Why Lower and Movoto are doing it differently than Rocket-Redfin

Brooklee Han: It has been a little over two months since the acquisition was announced. What can you tell me about the deal and how you came to the decision to join forces with Lower?

John Berkowitz: I think at the end of the day, none of the real estate platforms or portals can succeed both financially and with their delivery to consumers unless they help people buy and sell homes. And to do that you need two things: real estate agents and loan officers. Nobody has gotten that right yet. A lot of people have tried — Zillow bought a mortgage company and failed and now they are trying again and are all-in. Redfin bought Bay Equity and tried multiple mortgage products and now they are at Rocket. 

We have been obsessed since the beginning of operating Movoto with meeting consumers where they are and figuring out what they need, and typically what they need is a high quality real estate agent and the right mortgage product for them.

What we realized is that if you start with the real estate agent, the agent most often wants a local mortgage professional they have a trusted relationship with. Even though Zillow is used by almost all Americans, only 7% of the transactions are happening through Zillow and that is because the transactions are happening at the local level. The agent a buyer is meeting through a portal is connecting them with a local loan officer that they know. I think there is starting to be a greater understanding of this concept and we are certainly all-in on it. 

BH: How does the merger with Lower then play into this strategy?

Berkowitz: To craft the winning solution, you need consumer scale, high quality, dialed-in real estate agents and world-class local retail mortgage — that was the part we had to figure out and we found Lower in that process. I think the real advantage we have now is more scale retail mortgage operation that is attached to a consumer portal than anyone else. Call center mortgages work for a certain subset of consumers, but for the ones that go to a real estate agent first and rely on real estate agent recommendations, it is very hard for them to partner with a call center. So, while we may be the smallest in scale as far as consumers, I think we have that last mile of the operation more scaled and dialed in than anybody else. And how do you win when you are fighting against giants? You lean into your strengths and I think you are going to see us lean heavily into delivering a really good, consistent experience for consumers at a local level by leveraging the best real estate agents in that market and a well-run retail mortgage operation. 

BH: Real estate portals are no longer just about finding your next property and connecting with a local agent. What do you see next for the evolution of portals?

Berkowitz: We are seeing more attention being paid to how do you deliver more solutions to a consumer. There is a growing understanding that every American is on websites in the portal space, but very few Americans are buying and selling homes, so it is now about figuring out how they are using our websites, and what we have found is that they are using portals like home ownership platforms. They want to see what their house is worth, or inspiration for decorating or landscaping or maybe they are just even daydreaming about their next house. With this I think you see more people talking about homeownership as a life cycle versus a transaction. 

BH: How do you feel the portal space has changed over the past year or so?

Berkowitz: For the first time you are seeing real differences among the portals start to emerge. Zillow and Rocket-Redfin are going the one-stop-shop route and Movoto-Lower is doing the same thing but with a local ground game. Realtor.com is taking an advertising approach and CoStar is taking more of a software approach for agents. Up until now everyone’s business model was the same except for Redfin since it operated a brokerage, but now there are a lot of differences and that’s a pretty big shift.