ServiceMagic has added a lender referral service to its online marketplace of real estate salespeople and home improvement contractors. The new lender service connects home loan borrowers to prescreened lenders and mortgage brokers who pay a fee to participate in the program.
“(ServiceMagic Lending) is a marketplace that operates very similar to our original home services segment and our real estate segment that we launched a year and a half ago. We connect consumers with multiple screened and rated providers from whom they can choose,” said ServiceMagic co-founder Rodney Rice.
The lending service is being offered through a joint venture with Cornerstone Mortgage, a wholly owned subsidiary of First National Bank of Omaha.
The new program adds ServiceMagic to a long list of companies that already offer home loan borrowers an online service to find a lender or apply for mortgage financing. Companies already active in the space include Interactive Corp.’s LendingTree and GetSmart.com, QuickenLoans, ABN AMRO’s Mortgage.com, E-Loan, ForSaleByOwner.com and IndyMac Bank’s LoanWorks, among many others. National banks, community banks, mortgage banks, mortgage brokers and real estate brokerages also operate online mortgage services.
ServiceMagic’s offering was launched in October. Rice declined to disclose specific metrics, but he said the participation level and results so far have surpassed the company’s initial expectations.
“It is going really well,” he said.
Online loan operations face an uncertain future given the substantial falloff in mortgage refinancing business that has resulted from slightly higher mortgage interest rates in recent quarters. Shrinking refinance loan volume has pressed lenders to refocus their sales and marketing efforts on purchase-money mortgages, i.e., home buyers.
ServiceMagic’s approach is aimed at securing purchase-money borrowers who also want to select a real estate salesperson and home equity line of credit borrowers who also need to secure home improvement or repair services.
“We have a tremendous amount of purchase money and HELOC business. Those segments are stable and that is really what we are building the business around. We weren’t building the business around a refi boom that we knew was over prior to our launch,” he said.
ServiceMagic was started in 1998 as an online marketplace to connect homeowners to residential contractors. The Web site claims more than 3 million unique visitors per month. The privately owned company has scored $48 million in financing since its inception. Principal investors are Mobius Venture Capital, Sequel Venture Partners, Tango, CertainTeed Corp., Maytag Corp. and QwestDex.
Rice said some percentage–he wouldn’t say how much–of the financing inquiries come from people who also requested realty brokerage services. Such crossover selling from one platform to another is a key part of ServiceMagic’s strategy, although requests for one type of service aren’t shared with providers of other unrequested services.
“Our lenders are seeing an incredibly high level of quality around those applications because we are cross-selling them from one service to a second service. It has been proved over time that when a consumer submits multiple requests via a platform they are of much higher quality. That sets (those leads) apart from spam e-mail or a lesser-quality traffic source,” he said.
ServiceMagic also has added a broker option to its existing find-a-realty-salesperson service. The option is a “lead allocation tool” that enables brokers to purchase leads from ServiceMagic, then evaluate and distribute them to their agents. Rice said brokers are “realizing they can add a lot of value to their agents” with such a system.
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