Zillow is moving full speed ahead with expanding its mortgage business, leveraging its real estate technology to reshape the way today’s homebuyers finance their homes.
In its third quarter earnings report, Zillow Home Loans revealed an impressive data point: home loans increased 63% year-over-year in the third quarter to $39 million, driven primarily by an 80% year-over-year increase in home loans. the initial volume reached $812 million.
That’s a $3.2 billion home buying business, not far from the 50th spot on the mortgage leaderboard. And the company was hiring loan officers at a healthy clip last year, according to NMLS data.
Zillow’s thread
It all starts at the top of the funnel. In the third quarter, Zillow attracted an average of 233 million unique users per month across its apps and websites, according to its metrics, while the company’s statistics. Comscore reported 116 million monthly visitors during the same period.
No real estate forum in America gets more eyeballs. Not even close. But separating the loyal buyers from the hundreds of millions of looky-loos has always been a challenge, especially when the business is focused on advertising revenue from agents.
To that end, Zillow is pushing big buyers with its “market development” initiative.
Established in 2022, this program actually includes a collection of technical tools, such as Flex, ShowTime, Zillow Home Loans, Follow Up Boss, and Real Time Touring, to drive lead conversions and top agents.
The Seattle juggernaut has been covering the Developed Markets for the past year. It has now replaced Premier Agent in 43 markets, and counting Modexmost of its mortgage work is concentrated in Dallas, Los Angeles, Atlanta, Raleigh, and Portland, Ore.
With Flex, following the long-term Premier Agent program, qualified agents receive leads with the highest probability of success on the Zillow team, all without upfront costs. But there are boxes you have to check and heavy costs you have to stomach: To stay in the Flex program, agents must ensure that they meet performance goals, answer customer questions, be monitored for communication, and see that “60% of selected referrals engage with them. Zillow Home Loans.”
If the deal closes, Zillow will collect 40% of the agent’s commission.
The lead generation program is designed for highly productive agents and teams who spend thousands per month on Zillow leads. Zillow hopes that agents will refer customers to Zillow Home Loans instead of their usual exchange of loan officers from third-party lenders.
The company said that in “Developed Markets” for more than six months, customer acquisition rates for Zillow Home Loans are “among the youth, and new markets are trending the same way.”
Zillow said they are also seeing high conversion rates from partners who work with customers who choose Zillow Home Loans, “as we help agents and loan officers work together to better serve customers when they are ready to make money.”
On the company’s earnings call this week, CEO Jeremy Wacksman said the potential in the mortgage space is huge. “40 percent of all home buyers start their home buying journey looking for a loan, and more than 80 percent of those buyers don’t have an agent yet,” he said.
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