The real estate industry, with its dozens of players involved in a single mortgage transaction, is ripe for creating alliances and business ventures that can be a boon for your business.
And while real estate is primarily a local business, with the increasing number of homeowners tapping into vacation properties and investors managing rental properties across the country, there are vast opportunities for building joint ventures and strategic alliances that serve customers across state lines.
While both joint ventures and strategic alliances are created by two entities with the goal of collaborating for the purpose of increasing business opportunities, saving money or expanding services, the way in which they are set up is quite different.
Here are some pointers on the differences between these two approaches.
Joint ventures
To begin with, a joint venture (JV) or affiliated business arrangement (ABA) is a venture created by two distinct companies and is established by formal agreement as a separate business entity. This means that all of the finances of the new company exist within that new entity and remain separate from the finances of the companies who created the venture.
There are a lot of advantages to a JV, including the fact that it is less expensive to create than a merger or acquisition, for example, and can be time bound, meaning it can be dissolved when its usefulness has ended for the partners.
Usually, a joint venture is formed when two companies having diverse capabilities form a new company to capitalize on the strength of the combined resources or expertise. In the title industry, it is common for JVs to be created with real estate agents, homebuilders and mortgage companies to provide an entity that is uniquely dedicated to the customers who choose to work with the new venture.
Strategic alliances
Strategic alliances are a much more casual relationship between two companies, where the companies come together to achieve a specific goal without the formality of a legal partnership.
Commonly, the purpose of an alliance is to share resources. For instance, several graphic artists may form an alliance to share office space, equipment and general office support to save money. The alliance may also provide business building opportunities as they share leads or recruit each other to work on larger projects.
In the title industry, an alliance between two title companies – each of which have specific expertise in different areas or who cover different territories – allows the companies to funnel work to each other as needed or share office space in their respective regions for closings.
One of the most powerful ways to leverage strategic alliances in the title insurance industry is when agents set up a relationship with companies in other states who regularly do business in their state. This is most common in states like Florida, which entertains a lot of out-of-state purchasers for retirement homes, vacation homes, and investment properties. Setting up an alliance allows agencies in both states to benefit and provides the out-of-state agent a reliable contact onsite to manage the in-state requirements.
Title agents who are interested in expanding their business in 2025 have a lot of options for strategic growth in the current highly entrepreneurial environment. The sky’s the limit for agency owners with a vision for the future and a predilection for innovation.
Whatever method you choose to grow your agency in the coming years, we can provide enhanced tools and resources to help you meet your goals. Contact us today to learn how we can help you strategically grow your agency as well as optimizing your operation with back-office support, improved technology and sophisticated transaction solutions.