New York-based digital mortgage lender and real estate company Better.com has decided to partner with outside agents as referral partners, resulting in the mass layoff of agents at subsidiary Better Real Estate LLC, a person familiar with the decision told HousingWire.
Better Real Estate is pivoting from its operating model of having in-house licensed professionals to a partner agent model, which will make more sense for the company from a financial and economic standpoint and may increase agents’ earnings potential, the source said.
Inman first reported on the company’s decision, citing anonymous sources.
According to the person familiar with the decision, the existing transaction pipeline will proceed as usual, bonuses will continue to be paid out and the standard incentive structure for agents will remain in place.
A spokesperson for Better.com declined to comment.
Long relying on real estate agents as referral partners, mortgage companies like Better started to build their own real estate brokerages over the last few years. These lenders, who usually buy leads to originate refis, invested in their own real estate agents to win more purchase loans when the 2020 and 2021 boom ended.
Better Real Estate, launched in 2021, has licenses in 20 states and Washington, D.C. Its website says the borrower can save $2,000 when working with the company’s real estate agent and getting the company’s mortgage. Customers can also avoid paying a sell-side commission fee if they buy and sell with Better Real Estate and Better Mortgage.
In August 2021, Christian Wallace, Better’s head of real estate, told HousingWire that the company had 200 real estate agents in 15 states. However, Wallace, a former Sotheby’s agent and Opendoor manager, left the company in February 2022 amid a volatile period for the company.
The exodus happened after Vishal Garg, Better.com’s founder and CEO, laid off 900 people in a dystopian Zoom call. The company’s board of directors later reinstated Garg.
Wallace was replaced by Chad Walker, who left as head of real estate in June 2022. Nick Talyor held the position after that. Taylor spent more than nine years at Zillow in sales and strategy and more than three years at Modus.
Better.com has imposed layoff rounds to its workforce in the mortgage and real estate businesses in a shrinking mortgage market, after growing its headcount by almost five-fold to 10,000 employees in 2021.
The company has postponed its plan to go public via a special purpose acquisition company (SPAC), which was announced in May 2021. In March 2023, blank-check firm Aurora Acquisition Corp. extended the deadline to complete its merger for the third time. The deadline for the merger is now September.
According to Inside Mortgage Finance, Better.com was not listed among the top 50 largest U.S. mortgage originators in the first quarter of 2023. In 2022, when the lender originated over $10 billion, down 80% year over year, IMF ranked the firm as the nation’s 45th-largest lender.
In February, the company launched “Equity Unlocker,” which allows employees to pledge vested stock equity as collateral for a down payment in a mortgage without selling their stock. Current and former Amazon employees who have vested equity in the company will be the first group to have access to the product.
Garg last year said Better.com is building a home-auction site that would allow pre-approved mortgage holders to bid on and buy homes and avoid broker fees. He said it could eventually become a $100 billion segment for the company.
