking good questions, making sure it is a fit. That's what I always told my kids. When you're on an interview, you're interviewing them too. Because you're trying to find out, you know, you don't want to just get offered a job and go to work there. You need to keep going, right? So you definitely want to make sure it's a fit for you just as much as the other way.

Brandi Abercrombie 22:40

Well, I did remember what I had forgotten. So one thing that I always like to look at is what do people do outside of work? Because this is an industry that can consume you. And it can be a 20-hour a day career if you're a busy closer and you care. And those are the people that have a tendency to burn out. And so you want to try to see that there's some semblance of balance. You know, my friends and family always laugh. They're like, you never sit home, you never are still, because I like I enjoy volunteering, but the volunteer opportunities that I take are a way to make sure that I can step aside and step out of that business piece, you know, and think about something else to kind of almost like a forced break so that there's some some boundaries there. People that, you know, I don't want somebody that says, well, I'm only going to work eight to five and I'm going to take my 40 hours PTO every year or 80 hours or however many you get. Like those are people, those very rigid people that to me is more of a red flag than a green flag. And I've interviewed those people and I'm like, well, this is probably not the business for you because you have to sometimes the work goes past five, and you know, sometimes you can leave at four, and I don't care. But I mean, it's like sometimes you gotta stay till the work is done.

Tom Berry 23:54

Yeah, I would agree with that. I uh I guess the last thing I'll say on that too is you know, when I was saying people that have tried things, people that are willing to tell you that they failed at something, I think is an an an important leadership trait as well, which is I cannot tell you how many times in the title I have failed forward, which is, you know, I think a measure of a good team is hey, we're gonna try something, we're gonna try new things. If it doesn't work, we're gonna not make the same mistake over and over again. But I think that's a thing that gets punished unfairly in not just in our industry, but in every industry, is is trying and failing at something is often how you build a good team and how you build skills.

Valuing A Title Company To Sell

Brandi Abercrombie 24:44

Well, so I'm gonna shift gears on you a little bit. Um, so we've talked about identifying talent and trying to build, you know, trying to build your your talent pool and and build your company. A lot of questions that we all get as it relates to, you know, we've got I've got a really good company, I've got a really good team. Now I would like to find an investor or I would like to sell, or, you know, so let's transition into kind of that, because I think building that, identifying those good team, those good teammates, identifying that talent, training that talent, then naturally leads in a lot of instances to where people just want an exit.

Tom Berry 25:21

Yeah. Well, and that's a challenge. I mean, the first thing is there is not, you know, people ask us this question all the time, how do you value my business? Or how do I value my business? And there are, you know, if you look at certain other industries where businesses buy and sell back and forth, or you know, they're publicly traded, and so there's a there's a public market that values that business. But relatively speaking, in the title business, the the transaction volume of pro of of people either investing in or buying a title business pretty low. So there's not in the real estate in the in you know, using a real estate term, there's not a lot of comparables, right? I mean, relatively speaking, you know, maybe in Texas, I don't know, you know, maybe half a dozen title companies a year might sell, maybe not even that many. And so a lot of a lot of times we get a question, well, what is the formula? And it's like, well, there really isn't one, and which can be a good or a bad thing depending on how you, I mean, for example, if you know, it at investors title, if people ask us to value a company, there are some, you know, I'm able to tell people, well, here's how we would evaluate it, right? And but we can get talked up or down from that number based on a lot of other intangible factors, right? First and foremost, it's a relationship business. Quite often, particularly in if it's a smaller market and it's an owner of a business who's looking for an investor, they're the value, they and their people are the value in the business. You know, the office space, the copiers, the the conference tables, that's that's of little to no value in the big scheme of things to someone who's looking to invest in that. What they're investing in are your relationships, your expertise, the things that if you weren't there, there there really isn't much value. There may be some value to the brand in the name, but it's it's pretty minimal. It's it's the people in the business. Having said that, you still have to be able to get to, well, how do I tell somebody, well, here's what it is. And and, you know, that's where we've worked with a lot of people to say, okay, well, if you're looking at bringing in an investor, and the first thing you need to do is, you know, you may have been running this as a as a sort of a mom and pop shop, and and and it's totally understandable, for example, that you might have personal expenses that the business handles for you or some other things. And so one of the first steps is, well, let's get to a normalized PL, you know, that that someone, whether it's a local investor or it's another title company that you're selling to, or, you know, in the case of a joint venture, which we can talk about in a minute, here's how you would normalize a PL so that someone looking at this says, okay, I can see fundamentally, if I'm investing in a business where I'm buying stock, I'm doing it on the basis that that business is profitable and is going to continue to be profitable because I'm looking for a return on my investment. Step one is, okay, well, do you have, you know, monthly, quarterly, yearly PLs? Do you produce them? Sometimes business owners don't. And if they're the only owner in it, they know and they don't need to. Well, you're let us help you put together some financial statements that reflect what's actually going on in the business. I mean, number one, you should be doing that because that's how you measure your business, but but but people don't. And I understand they're they're just trying to get deals closed, you know, and they they know, okay, well, at the end of the year, I have I paid my bills and I have some money left over, right?

Brandi Abercrombie 28:48

Winning.

Tom Berry 28:49

Right. But that's number one. And then number two, there are, I mean, when I say there are no comparables, that I that's not true. I mean, we we have a formula, and I'm sure lots of uh companies have a formula to say, okay, well, we'll take a three-year average of your of your profit and we'll apply a multiple to that. That's normally what people do is they say, okay, we'll apply, you know, whatever, a a 4x or a 5x multiple to a three-year average of your of your annual profit. Well, what's implicit in that? You have to know what your annual profit is. You have to be confident that that is reflective of how the business is going to continue to run. But really, then what any purchaser or investor is evaluating is, well, what am I going to get the day after I invest? And that's going to be, well, is Brandy still going to be there? Is Lisa still going to be there? And so it's a different conversation depending on what you're looking for. You know, if you're looking to sell your business and retire, you're not passing it on to family, or you're not, you know, for whatever reason, you don't have somebody that's in line to take that business over as an owner. You might be selling to somebody outside of your market, there, you should expect that they're going to want to know, well, how, what, what's our plan? And what's your plan for helping me keep these relationships? Most of the time, what you're going to find is that people say, Well, I want you to stick around for some period of time. And so some portion of the sale is going to be contingent on you being around for a little while. So if you're thinking about selling your business, the first thing you should be thinking about is, well, how long am I willing? You know, don't think about it when, hey, I want to be completely done in six months, because that frankly is probably reducing your value to someone who's going, well, I'm going to buy this thing and you're going to be gone three months after we close on this thing. I'm probably not going to pay you as much as I might otherwise pay you if you're going to stick around for a couple of years. They're probably also going to suggest or ask that some portion of what you get paid is paid out in an earnout over that period of time. And I don't think that from their perspective, that's an unreasonable request. Maybe you're not looking to sell and you're just looking to bring in somebody who can add some capital into the business or some relationships. Still the same basic concept, which is you both have to agree on, well, what's the business worth, right? Because I'm going to buy 25% of your business. We both need to agree, you know, your business is worth a million bucks. So I'm going to put $250,000 into this business. You know, that that is the first step. And it's often people haven't even really thought about that when they start to think about this. But I would, I would recommend that people think about how long, you know, am I looking to exit the business completely? And if so, I would be thinking about it not months before I want to be completely done, but years before I want to be completely done. Because most people that are going to buy your business want you around and they and they want your employees around.

Brandi Abercrombie 31:44

They want your employees around. And so one of the things that we've kind of talked about is, you know, there are some compensation plans that some agents have put in place where they give key employees an ownership stake in the business. And that makes them, I think a lot of those companies in particular more attractive to potential investors or purchasers than 100%.

Tom Berry 32:04

Or, or, you know, we talked about a little bit earlier, which was that you also one consideration that doesn't come up that often, but but I think is a good thing to think about is you know, if I don't have family that I want to that are going to succeed me in this business, should I think about selling this business to my employees or giving them an opportunity as a group? That's that's something that sometimes gets overlooked. And, you know, I've seen businesses sell where you have people that helped build that whole business and they've, you know, they've been there for 25 years and they feel left out in the cold, which is, well, that's great. You know, I I even, you know, and I'm not saying that that's you should or shouldn't do that. I'm just saying that's another thing that people don't often think about as a good strategy that that I don't see happen very often.

Brandi Abercrombie 32:53

Yeah, that either gets you more value or it gets people more invested in your company. Sure. Because I mean, I think, you know, a lot of times employees spend money because they don't realize how it impacts the bottom line because you don't share the PL with them. But if they're in vet if they are owners, then they're gonna think about, you know, am I gonna drink the Coke from the fridge or am I gonna bring my own coke from home? Yeah, you know.

Tom Berry 33:19

Right.

Joint Ventures Compliance And Industry Change

Tom Berry 33:20

Well, yeah, and then, you know, the the other thing that we touched on a little bit was, you know, the other thing we get asked a lot about now because of what's going on in the title business and in real estate in general is that it's harder being profitable is more challenging right now, almost than it's ever been. You know, regulatory rate decreases, fraud, just the the amount of infrastructure you need to invest in. It's it's harder now than at any time that I've been in the business to it to just be, to just operate profitably. And I think that one of the things we're seeing a lot of, and and that's true in the real estate business too, and in the and then in the mortgage business and in the building business. And so you're also seeing a lot of people who are traditionally your clients who are themselves trying to navigate this new territory and are going, hey, I control a certain amount of business that I can refer. I want you to put me in your business, right? Which is not necessarily always the conversation you're the most excited about. Sometimes you are, you know, sometimes it's well, hey, this is a great way for me to grow and scale my business. But we get asked that question probably more so now than ever before, which is, how do I do this? And, you know, there's there's the component we just talked about is well, how do I value this? You know, whether they're buying into your business or you're forming a new joint venture with each other, how are we gonna decide how much money we both put into this thing? And and that's often the first conversation you have to get through is hey, you realize that we're gonna have to capitalize this business and you as a you know, you know, as a real estate broker or someone else you as a partner in this business, you're gonna be putting some money into this business.

Brandi Abercrombie 35:05

But you mean we can't just create a oh, we can't just create a the ad me as a member to the LLC? No.

Tom Berry 35:10

Uh no, you cannot. Um that's that's step one is what how are we gonna you know agree on what we're investing in? And then how are we gonna make sure that it's compliant so that we're not wearing orange jumpsuits at the end of this, right? Or or or losing our respective title insurance license and your real estate license. How are we gonna make sure that what we've built? And there are what even complicates that more is there are structures that are compliant in one state and not compliant in another state. And Texas is one of the most restrictive in terms of what is technically compliant. That doesn't mean there are not other, there are not models in Texas that are operating that probably aren't compliant, but nobody's looked at them. But I mean, the simplest thing to think about is if I'm getting into business with Lisa, I'm a I'm a title company operator, Lisa's a real estate broker, and we're going to, you know, we've agreed that this is something that's that's strategically advantageous to both of us. How do we form a partnership that is number one, gonna be mutually beneficial? But number two is gonna be compliant, isn't going to harm the consumer, and and is something that we're all gonna be happy about in 10 years. And so those are, you know, first is is is making sure that we have a mutually accountable relationship. Here's what I'm gonna do, here's what you're gonna do. Lisa's not in the business of running a title company. I am. I'm not in the business of running a real estate brokerage, she is. How are we gonna work cooperatively to make this a win? And then how are we gonna make sure that who's operating it? How are we gonna license this thing? And is it is it compliant? You know, at a simple level, the most compliance structure is we're 50-50 owners in this. Lisa's on the hook for 50% of the risk and 50% of the reward. That means if we lose $100,000 next month, we're both putting $50,000 into this thing. But if we make $100,000 next month, Lisa doesn't get $70,000 of that because she's the producer of the business. She gets $50,000 and I get $50,000. So also negotiating who's going to own how much of this and then who's going to have operational control over it are important things to consider. I'm the poster child for getting into the title business knowing nothing about title.

Brandi Abercrombie 37:25

And it's remarkable how much stuff you can screw up if you well, and that that actually leads me to my next comment is we there are so many people just in the world in the in general that feel like title companies print money in the back. And that's, you know, we've talked, you know, previously about how razor-thin margins can be, anywhere from six to ten percent, you know, and there are some that that operate at a higher margin, but I mean, for a normal shop, that's about right. And so there are, you know, a lot of people that get into this business. And I have a dear friend who just is cheering wildly because she got out. Yeah, because she thought that she would be, you know, it because it if you do a good job, it looks really easy. And so we get contacted by people all the time, by people who want to open their own title insurance company. And and we, you know, Lisa and I had a conversation with one lady. She worked, she was a mobile notary and she was like, I've just seen what title companies make and I want to do that. And we're like, mm-hmm. Well, the per Do you know a closer? Do you know anybody that's sitting with compliance?

Tom Berry 38:31

Well, and you know, the perception, I I can understand why that's the perception, because if you, you know, we we fundamentally are a you know, at a clo at a at a closing level, we're a client-facing business. So generally, you have a nice office, right? You come in and there's cokes in the fridge and there's cookies on the table. Right. And it does if you're doing, you know, it's like the the old adage of the the ducks calm on the, you know, and its feet are going crazy under the water. That's what uh was eye-opening to me was yeah, it all looks easy when you're sitting in the closing room, but it's you know, you go back past the uh past the door into the work area, and you know, people are yeah, you know, people are going crazy and sometimes they're yelling at each other, and there's a lot going on. And uh and you don't realize, and then you know what the other thing that is really opaque to people outside of the industry is how many regulatory reports and and you know, it fundamentally we hold as title companies millions and millions and millions of dollars of money that does not belong to us, and that's what people don't realize is how much risk there is. And and we are at fundamentally, we're an insurance company, but we're custodians of all of the value in a real estate transaction. And only about that much of it at the end of it belongs to us. And but the risk is huge because you're, you know, and and as a result, and necessarily the regulatory environment is pretty strict because you can lose a lot of other people's money and and you know, jeopardize livelihoods and all sorts of things. And and that's the part that nobody understands until you've been in the business.

Brandi Abercrombie 40:11

Yeah. Yeah, I agree with that. So, I mean, so yeah, the JV, I mean, you've got some people who love that theory and some people that that you know hate it. But you know, if if you are looking to get into the title insurance business, I mean, I think those are kind of cautionary tales of things you need to kind of be aware of.

Tom Berry 40:28

But I do, you know, I think, I think whether if you're in the title business, whether you like it or not, the the the all of the change and consolidation you're experiencing in the title business is happening in the real estate industry at large. And so it's I I think those conversations are gonna become more frequent, not less frequent, which is I mean, and some of it is also driven by consumers, right? Consumers are increasingly want to just deal with things at a single point of contact, and I want to just, you know, I I want to do everything on my phone. I don't want to, I just bought a house and I was as bad as any other consumer, right? I was like, well, I don't want to do that. You know, that's way too much work for, you know, and I I mean, so it's I think that's the other thing that that you know, that I think is just the reality is is that you're going to see consolidation of the industry, both in terms of consolidation within each individual part of the industry, but also just, you know, companies trying to come together and create a single point of contact for the consumer, a single set of services for the consumer. And I don't think that's gonna go away. I think, I think that's here to stay, and I think you'll see more of it, not less of it.

Wrap Up And How To Reach Us

Brandi Abercrombie 41:42

Okay. Well, I think I think today has been a very informative conversation. Thank you both uh Lisa and Tom for your conversation. We've had, of course, you know, we are all in business development, and of course, I can't end without a call to action. So if you're interested in, you know, in talking a further about any of these pieces, please reach out to either Lisa, Lauren, Tom, or myself, and we can, you know, have conversations with you about whether it's valuation or whether it's, you know, evaluating a partnership opportunity or things like that. Or if you're just looking for an underwriter who looks at things a little differently, give us a call.

Tom Berry 42:17

Thank you.

Brandi Abercrombie 42:18

Thank you.