Best Practices: Choosing Your Partner

Joint Ventures come in two flavors: those that are built for a very limited single purpose, such as “to develop the next great racing car,” and those whose purpose is to be perhaps not “forever,” but certainly to be around for a while and to enjoy ongoing success.  In the real estate business most realty companies and builders plan on staying around and building on their success, as do local banks and mortgage companies.  It’s logical, then, that when choosing a title partner to venture with one a Realtor, builder or lender would look to partner with a company that has been in business for many years.  Since real estate is local, it is also logical that the Realtor, builder or lender look to a local provider as the best partner potential.  Logical, perhaps, but not correct.  Why?  Why do most joint ventures end up being undone or at least unsatisfactory even if they continue in business?

The Japanese word for “joint venture” translates along the lines of: “same bed, different dreams.”  Each party to a joint venture brings not only their contribution in terms of ongoing support, but also their dream and all the human baggage we each carry with us daily.  Each has a specific expectation, and often – too often – that expectation is never spoken and therefore goes unrequited.  We’ll discuss expectations in more detail another time.

Building a strong joint venture is a lot different from building a great title company.  Over the years I have had the privilege of doing both, and while neither is easy, building the venture is infinitely harder, and certainly radically different from building a title operation.  The local title guy is excellent at building that company.  He or she knows the business inside out and understands local custom better than almost anyone in town.  He is able to identify a title problem just be touching the brief of title, and can do a closing with his eyes shut.  The problem usually is, however, that he not only doesn’t know how to do a joint venture – he really doesn’t care to know how to do a joint venture.

From the standpoint of a local title company, doing a title joint venture is often a “lose – lose.”  How can they do a venture – something that they are not really trained to do – when it is a conflict with their other business?  If the title partner feels he or she is imposed upon by the venture rather than elated they were asked to be part of it, then you have a classic example of “same bed – different dreams.”  One partner is already unhappy, and this marriage will never work!

Whoever you pick to do your venture, ask yourself two important set of questions: First – “what makes this company competent in the development and management of a joint venture; what experience do they have; and who can I ask to verify they are competent?”  Second – “what motives this company to do a joint venture; are they worse off or better off doing a venture with my company; and how will it affect their core business?”

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