New York-based real estate brokerage Compass announced Tuesday that it has signed an agreement to acquire CommonGround Abstract, LLC., a Philadelphia-based title insurance company.
The agreement marks Compass’s fifth title insurance company acquisition this year and third this month. Less than a week ago the brokerage announced plans to acquire First Alliance Title, LLC. And the week prior it announced an agreement with LegacyTexas Title.
According to Compass, the transaction is expected to be finalized before the end of the year. The financial terms of the deal are not being disclosed.
Founded in 2019, CommonGround Abstract serves home buyers, and real estate brokers and agents throughout Pennsylvania and New Jersey. This acquisition expands Compass’s portfolio of title and escrow services to nine states, including California, Colorado, Florida, Maryland, New Jersey, Pennsylvania, Texas, Virginia, and Washington State, and Washington, D.C.
Compass first began expanding into title and escrow services in October 2020 with its acquisition of Seattle-based title and escrow start-up Modus. A few months later, the Robert Reffkin-helmed brokerage struck up a deal with Washington D.C.-based KVS Title.
In its analysis of Q2 2021 figures surrounding mortgage and real estate closings, FundingShield found an overall increase in the risk of wire and title fraud, with two in five (40%+) transactions categorized as high risk.
Presented by: FundingShield
This expansion, however, has not been without its challenges. In March 2021, the Washington state insurance commissioner filed an order to revoke Modus’ insurance license for allegedly violating a real estate regulation preventing title and escrow companies from giving individuals who place business with the title insurer any form of direct or indirect payment, fee or reward.
In June, the Washington state insurance commissioner issued a minimum $15,000 fine to Modus for violating regulations, including those related to inducements and other non-title services offered to real estate agents. The company’s license is not being revoked.
Compass has not been shy about its goal of expanding into every part of the real estate transaction, including ancillary services such as mortgage, concierge, bridge loans, and title and escrow. The brokerage also announced in August that it would be launching a mortgage joint venture with Guaranteed Rate, called OriginPoint.
The title insurance industry is currently undergoing rapid changes, as more and more brokerages enter the industry and online platforms, such as Blueprint and Radian’s titlegenius attempt to disrupt things.
For the traditional “Big Four” title insurers Fidelity National Financial, First American Finance Corp., Old Republic National Title and Stewart Title, all of these changes have meant that they have had to make adjustments in their online offerings and they have been making acquisitions of their own in an attempt to stay ahead of the competition.