If you need assistance, please call 754-581-5077

Mortgage is the new money pit for portals: Mike DelPrete

Tuesday, October 4, 2022   /   by Dave Magua

Mortgage is the new money pit for portals: Mike DelPrete

The largest global real estate portals are attempting to diversify and expand their revenue streams by offering mortgage — with mixed success.

  • Zillow, Redfin, and Australia’s REA Group have all made major forays into mortgage with large acquisitions.
  • Despite being technology companies, revenue growth is closely tied to employee count, and profitability (in the U.S.) remains elusive.

Dig deeper: Redfin’s mortgage revenues jumped after its recent acquisition of Bay Equity for $138 million, but the overall business remains unprofitable.

Zillow’s mortgage business has been unprofitable for over five years, recently spending $1.85 for every $1 in mortgage revenue.

  • It even lost money in 2021, when 96 percent of mortgage firms were profitable.
Australia’s leading portal, REA Group, has managed to grow a profitable financial services business by acquiring two large mortgage brokering businesses.

  • Financial services now account for 6 percent of REA Group’s total revenue.

Behind the numbers: Mortgage growth is very much tied to people — mortgage brokers and mortgage loan originators (MLOs).
  • REA has acquired legacy mortgage businesses with hundreds of brokers — the company currently employs more than 1,000 brokers.
  • Redfin’s mortgage originations jumped in Q2 2022 after its acquisition of Bay Equity and its 485 MLOs.

Mortgage business growth is tightly correlated to an increase in mortgage advisors (brokers and MLOs).
  • Redfin’s mortgage originations are up 10x while MLO count is up 12x after acquiring Bay Equity.
  • REA’s financial services revenue is up 2.8x while its number of mortgage brokers is up 2.7x after acquiring Mortgage Choice.

Broader context: The number of MLOs is an important bellwether for the ability of other real estate tech disruptors to grow in the mortgage space.

The bottom line: Billions of dollars are being invested to disrupt the mortgage process — which is the path to profitability for many real estate tech companies.

  • Instead of leading to greater profits, mortgage has turned into a money pit for the big U.S. real estate portals.
  • And at the end of the day, the evidence is clear: it’s the number of brokers and MLOs that drives meaningful business growth.
October 03, 2022

  #real estate #south florida #luxury real estate #buy and sell #dave magua #home decor #real estate agent #luxury life #luxury homes # miami realtor #dave magua group #we sell houses #jplantation #weston island #beach front properties #real estate investor #investment property #family home #boca raton #boca #home #illustrated #real estate#compass, palm beach county, south florida, broward county, sell my property, palm beach, jupiter

Keyes Illustrated Properties
Dave Magua
21065 Powerline Rd C-7
Boca Raton, FL 33433

The multiple listing information is provided by MIAMI Association of Realtors® from a copyrighted compilation of listings. The compilation of listings and each individual listingare © 2018 MIAMI Association of Realtors®. All Rights Reserved.
The information provided is for consumers’ personal, noncommercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. All properties are subject to prior sale or withdrawal. All information provided is deemed reliable but is not guaranteed accurate, and should be independently verified.
UP5DB701E1507748.jpg All listings featuring the BMLS logo are provided by BeachesMLS, Inc. This information is not verified for authenticity or accuracy and is not guaranteed. Copyright ©2024 BeachesMLS, Inc.
This site powered by CINC: www.cincpro.com