Zillow is full steam ahead with an ambitious expansion of its mortgage business, leveraging its innovations in housing technology to potentially reshape the way modern homebuyers finance homes.

In its third-quarter earnings report, Zillow Home Loans revealed an impressive data point: Mortgage revenues rose 63% year-over-year to $39 million in the third quarter, driven primarily by an 80% year-over-year increase in purchase loans. production volume up to $812 million.

That’s an annual turnover of $3.2 billion in purchase mortgages, not far away from a top 50 position in the mortgage rankings. And according to NMLS data, the company has been hiring loan officers at a good rate over the past year.

The Zillow Funnel

Everything starts at the top of the funnel. In the third quarter, Zillow attracted an average of 233 million unique monthly users across its apps and websites, according to its own metrics, while the analytics firm Comscore reported 116 million average monthly visitors for the same period.

No real estate platform in America receives more attention. Not even close. But separating the serious buyers from the hundreds of millions of looky-loos has always been the challenge, especially when the business focus has been on agent advertising revenue.

To that end, Zillow is pushing serious buyers further down the funnel with its “enhanced Markets” initiative.

Founded in 2022, the program essentially combines a suite of tech tools, such as Flex, ShowingTime, Zillow Home Loans, Follow Up Boss, and Real Time Touring, to work with top agents to drive lead conversions.

The Seattle juggernaut has ramped up Enhanced Markets over the past year. It has now replaced Premier Agent in 43 markets, and according to ModexMuch of the mortgage activity is clustered around Dallas, Los Angeles, Atlanta, Raleigh and Portland, Ore.

Through Flex, a successor to the long-standing Premier Agent program, qualified agents receive leads with higher chances of conversion success from the Zillow team, all at no upfront cost. But there are some things that need to be monitored and that come at a high cost: To stay in the Flex program, agents must ensure they are meeting transaction targets, answer customer questions, have communications monitored and ensure that “ 60% of opt-in transfers involve Zillow home loans.”

When a deal closes, Zillow collects 40% of the agent’s commission.

The lead generation program is designed for top producing agents and teams who spend thousands of dollars per month on Zillow leads. Zillow hopes agents will refer customers to Zillow Home Loans instead of their usual rotation of loan officers from third-party mortgage companies.

The company said that they have been operating in Enhanced Markets for more than six months, and that Zillow Home Loans customer acceptance rates are “in the mid-teens, with newer markets showing a similar trend.”

Zillow said they are also seeing higher transaction conversion rates for agent partners who work with customers who choose Zillow Home Loans, “because together we help agents and loan officers better serve customers when they are ready to complete a transaction.”

In the company’s earnings call this week, CEO Jeremy Wacksman said the potential in the mortgage space is huge. “Forty percent of all home buyers begin their home shopping journey by looking for a mortgage, and more than 80% of those buyers do not yet have a real estate agent,” he says.

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