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[Pulse] Zillow just became the mortgage and real estate industry’s biggest frenemy

But if you don't make nice, you won't reap the rewards

Fun fact: Zillow launched its mortgage lead business for lenders 11 years ago today.

Another fun fact: Zillow received 25 million loan requests last year from borrowers asking to be paired with lenders.

And yet another fun fact: Zillow said in February it’s looking to double its revenue in business lines providing leads to lenders and realtors over the next three to five years.

Meanwhile, my man Ben Lane at HousingWire asked lenders if they felt a “disturbance in the Force” Wednesday as Zillow confirmed its official entry into mortgage lending.

I have heard three refrains in response to Zillow’s disruption:   

  1. Who cares, Zillow doesn’t impact my business.
  2. Zillow is coming for my job!
  3. Zillow will eliminate Realtors and lenders.


Or is Zillow big enough to double its lender and Realtor lead business while also growing into a lender and an instant-offer firm?

For those of you ignoring them, here’s a recap of what Zillow is up to:

  • Zillow averages about 150 million visitors per month.
  • Zillow did $1.33 billion in revenue last year, most of which came from providing leads and services to real estate agents and lenders.
  • Zillow plans to nearly double this lead revenue to $2 billion within three to five years.
  • Zillow Offers, which is Zillow’s play to compete with instant offer firms like Opendoor, plans to buy 5,000 homes per month within three to five years.
  • Zillow’s mortgage head Erin Lantz recently told me that Zillow Home Loans’ No. 1 priority is to support Zillow Offers.
  • Zillow Home Loans plans to ramp up to closing 3,000 loans per month within three to five years by making loans to folks selling to Zillow Offers when they buy new homes, and making loans to folks buying Zillow-owned homes.

Here’s why I think Zillow brings more opportunity than threat to lenders:

  • As noted above, Zillow received 25 million requests from borrowers asking to be paired with lenders in 2018. Assuming lenders buying these leads only close 2% of them, that’s 500,000 loans.
  • The lender Zillow bought in August 2018 is now called Zillow Home Loans, and they only did 4,000 loans last year.
  • In the next three to five years, Zillow Home Loans wants to grow this to 36,000 loans per year, and plans to do so by supporting Zillow Offers activity as noted above.  
  • Meanwhile, Zillow is doubling down on providing mortgage leads to the industry.
  • Also remember: Zillow is a giant. They’re big enough to provide leads to the industry while also spending the next three to five years supporting Zillow Offers as a lender.
  • And if it hits its 36,000 loans-per-year goal within the next five years, Zillow would be a $7 billion per year lender, which is only 0.5% market share.

Here’s why I think Zillow brings more opportunity than threat to Realtors:

  • A seller asks Zillow Offers to buy their home every five minutes, and Zillow says this translates into $100 million in demand value per day.
  • Yet, Zillow Offers only bought 686 homes from sellers from its April 2018 launch date through the end of 2018.
  • This means most sellers reject Zillow’s offer, and then Zillow connects them with a real estate agent.
  • This means Zillow partner agents can get in on a lead source producing inquiries on potential listings every five minutes.
  • Zillow just started experimenting with a model where real estate agents pay for leads only after they close instead of paying up front.

The only threat to lenders and Realtors is ignoring Zillow.

You can ignore or hate this all you want, but don’t pretend lending and real estate isn’t being disrupted like every other industry before it.

The disruption is going to have its way with all of us whether we ignore it or not.

Every disruptor follows the frenemy model where they both support and compete with industries they’re disrupting.

So while you label Zillow Home Loans your enemy, your competitors who are willing to engage with the frenemy can access to 25 million mortgage leads or more.

I’ve been saying this since Zillow got started in mortgage 11 years ago, and I’ll say it yet again: Ignore Zillow at your own risk.

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