We think that should play very well in this new market as the buy side agent is going to be negotiating likely here with the consumer as to the fee for the service that they will provide. And so one of the things we’ve really focused on in building our purchase business, we were 91% purchase, but, obviously, we need more volume at this company, and that’s what we’re focused on. We got to get bigger, is partnering with real estate agents. It’s something we didn’t have to do in refinance. It’s not as simple as a digital play to go do that. And so we’ve been doing that over the course of 2023, and Duo is a big part of this and should fit in well with what is likely to be the new market structure going forward.
Vishal Garg: Yes. I think one thing to add, the important thing is this is going to drive more consumers online. So, we think that in the best case scenario, consumers are going to have to figure out how to pay for a realtor. And they’re going to come to try to figure out how much they can afford. And the more consumers that do that, the more they get online, the more they will find us and the more they’ll find our value propositions of speed, certainty and price attractive along with the service offerings that we’re doing. The fact that we have Realtors who are signing up to become loan officers on our platform shows you how advanced our platform has become in terms of purchase mortgages. We’ve built it from scratch from the ground up. We just didn’t reconfigure the refi product to do purchase. We’ve built a product that realtors are adopting and saying, yes, I want to be a loan officer on this platform.
Michael Kaye: And a follow-up question is, do you have any thoughts and concerns about the CFPB looking into what they claim are junk fees as part of the mortgage closing process? For example, do you think they could potentially place limits on loan origination fees or the use of discount points?
Vishal Garg: I think the CFPB is right to look at a lot of the junk fees that go into the mortgage process. We’ve always been a low fee, low-rate lender. And our gain on sale margins have typically been substantially lower than that of the rest of the industry. To the extent that the CFPB equalizes the playing field across the board, we think we will be a beneficiary of that.
Operator: Your next question comes from the line of Jeff Cantwell from Seaport Research.
Jeff Cantwell: I want to ask you, I understand that some of Better’s competitive advantage comes from its ability to be a low cost provider. Does management do you guys see any opportunities to improve pricing and revenue per fund over time? Thanks.
Kevin Ryan: Sure, sure. So, I mean, that’s right. And Vishal just said it right. And we started the company with ESAs. We’ve generally been low to no fee and low rate. And that has served us well kind of getting to the place where we’re relevant in the market and grew customer base. But I’ll tell you, we look at this all the time. We study unit economics. The reason we scaled back so much last year was we wanted to do what we call contribution margin profitable loans. So every loan makes money in and of itself. And so we’ve been putting price into the market. Over the course of 2023, we raised price. We’ve done it again in Q1. We’ve seen really limited impact to our conversion rates. I mean, there’s some, but limited impact.
And so I think as you think about us, and particularly with this new operating model, these are seasoned loan officers. You think of things like Duo, etcetera. It’s going to be a higher service offering. When the company was founded, it was really a DIY product. Go online, click here, and that leads itself to a low cost product. If we’re hiring more seasoned people to actually work with the consumer through the home buying process, which can take months, as Vishal said, we think it kind of justifies the slightly higher price. So I think that our trend is already developed. Sometimes it’s not easy to see in the numbers because, right, you have marks and things like that that also run through gain on sale. Our gain on sale has been trending up each and every quarter.
Some of that’s capacity coming out of the market. And some of that’s just, what we’re doing. And I think over time, we’ll convert closer to the industry on being on sale. I don’t think we’re ever going to be the high cost to the consumer. That’s not our model. But I think we’re going to trend a little bit higher. So more revenue per unit is definitely in our future.
Operator: Your next question comes from the line of Pete Heckmann from D.A. Davidson.
Pete Heckmann: I wanted to ask a question on the B2B partners. It’s kind of intriguing aspect of the business and now adding Beyond.com. Can you talk about the economics on those partnerships? And on a relative basis to DBC, how do you expect it to grow in 2024?
Kevin Ryan: I think the biggest benefit of the B2B relationship is that we have zero customer acquisition costs. So, in the case of partnerships like Beyond.com, we’re able to instead of having a customer acquisition cost, we’re able to utilize their extremely large customer list, their low cost of the marketing to that list in conjunction with the marketing that they’re already doing and drive a discount to the consumer and pay a bounty to Beyond for the applications and consumers that they refer to us. So, it’s a win, win for all parties. The other partnerships that we have, the ones that are going to be coming out of sort of our partnership with Infosys, those are more full white label mortgage as a service for big banks.
