Zillow is launching a new online program, Zillow Home Loans, that will offer mortgages directly to homebuyers — a move that will put the company into direct competition with some of the other third-party lenders already accessible on its website.
Zillow Home Loans was created by rebranding and integrating Mortgage Lenders of America, a separate lending company Zillow acquired last year.
In a statement, Zillow framed the new program as a way to beef up its online homebuying and re-selling program Zillow Offers (in which the company makes all-cash offers on homes to homeowners and prospective sellers in a growing number of markets across the U.S., who request them on Zillow’s website).
“Homeowners using Zillow Offers to sell their home can easily secure their financing through Zillow Home Loans, giving them the certainty to be able to sell their existing home and shop for a new home simultaneously,” the statement explained. “Home shoppers who want to purchase a Zillow-owned home may use Zillow Home Loans to seamlessly finance the new home purchase.”
Would-be buyers can also use Zillow Home Loans for any home they wish to purchase and for which they need financing, not just those homes owned and being sold by Zillow itself.
The program is not replacing Zillow’s current mortgage marketplace, which handled about 25 million loan requests last year and asks users to answer a short series of questions before connecting them to third-party lenders.
Instead, Zillow continues “to offer consumers the power of choice to shop for loans directly through Zillow Home Loans or through our popular mortgage marketplace,” Zillow Vice President Erin Lantz said in a statement.
A screenshot from Zillow’s mortgage service that connects buyers to outside lenders. Credit: Zillow
In her statement, Lantz described getting a mortgage as “often the hardest, most complicated part of buying a home.” Zillow Home Loans is meant to remedy that problem by providing buyers with a simpler more streamlined experience.
Erin Lantz
“With Zillow Home Loans we are taking an incredible step forward to deliver an integrated payments platform to complete the financing for Zillow Offers that delivers a more seamless, on-demand real-estate experience today’s consumers expect,” Lantz added.
Zillow announced its acquisition of Mortgage Lenders of America in August. At the time, Errol Samuelson, Zillow’s chief industry development officer, said that the goal behind the purchase was “to create an experience when a buyer comes to buy a home through Zillow Offers, where that transaction happens more quickly and more seamlessly.”
The reimagining of Mortgage Lenders of America to Zillow Home Loans is the next stage and that same process, with the company saying in its statement that the new program should make purchases “radically” easier.
Though the company described the new program as an “affiliated lending platform for Zillow Offers” — which should be active in 11 metro areas by the end of this year — Zillow Home Loans will be widely available. However, the priority for now is on using Zillow Home Loans to compliment this online homebuying service, rather on serving the broader market.
Either way, though, the move is further evidence that Zillow wants to have a stake in the entire consumer real estate experience. The company is best known among buyers and sellers for its ubiquitous home search portal website, and for its Zestimate home valuation tool.
But it has aggressively expanded into other areas as well, such as direct online homebuying and re-selling (a.k.a. iBuying, a growing trend across the country driven by venture-capital fueled startups and increasingly, traditional real estate brokerages), that put it front and center during later stages of the home buying or selling process.
At the same time, Zillow has also expanded geographically, moving into Canada last year.
Currently, Zillow’s largest source of revenue is its Premier Agent online advertising program, in which real estate agents who work for brokerages across the country pay to have their image and information displayed prominently on Zillow listings, and receive leads from those home searchers who click or tap to connect with them.
However, during a recent earnings call CEO Rich Barton said he expects revenue from Zillow’s Homes division (which includes Zillow Offers) to eclipse Premier Agent within five years. Zillow Home Loans looks like the latest effort to achieve that goal.