During breaks in nearly every televised basketball game, it’s there: Tracy Morgan imploring pensive homebuyers “pretty sure” is not enough, and that they can only be certain about their giant life choice with Rocket Mortgage.
“Find the right mortgage with a local broker and Rocket technology,” intoned the narrator on the commercials, which premiered during the Super Bowl.
The ads are mostly set not in a loan office, but a home showing. That raises a question of perhaps little interest to National Basketball Association fans but a great deal of interest to National Association of Realtors members – where is the real estate agent in this picture?
Rocket rocketed to being the highest volume mortgage lender in the country by late 2017. They surpassed Wells Fargo through persistent marketing (ginning up interest in the Rocket app), robust customer service and benefited from industry-wide retreat from the depository banks.
Rocket has since ridden the wave of famously low interest-rates, which juiced the mortgage refinancing market. The company created by Dan Gilbert went public last year, and it reported a cushy $6.6 billion in profits through the first nine months of 2020.
But a company like Rocket – both ambitious and these days heavily reliant on the refi revenue stream – is looking for ways to get more purchase business, and one of them is real estate.
The company’s real estate arm, Rocket Homes, has historically been a tiny part of the company’s revenue. But Rocket is looking to throw its considerable weight around in real estate – positioning itself as a one-stop shop for homebuyers.
“They’re aggressive,” said Mike Kortas, the president and CEO of Nexa Mortgage, a mortgage brokerage. “Rocket’s real estate game play is going to have firepower.”
A trusted Rocket adviser
Over the past two months, a new posting from Rocket Homes hit LinkedIn – “A real estate advisor.”
The adviser, states the job ad, must be able to work nights and weekends as they “build and maintain a pipeline of over 750 clients and build a business relationship with our nationwide network of real estate agents.”
The applicant should be ready to glue themselves to the potential homebuyer.
“They stay with them whether it’s three days, three months, or three years,” said Doug Seabolt, CEO of Rocket Homes.
Rocket is a licensed brokerage and retains Rocket-affiliated real estate agents: So, is the real estate adviser another Rocket real estate agent?
Seabolt says it’s not, despite the adviser performing preliminary, agent-like tasks such as pointing consumers to different homes in the market. Instead, Seabolt said, the adviser boosts Rocket in the small but growing world of real estate partnerships. The company’s public filings indicate it has 15,000 real estate agents across the country, who, while affiliated with a separate brokerage, are Rocket partner agents.
(For those wondering, then, what in-house Rocket real estate agents do, Seabolt stated they “provide real estate services across the U.S. primarily for Rocket team members.”)
For an agent, enrolling in a real estate partnership is like signing up to be a driver on a rideshare app.
They apply, are vetted, have a brief orientation session, and field leads as a buy-side agent at certain times. The agent is not necessarily exclusive to Rocket, and could be doing the same gig with Redfin, or another company.
If the agent closes a sale, Rocket gets a referral fee.
In Kortas’ stomping grounds of central Arizona, some real estate agents, he said, have begun to gobble up business as Rocket-preferred agents. But, up until now, money in real estate referrals is a drop in the bucket. Rocket reported a total of $13.28 million in referral fees in their third-quarter earnings.
Rocket has its work cut out in getting customers to think of them as a real estate source, along with a mortgage lender.
Rocket Homes’ home listings website is aesthetically similar to Redfin, and someone entering their contact information there is quickly emailed and called by a Rocket representative.
But Rocket Homes averaged 485,000 unique visitors a month in quarter three (which is up from 372,000 a year before), small traffic numbers in the soaring business of home-viewing. Redfin claims 49 million unique monthly visitors. Zillow reports 236 million.
The future of homebuying
If the numbers are small, why does Rocket Homes matter? Industry insiders gave two reasons – one is that Rocket has not just a lot of capital, but a lot of people’s information. The other is that Rocket is throwing its hat in an exclusive ring to be a one-stop shop for homebuyers.
Consumers know Rocket best for an app that lets them quickly learn if they are pre-approved for a loan – a process that, of course, involves providing one’s financial history.
“Rocket has really been a data and technology company for a long time now,” said Matt Gouge, a mortgage broker in Sacramento. “Ultimately, they have so much data that they could use it for other ways to make money.”
Traditionally, Gouge said, real estate and mortgage stay in their lanes, save for brokerages keeping a token mortgage corner office. But Rocket is adapting to the ways of its publicly traded, data-rich brethren. That’s not to say other mortgage lenders, as most such companies, like Rocket’s Wolverine State arch-rival United Wholesale Mortgage, have no real estate profile. Rather, Zillow and Redfin — real estate outfits who each have mortgage departments — are the real competition.
During its annual earnings call, Zillow CEO Rich Barton said he “envisioned a future experience that begins on our mobile app” where a customer can see a home, get a prequalified home loan, and close on a home.
It may be a smart play, said Steve Murray, president of RealTrends, for Rocket to not just defend its mortgage turf from Zillow, but also go after real estate.
“About 66-70% of all consumers still choose their real estate agent because they know one or some trusted source referred them,” Murray said (HW Media, the parent company of HousingWire, acquired Real Trends in late 2020). “That leaves the rest up for grabs.”
Murray notes that Rocket enters a crowded market, but also a fluid one where a firm could grab 100,000 closed transactions in a year, and still have less than 1% market share.
Seabolt did not specify how many real estate advisers the company would take on, or how much the company may invest in real estate. But he did echo Rocket’s slogan.
“The home is an essential component of happiness and financial well-being,” he said. “We are providing the tools and information services that help a consumer arrive at certainty.”