Companies with deep pockets, including Zillow, are aggressively increasing their MLO headcount to capture future market share, writes Mike DelPrete.
This article was shared here with permission from Mike Delprete of Inman Intel, Inman’s data and research division, providing deep insight and market intelligence into the business of residential real estate and proptech. Subscribe now.
Even in the downturn, people are still taking out loans and buying homes, and some companies are trying to grab a bigger share of the mortgage market.
why is it important: Tracking MLO (mortgage loan originator) employee numbers is a natural consequence of the size of a company’s mortgage business, and tracking employee numbers over time helps determine who is investing in future growth. It becomes clear what you are doing.
- Three interesting examples are Zillow, Redfin, and Better Mortgage.
- Over the past 15 months, Zillow has seen a slow and steady increase in employee headcount, Redfin has seen a similarly gradual decline, and Better (a classic hockey stick curve) has seen a rapid increase.
Expand your company’s field Looking at the past three years provides useful context in terms of growth, decline, and relative size.
- Small disruptors pale in comparison to portals and established mortgage companies.
- It is better to go to wild get on.
as a percentageBetter has grown the most over the past year.
- Tomo is notable as the only disruptor to significantly increase MLO’s personnel numbers (but from a small base).
Mortgage loan origination amount Typically, this will roughly match the MLO headcount.
- Origination growth continues to be steady as Zillow continues to invest and grow its mortgage business.
- Redfin and Better seem to be riding a more seasonal wave. (Note: Better’s origination value also includes a growing refinance business, while Zillow and Redfin’s are primarily purchase amounts. )
closest indicator To measure overall efficiency, we need the starting volume per MLO.
- Zillow was flat, while Redfin recently increased over the past two quarters. This is the result of a seasonal increase in volumes and a corresponding decrease in MLO headcount.
- The Better metric has improved significantly, but is on the decline. This is likely the result of an exponential growth in the number of employees (i.e., investment in future growth) that exceeds the number of new hires.
Revenue per MLO is another efficiency metric, and Zillow wins in that category.
- Zillow’s mortgage revenue per MLO in Q3 2024 was $130,000, compared to $114,000 for Redfin and $89,000 for Better.
conclusion: Companies that can afford to do so are aggressively increasing their MLO headcount to capture future market share.
- The mortgage businesses of disruptors, primarily power-buying companies, remain much smaller as they weather the weak market and pivot their business models.
- The portal has been remarkable, acquiring large mortgage businesses, and Zillow continues to grow its MLO headcount.
- Pure mortgage companies, especially Rocket, are large and well-positioned to take advantage of growth opportunities in their own adjacencies.
Mike Delpreto is strategic advisor A global expert in real estate technology, including Zavvie, the iBuyer offer aggregator. Connect with him at linkedin.
