Zillow Group today launched a Home Loans division, establishing another pillar of the company’s new identity of directly buying and selling homes.
PREVIOUSLY: Zillow as mortgage lender: Real estate giant going ‘further down the funnel’ of buying a house
Zillow has been quietly originating mortgages for a few months, following the acquisition of Mortgage Lenders of America last year, but the company plans to double down with the Home Loans division. The new rebranded mortgage division will complement Zillow Offers, the company’s direct home sales operation, with a goal of streamlining and simplifying the process of buying a house. Zillow Home Loans is also a standalone business, so a customer doesn’t need to use Zillow Offers to get financing.
GeekWire previously reported on Zillow’s mortgage ambitions, just days after the announcement of a surprising shift that included co-founder Rich Barton’s return as CEO, and Zillow’s declaration that it will go all-in on direct home sales. The company aims to originate 3,000 mortgages a month within three to five years, including loans on approximately a third of all Zillow Offers transactions.
Mortgage Lenders of America originated approximately 4,000 home loans in 2018 across 40 states, or roughly 333 per month. That’s about one-tenth the number of mortgages Zillow Home Loans plans to originate within the next few years.
At the time of the deal, Zillow didn’t say how much it spent to purchase Mortgage Lenders of America. But the company’s annual 10-K filing with the U.S. Securities and Exchange Commission revealed the price: $66.7 million in cash.
Mortgages are part of Zillow’s overall shift from media and advertising to “moving further down funnel and closer to the real estate transaction to create better consumer experiences,” according to the company’s 10-K filing. To commemorate that shift, Zillow today debuted a rebranded website with more immersive home photos, a simplified shopping experience and an updated logo.
Zillow also unveiled a new ad campaign today, complete with the redesigned logo, to let people know about its new identity.
Zillow’s bet on home sales brings it in competition with a number of well-funded and experienced rivals in an increasingly crowded market. Just today, homebuying and selling platform Perch announced it raised $20 million in equity and $200 million in debt.
The Zillow Home Loans business is based in Overland Park, Kan., with more than 300 employees there. Mortgage Lenders of America was headquartered in Overland Park, the same city that is home to Sprint.
In a telling sign of its ambitions in the mortgage business, Zillow will add a new segment to its financial reports, starting this quarter, focused on home loans. That includes some existing Zillow offerings, such as a marketplace that connects borrowers and lenders, and its new undertaking of originating its own mortgages.
For 2019, Zillow expects the mortgage segment to bring in revenue of $100 million to $115 million, good for annual growth between 25 and 44 percent. Zillow brought in roughly $80 million in mortgage-related revenue in 2018, down 1 percent over the year before.