Ahead of his call for second quarter 2018 results, Zillow on Monday announced an agreement to acquire Mortgage Lenders of America, a nationwide, direct-to-consumer online mortgage lender, a move to make it easier to buy homes through the fledgling Zillow company. Zillow offers online home buying and selling platform. Terms of the deal, including the purchase price, were not immediately disclosed.
“The goal here is to create an experience when a buyer comes to buy a home through Zillow offers, where that transaction happens faster and more transparently,” Errol Samuelson, director of industrial development at Zillow, told Inman. .
Zillow offers launched in April 2018 as an extension of Seattle tech giant’s existing Zillow Instant Offers program, which allows potential sellers in certain markets to visit Zillow’s namesake website to request an instant cash offer on their property from investors and startups approved by Zillow. In the expanded version of the program, Zillow began buying and selling homes himself in Phoenix, Arizona, and Las Vegas, Nevada, using real estate agents who paid for Zillow’s advertising through their Premier Agent Program to represent it in transactions. The move has placed Zillow in direct competition with other instant cash home buying services, such as Knock, Offerpad, Open Door and Red tuna.
Over the next four months, Zillow Offers bought at least 19 homes in Phoenix and sold new, and the company announced that it will launch Zillow Offers in Atlanta and Denver Later this year. However, Zillow also had to lower the price on at least one of the houses he bought.
Zillow’s addition of Mortgage Lenders of America to the program is intended to make it easier for Zillow to provide financing to potential buyers visiting Zillow’s website, particularly those interested in the properties that Zillow is selling.
“Certainly from a buyers’ point of view, a transaction that goes with fewer surprises and more quickly is very desirable,” added Samuelson, who estimated that the transaction would be closed in the fourth quarter of 2018. “But it is also important to us in terms of our business – if you think of a business where you buy a house, transform it and sell it – it is really essential that you can reduce that time to one minute.
Kansas-based Mortgage Lenders of America is a client through Zillow’s current advertising product for lenders, which will continue to operate even with the acquisition.
In 2017, Mortgage Lenders of America reported having issued 4,400 mortgages through the platform. Zillow said it intends to continue supporting and growing the lender advertising platform, which has seen users submit 23 million requests for loan information through its many consumer brands.
As Zillow develops technology around the Mortgage Lenders of America integration, it is possible to partner with other brokerage partners who have their own mortgage subsidiaries, Samuelson said.
“We believe that the tools that we are developing for Zillow offerings, some of these tools that we can license to brokerages so that they can help improve their own capture rate with their own mortgage business,” said Samuelson.
Mortgage Lenders of America – which has about 300 employees at its headquarters in Overland Park, Kansas – will continue its current business, offering mortgages to consumers and participating in the Zillow mortgage market, according to a statement.
“At Mortgage Lenders of America, we strive to help homebuyers make informed and confident decisions about their mortgage choice,” said Philip Kneibert, president of Mortgage Lenders of America, in a statement.
“We are thrilled to join the Zillow Group and look forward to working together to develop an innovative new mortgage experience to better serve buyers. “
After the acquisition closes, Kneibert will remain Managing Director of Mortgage Lenders of America, reporting to Greg Schwartz, President of Media and Markets at Zillow Group.
The acquisition is just the latest part of Zillow’s apparent strategy to move beyond its role as a web search portal and advertising marketplace, moving it further downstream, with more services to directly facilitate real estate transactions. . Last week, Zillow announced a new rental tool which would allow potential and current tenants to apply for apartments and pay their rent through the site, in addition to researching new rentals.
In July, Zillow announced a new public offering of $ 650 million, half in shares and half in senior notes. The company has hinted that it may use some of the capital generated to fund future acquisitions and growth, in an investor press release.
Zillow has not shied away from making strategic business and technology acquisitions. In September 2017, he announced the acquisition of New Home Feed, ad management technology that allows home builders to syndicate their ads on the web.
Previously, he had announced the acquisition of Naked Apartments, a database of apartment listings in New York in 2016. Zillow dotloop of the acquired transaction platform in the summer of 2015, and the year before, it took an important step to acquire its competitor Trulia in a Agreement of $ 2.5 billion in shares.
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