Zillow can help you find a home, and now, a mortgage

Zillow is already buying and selling homes and now it wants to be your mortgage lender, too. Today, the company announced a fresh makeover to a key piece of its bold strategy to become a one-stop shop for real estate transactions.

In August 2018, Zillow purchased Mortgage Lenders of America, a Kansas-based mortgage originator that produced roughly 4,000 home loans in 2018, for $65 million. Now, that division has been rebranded into Zillow Home Loans.

“Getting a mortgage is often the hardest, most complicated part of buying a home,” said Erin Lantz, vice president and general manager of mortgages at Zillow Group, in a press release. “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.”

Zillow caused a stir in the real estate industry on its earnings call in February by formally announcing its intent to transform from a real estate advertising platform into a full-service lender, advertiser, and home buyer, in addition to shaking up its corporate leadership.

Part of this new strategy is Zillow’s aggressive push into the so-called “iBuyer” space with its Zillow Offers program. Zillow Offers gives prospective home sellers an algorithmically determined “fair market” offer to buy their house, an offer that, if accepted, would close in a matter of days. The service is intended to help motivated sellers and people who need to move immediately.

If the company can pull off its new strategy, the future of Zillow would look like this. Say you’re a homeowner moving to a new city and you want to both sell your existing house and buy a new one. You’d go to Zillow Offers and get an offer from the company. If you accept it, you’d sell your house on the spot. If you don’t, Zillow would refer your sale to one of its agents and it would be listed on Zillow.com.

Either way, Zillow will then try to help you find your new house, referring you to one of its agents in your new city. If you decide to buy a Zillow-listed house, it can provide you a mortgage through Zillow Home Loans.

If at any point in the process you don’t want to use Zillow’s services, you have that option. If you decide you don’t want to get a mortgage through Zillow Home Loans, you can shop for a mortgage in Zillow’s existing mortgage marketplace, or outside of Zillow altogether.

Having everything under one roof could prove incredibly convenient for the consumer, but it comes with considerable risk to the company. Zillow has been forced to find new sources of revenue because its primary source of income—real estate advertising—has slowed considerably in the last year.

On their own, Zillow’s new services may not be a windfall for the company. Zillow says it makes $1,723 per home flip under Zillow Offers, a 0.6 percent profit. But the company hopes that each part of its business will be able to boost the other parts and customers will choose to go through the entire process of buying and selling a home on Zillow.

“It’s all about just reducing friction for customers and making that whole process easier and more transparent,” real estate technology consultant Mike DelPrete told Curbed last month. “The people that [add services] as a money grab are going to lose. It’s not about if I sell this guy a mortgage or title insurance I’ll make tons of money.’ It’s about ‘Hey work with us, we have this great dashboard we’ll give you. You can see where you’re at at all times. You can ask questions and it’s all captured transparently online.’”

Zillow isn’t the only company striving to become the dominant real estate platform online. Redfin has made similar moves, although it hasn’t been as aggressive in expanding Redfin Now, the company’s own iBuyer program. Zillow Offers is now in nine markets with more to come.