A CEO resigning.. Investor sentiment turning against it.. Big mortgage related losses announced and more to come, a nervous financial world. Those of you who’ve read the comments on my recent investment club post/thread understand my concern relating to publicly traded financial stocks.
Gabe writes tonight:
“”Hey Frank,
Looks like Citigroup made a big move and acquired Mortgage.com. If you look at the site you can clearly tell that it’s a CitiMortgage site, but for some reason the whois still has the same registered owner: ABN AMRO MORTGAGE GROUP, INC
Not sure if official ownership has yet to change hands of if there is some sort of lease agreement – whatever the case, CitiMortgage is taking advantage of a huge amount of type-in traffic.
Keep up the good work on the blog – very informative as always!
Thanks,
Gabe”"
***FS*** Like the butterfly that flaps its wings and starts a hurricane a world away, this is potentially huge for Citigroup. One simple little name that will be shared virally and typed in organically day after day, month after month, year after year. I understand the power of great domain names.. and I understand the domain name’s “place in the world” vs. one of the biggest companies in the world - but look at this commonsensically.. How much lower would C’s worst 2009 trading day be “without” the compound effect of an incredibly valuable generic domain name like this. This name is going to force millions of mortgage leads right to Citi’s front door.. It’s like owning the front door to every bank in the land relating to the search-term “mortgages” .. My family has typed this name in repeatedly over the years.. so has yours whether they can remember or care to admit it or not. Prince Al-Walid bin Talal got lucky on this one. He doesn’t yet know it.. If managed correctly, the power of Mortgage.com is going to secure and ensure that his investment in Citigroup is more of a success than it could have been without this incredibly powerful domain name.
Great way to round out a challenging week. Thanks Gabe.
http://www.marketwatch.com/news/story/citigroup-buy-abn-amro-mortgage/story.aspx?guid=%7B2501AA7F-BF20-4468-8B60-0F1AAC075C53%7D
ABN Amro is a large dutch bank that sold its mortgage division to Citi back in January (link above).
$3 billion is pretty pricey for just a domain name and I would not be shocked if this is the only tangible asset Citi gets out of this mess.
Capital One recently wrote down the entire cost of its acquisition of a similar sized mortgage group.
***FS*** “”..and I would not be shocked if this is the only tangible asset Citi gets out of this mess.”" .. Ha!!! You get this.
Citi bought ABN AMRO and mortgage.com is one of the assets that were attached with the sale.
Do…
‘Real’
Generic Domains
ROCK…
Or
Not?
Anybody…that thinks…that they are ‘late’ to the…’SHOW’…
Is…
Sadly Mistaken…
The ‘SHOW’ has not even started yet!
Peace!
Dan
Who gets it:
Citi buys ABN AMRO, inherits Mortgage.com – brands the site as a Citi site – starts collecting thousands of new loan applications monthly:
As of 11/9:
Citigroup Inc. – $33.10/share & $164b mkt cap
Who still misses the boat:
Wells Fargo owns HomeLoans.com and does nothing with it – not even forward this name to their own mortgage page on their site:
Wells Fargo & Company – $31.66/share & $106b mkt cap.
Who would you invest in? Best thing about the whole thing is that the January Market Watch article that talks about the Citi purchase – makes absolutely no mention of Mortgage.com.
That’s how early we are in the domain biz – Wall Street doesn’t even value that domain significantly enough to warrant a blurb in the piece – even though this name will bring in probably 5K-10K new loan applications a month (millions in rev) – strictly on the generic keyword value of this domain.
No doubt wells has dropped the ball, but there is no way mortgage.com generates 10k in loans per month strictly via the domain name.
10k of loans per month puts you in the top 10 residential retail lenders in the country, which abn amro did not achieve…this is a great name but the 3 billion purchase was much more involved than acquiring the domain name…
[...] was reading a post on Frank Schilling’s SevenMile.com blog about Citigroup’s branding of Mortgage.com, and I wanted to bring attention to this. Clearly [...]
Great, now Citibank will trademark a “generic” term then send C & D’s to other MortgageWeb.com morgage.com and others and put them to UDRP for $2,500 with Markmonitor’s HOW TO on getting domains for the rich and famous. Most domainers can’t afford to fight so they hope arbiters will see the light, except the arbiters say SHOW ME THE MONEY rich and famous and we will give you what you want. UDRP is about $$$ and lots of it.
The name generates $3m per month NNN for ABN….or at least it did.
While it is a great point that there is tremendous value in a domain such as mortgage.com, I think that I agree with Dan and find it interesting to speculate about where the new value is going to arise. A simple example perhaps would be to examine the trends of language growth and invest in undervalued Spanish domain names -
Marketing Relationship –
5K – 10K in new loan applications does not translate into 5K-10K in new loans closed per month. I’m sure there is less than a 20% close ratio with online applications (based on less customer loyalty & personal relationships with loan officer). I think it’s very realistic that they can generate between 1K-2K new funded loans per month (30-60/day).
Take into account that Citigroup will be able to capitalize better with this name because of brand loyalty and awareness than what ABN AMRO did – translation – More loan applications + higher close ratio.
I think you are also undervaluing the power if this generic domain….
Frank,
For the doubters let’s put the Citibank / Mortgage.com deal in perspective…
ABN Amro’s value was in thier wholesale lending channel however the simple value of gaining the bonus of mortgage.com….here we go….
Conservatively,
Let’s say mortgage.com gets 3,000 organic type visitors a day
That’s 90,000 a month
Let’s say 5% submit an online request / application
That’s 4,500 applications a month
Let’s say 10% end up closing a home loan
That’s 450 closed loans a month.
Let’s use an average loan amount of 300,000
So now we have 450 x 300,000 = $135,000,000
Total loans of $135,000,000 from organic traffic.
Most lenders factor in at least 2 points
2 points = 2%
2% of $135,000,000
= a profit of $2,700,000 a month!!!!
double check the math – any way you play it – this organic traffic is more powerful than any sex.com –
Alan
Let’s run the numbers. $1 billion in mortgage originations would require 5,000 customers (average of $200K per customer). A typical application to close rate is about 40-50% but lets say online it is much lower at 25%. That means to get 5,000 customers to close you’d need 20,000 applications. Let’s say the ratio of online visitors per application is 10 to 1. You’d need 200,000 visitors to generate the 20,000 applications. Divide 200,000 by 365 days for roughly 5,000 per day. It wouldn’t surprise me if mortgage.com got that many visitors per day. Even if it took twice as many visitors to convert to an application, that’s still just 10K visitors per day.
So how much is a $1B in originations worth? In today’s credit markets, not a penny. Haha. Okay, actually the valuation in normal times is probably around 1% (maybe a little more depending on credit quality). That gives you a value of $10MM. Assuming we value cash flow over at least three years we’d end up with about $20MM-$30MM. Of course, the infrastructure to actually originate and service those loans is a totally different story. Nonetheless, it just goes to show how undervalued some domain names actually are in today’s world.
[...] was just at SevenMile.com reading about CitiBank taking possession of Mortage.com which to me looks like one of the most obvious names for a banking group to [...]
Gabe
I spent some time at the largest online lender in the country, they do 8-10k loans per month in good times with a 100 million per year marketing budget. Its a great name but net loans via strictly typing in the url is probably under 200 per month. Citi also has done a poor job in developing this site to convert well…but time will tell, I would love to own it, abn paid 1-2 million to acquire it a few years back…great investment…
Valuation
2 ways to value this name
Most lenders will spend 1k to acquire a customer in total marketing cost. Assume 150k loan with 2% back end revenue. If the site produces 2400 fundable loans this equates to a marketing budget or savings of 2.4 million per year
Valuating on revenue of 3k times the 2400 closed loans equates to 7.2 million per year, times a multiple of 5-7 years would put the value between 35-50 million for a true end user mortgage company so this was truly a steal buy a few years back…when you look at numbers like this it makes you wonder how the idiots who run wells fargo can justify not monetizing the homeloans.com name…if I were an shareholder I would probably contact their bod
The name nets $3m per month. Bottom line.
I know this for a fact…..