Common Problems Brokers Face with a Joint Venture

New Door Blog Posts (2)
In a joint venture, two parties create a shared business entity. They share the risks, profits, and decision making.  They seem ideal, because by joining with another company, you might gain access to a new market or skill set, combine assets, and minimize individual risks.  And often, the two companies joining together are complementary. This is frequently the case with real estate joint ventures. A common example is when a brokerage forms a joint venture with a title company.  However, there can be significant downsides to joint ventures, and you should be aware they’re not as ideal as they seem.  If you’re a brokerage looking to benefit from working with a title company, you do have other options. With New Door Property Transfer, you become the owner of your own title company. You also avoid these common problems brokers face with traditional joint ventures:

You Don’t Own the Title Company

In traditional joint ventures, each entity continues to do their own business. This probably sounds like a benefit. Your brokerage can provide real estate services, and the title company can provide title services, so you both capitalize on your strengths without interference in your company’s normal operating procedures.  There’s really very little change in how you do anything at all. But remember, you don’t own the title company. You won’t have much say in what they do, if any. You’re trusting them to provide services that align with your own business standards, in terms of ethics, responsiveness to clients, and accuracy.

You Share the Profits

The company providing the joint venture with the title company will form, manage, and take responsibility for the title company and it’s employees. Your brokerage provides them with clients through real estate transactions that require title services; in return, you get a share of their profits. This arrangement does seem to benefit both parties. But ultimately, you’re sharing profits with a title company that has been created to work with your brokerage.  You’re doing the work to attract clients through a reputable real estate business. The traditional joint venture model doesn’t let you fully capitalize on the extra profit you can earn by adding a title company to the successful business you already run. Instead, you’re likely to have fees and missed opportunities to fully scale your business.

You May Not Experience Full Transparency

Remember, the title company is its own entity, working for itself and receiving a share of the profits. Can you trust that they are being fully transparent, and communicating openly with you about their objectives, strengths and weaknesses, and finances? The problem is that many joint ventures aren’t fully transparent. And this causes lots of frustration and headaches for your brokerage.  Lack of transparency causes other issues, too. You and the title company will be working with the same clients to provide a successful and satisfying real estate transaction. Without open channels of communication, the process may not be as effective and efficient as it should be.

A Partnership with New Door Property Transfer Avoids These Problems

New Door doesn’t enter into traditional joint ventures with our partners. Instead, your brokerage will fully own the title company. This is a different type of business relationship that ultimately benefits your brokerage, your agents, and your clients. Our partners make an initial investment, and we provide them with a turnkey solution to owning their own company. We help create the company, hire local administrators, and handle all of the transactions. You receive a new company, 100% of the profits, and full transparency.

Company Ownership

You’ll be able to grow your brokerage by providing the additional services of title searches and title insurance through a company you own. Clients appreciate the comprehensive care and knowledge, and realtors will be drawn to work for you.

All Profits

When you receive all of the profits from title services, you’ll also have an excellent return on your initial investment with us. And you’ll never have to wonder if you’re receiving a fair split.

Full Transparency

We’re fully transparent with our business model, and all of our partnerships are RESPA compliant. We want your agents to have all of the information they need to ensure successful real estate transactions. And we’ll continue to support you and your title company. Don’t settle for the common problems brokers face with a traditional joint venture. Benefit from owning your own title company, and help your brokerage reach its fullest potential.  Visit New Door Property Transfer to learn more about our unique partnerships.

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