HomeLight CEO Drew Uher says he’s glad to be out of the mortgage enterprise. Fathom CEO Marco Fregenal sees worth of being in lending “in a very selective way.”
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For actual property brokerages in search of alternatives to win within the post-commission lawsuit period, moving into the mortgage enterprise may appear to be a tempting alternative to generate extra income.
Brokers and brokers attending Inman Join Las Vegas are getting views on the professionals and cons of delving into mortgages from a number of factors of view.
These factors of view embody HomeLight founder and CEO Drew Uher — who’s been there and executed that — and Fathom Holdings CEO Marco Fregenal, who nonetheless sees worth in being within the mortgage enterprise “in a very selective way.” LoanDepot CEO Frank Martell is urging Compass to assume twice about increasing into lending.
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A 2023 Better of Proptech Inman award recipient, Uher launched HomeLight in 2012 as an agent matching website with backing from Google Ventures, amongst others. HomeLight obtained into the mortgage enterprise with the 2019 acquisition of digital mortgage lender Eave, which turned HomeLight House Loans.
Uher mentioned HomeLight has since exited the house mortgage enterprise, and that he has “a newfound respect for the mortgage industry.”
“If you rewind to 2021, [we had a] slide in our investor deck of … the billions and billions of dollars of revenue that we’re gonna do in the future … huge growth coming out of mortgage,” he mentioned.
What HomeLight realized was that mortgage lending is “a very people-intensive business” that Uher mentioned he’s comfortable to depart “to the people who are really good at it, who specialize in it. Our unit economics now look much more like software margins than they did a few years ago.”
In line with information maintained by the Nationwide Mortgage Licensing System and Registry, HomeLight House Loans Inc. holds licenses in 34 states and Washington, D.C., and finally rely sponsored 13 mortgage mortgage originators.
HomeLight continues to companion with mortgage lenders on its energy purchaser and money supply providers, which it expanded with the 2022 acquisition of Settle for.inc.
“The way the ‘buy before you sell’ product works, we used to do the mortgage in that transaction — that used to be how we would monetize it,” Uher mentioned. “By stepping out of that, and by letting the agents’ preferred lender do the mortgage, we are no longer creating friction between the agent and the lender. We can actually leverage the lender as a channel.”
Fathom, which gives actual property brokerage, mortgage, title and insurance coverage providers, obtained into the mortgage enterprise in 2021 with the $26.75 million acquisition of E4:9 Holdings and its three working subsidiaries, Embody Lending Group, Dagley Insurance coverage Company and Actual Outcomes. Though Fathom ended up promoting Dagley again to its founder this 12 months, it expanded its presence in lending by buying Washington, D.C.-based Cornerstone First Monetary.
Fregenal mentioned that whereas mortgage lending is a small half Fathom’s enterprise, it may be a precious instrument in facilitating transactions.
“I think what makes Fathom unique is that we’re not trying to do everything for everyone,” he mentioned. “Our goal is to facilitate a transaction. We use mortgage in a very selective way.”
Fregenal mentioned Fathom is targeted on serving to its brokers, and Embody “has helped get deals done. But I agree you have to be hyper-focused on what you do well.”
LoanDepot President and CEO Frank Martell additionally warned actual property brokers and brokers on Wednesday to assume “long and hard” earlier than moving into the mortgage enterprise, calling it “a very complicated, highly regulated industry.”
Martell additionally serves as a board member for actual property brokerage Compass, and panel moderator Clelia Peters mentioned he’s been advising the corporate on a potential enlargement into house lending.
“He told me backstage that he was really encouraging [Compass to] step away from thinking about that type of integration,” Peters mentioned Thursday.
Uher famous that “Zillow is leaning heavily into [mortgage], which I don’t understand at all. Usually, loan officers are the ones paying for Premier Agent subscriptions, and so it’s like they’re biting the hand that feeds them.”
Fregenal mentioned the mortgage trade is doing pioneering work in synthetic intelligence, and being uncovered to that has been helpful for Compass.
“The mortgage industry is doing a lot of work on AI [that] has caused them to really think about the process, right?” he mentioned. “To think about how they spend money, how long it takes to get a mortgage. So for us, having a mortgage business also helps us understand that — how do we simplify that process as well?”
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