Q3 2024 Big Four Earnings: Commercial & Refi Strategies | Title Agents Podcast Ep73

In a world where change is the only constant, Mo Shamil stands at the forefront, guiding title professionals to not just grow their businesses, but to master the art of innovation. With every episode, you're handed the keys to unlock unparalleled growth and stay ahead of the curve. Get ready for a transformative journey. So for what, the last couple of years now, if you own a title agency, I think the operating mantra has just been survival. Oh, absolutely.

Just hang on. Right. Just hang on. Everyone's been focused on these high rates, the low inventory, just grinding it out until things hopefully stabilize in 2026. But then these Q3 results drop from the big four, FNF, First American, Stewart, Old Republic, and it's a completely different picture.

It totally defies that narrative of market depression. Well, it's more than that. It's a strategic realignment. These companies are thriving. They really are.

But the way they're making money, that demands an immediate pivot from every independent agent listening to us right now. Exactly. They've figured out where the money's moving. So this deep dive, this is your shortcut through all that noise. We're going to give you the actionable takeaways.

Yes. The shifts are really clear. Optimism is back. Commercial is king. Refi is already rebounding.

And the big four are all in on automation and recruiting. It's going to shape your entire business plan for 2026. So let's start with the data. That's where this conversation has to begin. If you just look at residential purchase volume, yeah, it's still waking up.

It's slow. But the whole quarter was saved by two massive factors. Okay. What are they? First, commercial real estate.

It was up roughly 30% across the board. 30%. Wow. And second, the anticipation of rate drops. That has spurred a huge, and I mean immediate, rebound in refi order.

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That's incredible. Let's unpack the individual companies though. Let's start with FNF, Fidelity National Financial. We're calling them the tech titan, and for good reason. They absolutely sailed past expectations.

Their EPS, so earnings per share, beat the street by a massive 16%. 16? Yeah. $4 billion in revenue for the quarter. But the real story, the one you have to pay attention to, is that commercial segment.

It was up a staggering 34% year over year. And their strategy to get there, it's not a secret, right? It's all about their in-here platform. It's all about digital adoption. The reports called out an 85% user conversion rate.

So for an independent agent who partners with FNF, what does that 85% number actually mean? It means the platform is no longer a perk. It's the expectation. It's the front door. It is the front door.

FNF is betting their future on controlling that digital closing ecosystem. It gives them margin. It gives them security. If you're an FNF agent, you just have to embrace it. Because they're making everything faster through it.

Everything. Secure, earnest money, streamlined disclosures. It's all through in-here. So your agency's efficiency is now completely linked to how well you use their tech. If you fight the platform, you're fighting your own underwriter's core strategy.

That's a huge point. OK, let's pivot to First American, FAF, the data innovator. Right. They reported $2 billion in revenue, up 14%. Commercial is right there with FNF, up 29%.

But their strategic focus feels different. It's fundamentally different. FNF wants to get you on the platform. First American, they're tackling the problem a step earlier. They want to eliminate the manual labor inside the platform.

I saw a quote from their CEO that really stood out. I know the one. We are turning a labor product into a data product. This podcast is made possible by our sponsor. You have worked so hard to build your business.

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It should. The immediate fallout for them is just measurable cost savings. They're rolling out tools like Sequoia and Endpoint to automate the actual title production. So this isn't theory anymore. This is happening now.

Oh, this is active R&D designed to cut their own headcount and dramatically reduce the cost per policy. So practically speaking, what does labor into data even look like? An agent listening right now pays a processor to do a title search. What is FAF doing? It's the difference between a human review and a structured query.

A manual processor might spend, what, three hours compiling documents, reviewing for liens ins, for transfers. A lot of time. A ton of time. FAF's tools query structured databases instantly. They can generate a preliminary title report in minutes, maybe seconds.

And that lets them get their profit margin back. Exactly. The takeaway is simple. If your underwriter is automating the search and exam process, you have to reevaluate every single manual process in your own shop. You have to, just to compete on price and speed.

Understood. Okay, now let's talk about Stewart, STC, the hungry challenger. Their Q3 was maybe the biggest surprise, a 40% year-over-year earnings jump. A huge jump. And their strategy is completely different from the tech-first approach of FNF and FAA.

How so? Because if yours are focused on internal automation, Stewart is focusing on you, the agency. Their agency services revenue grew 28%. Their whole strategy is just pure market share acquisition. They're actively recruiting independent agents.

And they're targeting specific areas. 15 states. They cited big wins in huge markets, Texas, Florida, New York. But that's a risky play, right? Are they sacrificing underwriting discipline by chasing market share so aggressively?

Well, that's the critical question you have to ask as an agent. Stewart is clearly in, let's call it, growth mode. They're willing to invest heavily, maybe offer better splits, more support resources, anything to capture that share quickly. So for an agent in one of those target markets- You have leverage right now. You are a valuable asset they are actively bidding on.

You should be factoring that into any negotiation, whether it's with them or using it to get a better deal from your current underwriter. A very interesting dynamic. Finally, we've got Old Republic, ORI, the steady ship. Their performance was solid, title premiums up about 8%. But they seem to be just opting out of the tech arms race completely.

They're the traditionalist. That's their strategy. They're focused on underwriting discipline, financial stability, and just those reliable relationships. You're not going to see a lot of tech flash or AI hype from them. So for an agent who's tired of all the disruption- ORI is the safe harbor.

Permitting that trust and consistency are ultimately more valuable than being the fastest or the cheapest. That really lays out the scorecard perfectly. They're all finding success, but in very different ways. Okay, so that's the what's. Let's talk about the so what.

We need to detail the three strategic pivots every agency owner needs to be thinking about for 2026. And the first one is recognizing a change that's already here. Refiled preparedness. Refinances. They were basically deadweight for two years, right?

Companies downsized that part of their business. They did. But the data shows the market is already bouncing back. And bouncing back hard. All four underwriters saw a big spike in Q3 refi orders.

That's a trend, not a blip. This is so important. If you scaled back your refi capacity, you need to flip that switch back on now. Immediately. The whole cadence of a refi file is different from a purchase.

It's higher volume, faster turn times, less handholding. If your workflow is still set up for those slow, high-touch purchase files, you're going to get swamped. So let's make it actionable. What's the checklist for our listener? First, start calling those loan officer contacts who've been silent for 18 months.

They are hunting for this volume. They're hungry. Very. Second, you have to review and update your refi file processes. The ones that have been collecting dust.

Fix your closing disclosure process for refis now. And third, train your people. Any new staff you hire during the purchase boom needs to know. less hand-holding. If your workflow is still set up for those slow, high-touch purchase files, you're going to get swamped.

So let's make it actionable. What's the checklist for our listener? First, start calling those loan officer contacts who've been silent for 18 months. They are hunting for this volume. They're hungry.

Very. Second, you have to review and update your refi file processes, the ones that have been collecting dust. Fix your closing disclosure process for refis now. And third, train your people. Any new staff you hire during the purchase boom needs to know the cadence for refi work.

Got it. Okay, pivot number two is about chasing the money. And as we said, it is flowing overwhelmingly into commercial real estate. It's just math. Commercial revenue is growing two to three times faster than residential right now.

When you see FNF and FAF reporting 30% growth there, that tells you where their investment is going. So if you're running a residential-only shop... You are structurally limiting your own growth for the next year and a half. Period. And what's great about this Q3 data is that this isn't just about giant office tower deals in Manhattan.

No, not at all. The strength is broad-based. Multifamily housing, so apartment complexes, industrial warehouses. This podcast is proudly sponsored by... Need extra hands without extra overhead?

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The office sector might be struggling, but logistics and housing are making up for it. For sure. So the action items here aren't that complicated. You need to start partnering with local commercial real estate brokers, CRE brokers, not just residential agents. Go to different networking events.

Exactly. They are a totally different world than a residential broker happy hour. And crucially, make sure your digital footprint says you're in the game. Update your website, your LinkedIn, add commercial-specific messaging. You have to signal to the market you can handle that $5 million warehouse deal, not just the $400,000 starter home.

Visibility is everything in CRE. Okay. The final and maybe the most foundational pivot is that labor-to-data shift. This is the big one. The insight here is that automation isn't a theory anymore.

It's a proven margin-restoring reality. FNF and FAF are not developing these tools for fun. No, they're using them right now to get back profit margin that was squeezed out by rising labor costs. It's a painful squeeze, right? Labor costs are up, but the demand for faster closing is also up.

And it all comes back to that first American quote. They are eliminating the need for a person to do the work by structuring it around data. So if your agency is still heavy on manual search, manual exam, manual typing, the cost of competing that way is now just demonstrably too high. You're selling slower, more expensive labor when your underwriter is selling cheap, fast data processing. So what are the action items?

It's an internal audit. First, ask your underwriter today what automation tools they provide. You might be paying for something you're not even using. Good point. Pick just one or two big manual processes in your agency, maybe it's order entry, and just commit to replacing them with technology now.

And this is about staff evolution, not necessarily elimination. Absolutely. You cross-train your staff. You need people who can manage and troubleshoot the technology, not just push paper. You're shifting them from being process executors to technology managers.

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Try www.titlegpt.ai today. That's how you future-proof your margin. Okay, we've broken it all down. Let's synthesize this one last time. The title wars are back, but they're being fought on three very different fronts.

They are, and the choice for an independent agent is clearer than it's ever been. On one side, you have FNF and FAF. They're scaling with tech and automation. They're betting that speed wins. They're leading the disruption.

Then you have Stewart, growing through you, through agency partnerships, aggressive recruiting. They want market share now, and they're willing to pay for good partners. And finally, you've got ORI, holding steady, betting on trust, relationships, and underwriting discipline over the tech race. They are the stable, long-term partner. So the listener's choice is critical.

You have to decide which lane you want to be in for 2026. Do you ride that digital wave with FNF and FAF? Or do you lean into being the strong relationship partner aligning with ORI? Or do you use the demand from Stewart to get a better deal? Which brings us to the final, highest leverage actions as we close out the year.

First, you have to evaluate your current underwriter's fit for 2026. Is their tech and partnership model what you need? Use this Q3 data to have that critical conversation. And second? Second, if you're in a market Stewart is courting, use that leverage.

Seriously. Renegotiate your splits, your support packages. That window of high leverage negotiation is not going to last forever. So this deep dive really confirmed it. The market isn't necessarily depressed, but it has fundamentally shifted away from just residential purchase volume.

The money is moving. The market is functional, but the mechanisms of how you make a profit have totally changed. The big four are proving that automation works. It restores margin. So if First American is actively turning labor into process data, you need to ask yourself this as you plan for next year.

This is the big question. Is your agency selling manual labor or are you selling process data? The cost of competing manually is now demonstrably too high. Go explore the tools your underwriter offers and audit those manual processes today. And that's a wrap on today's journey with Mo Shamil from the Tidal Agents podcast, reminding you that mastering the art of innovation is key in the tidal industry's fast-paced world.

If you're finding it tough to keep up with the changes and challenges, remember you're not alone. Our calendar is open for you. Find the link in the show notes and let's connect. Make sure to hit subscribe to not miss out on strategies that elevate and insights that empower. Together, we'll navigate the future of the industry.

I look forward to our next meeting in the upcoming episode.