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Apr-04-2008Zillow Opens Online Mortgage Marketplace(topic overview)
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Lenders can respond to an unlimited number of loan quote requests directly from borrowers -- for free. Zillow Mortgage Marketplace extends Zillow into another crucial facet of home ownership, and includes the industry's first-ever lender public feedback system where borrowers rate the lenders they choose to contact. Similar to the company's initial real estate launch with Zestimate(R) values two years ago, Zillow developed Mortgage Marketplace to add information and transparency to what has traditionally been a confusing process for borrowers. Zillow Mortgage Marketplace gives borrowers greater control and more information to help them find, research and select the right lender and loan. "It's clear from our customer research and from reading today's headlines that borrowers need a better way to research and shop for home loans," said Rich Barton, CEO and co-founder of Zillow.com. "Loan shoppers tell us they want real quotes -- not just teaser rates -- when doing their research online, and they want to control who and when they contact by shopping anonymously until they are ready to talk. There is an obvious need for a transparent, free marketplace, and with this in mind, we are pleased to enter a new business today with the launch of Zillow Mortgage Marketplace." [1] NEW YORK (AP) — Armed with market research that showed Americans spend as much time researching a vacation as they do a mortgage loan (answer: five hours), Zillow.com is launching a mortgage marketplace that allows consumers to anonymously receive custom loan quotes and rate their lenders. Zillow.com, which created a buzz in the real estate industry two years ago with its online home value "zestimates", hopes to add transparency and information to the mortgage application process, while making it easier and faster to get mortgage quotes. On its Web site, potential borrowers can fill out a detailed loan request form, which doesn't ask for any identifiable information. The borrower then has the option to contact lenders about their quotes.[2]
Seattle-based real estate Web site Zillow.com unveiled a free online service Thursday that will allow borrowers to anonymously request custom loan quotes from registered lenders. Called Zillow Mortgage Marketplace, the service includes a public feedback system for borrowers wishing to rate the vendors they contact. Though the service is provided free to both parties, Zillow said lenders must pay a one-time registration fee of $25 each.[3] Seattle-based real estate Web site Zillow.com has launched Zillow Mortgage Marketplace, an open and transparent lending marketplace designed to offer borrowers an anonymous and hassle-free way to request custom loan quotes directly from registered lenders.[4] SEATTLE, April 3, 2008, 2008 /PRNewswire via COMTEX/ -- Real estate Web site Zillow.com today announced the launch of Zillow Mortgage Marketplace, an open and transparent lending marketplace, offering borrowers an anonymous and hassle-free way to request custom loan quotes directly from registered lenders.[1]
Zillow.com, the website best known for its home valuation tool, launched its new mortgage-shopping tool tonight, after weeks of whispers and hints. The free tool allows would-be borrowers to search for real loan quotes anonymously on the Zillow site, and leaves the borrower in control of any follow-up contact with lenders who bid for their business on the Zillow site. From Zillow's press release: "Loan shoppers tell us they want real quotes -- not just teaser rates -- when doing their research online, and they want to control who and when they contact by shopping anonymously until they are ready to talk," said Zillow CEO Rich Barton, adding, "There is an obvious need for a transparent, free marketplace." Most online loan-shopping services -- such as Lending Tree -- require a would-be borrower to submit personal information up front.[5] Seattle-based Zillow.com, best known for its instant home value "Zestimates," launched a new service on Apr. 3 aimed at changing the way Americans shop for mortgages. Borrowers can use Zillow's new "Mortgage Marketplace" to get custom loan quotes from lenders without having to give their names, addresses, phone numbers, or Social Security numbers, or field unwanted telephone calls from brokers competing for their business. Borrowers reveal their identities only after contacting the lender of their choice. For mortgage companies, the anonymous leads come free of charge; they can make a bid based on information provided by the borrower, such as salary, assets, credit score, and the type of loan.[6]
Lenders can respond to an unlimited number of loan quote requests directly from borrowers. Zillow adds that Mortgage Marketplace extends the company into another crucial facet of homeownership and includes the industry's first-ever lender public feedback system where borrowers rate the lenders they choose to contact.[4] The Mortgage Marketplace quote form requires lenders to disclose all fees upfront then Zillow estimates taxes and insurance and provides an inclusive estimated monthly payment. This makes it easier for borrowers to compare loan quotes on an apples-to-apples basis, note differences and better evaluate overall affordability. The borrower decides which lender(s) they want to contact, if any, maintaining complete control of the process. Only when a borrower contacts a lender will their identity be revealed.[1] Zillow is utilizing the help of a leading independent third party to support a confirmation process that may include identity authentication, employment verification, broker license confirmation and checking standard sources for complaints or comments. To cover the cost of this confirmation process, lenders pay a one-time registration fee of $25. -- Create a public profile and accept borrower feedback. Once lenders are confirmed, they automatically receive a public profile on Zillow, which lists their contact information and a link to their email address. Lenders are able to add a photo and other information about their credentials or service philosophy. Lender profiles will also display ratings submitted from borrowers who have contacted them. Through these personalized profiles, lenders are able to build a reputation on Zillow based on responsible lending practices, competitive and accurate rates, and great service. -- Agree to adhere to the Zillow Mortgage Marketplace Code of Conduct. This places mutual responsibility on the borrower and lender to be accurate, professional and law-abiding in all interactions.[1] The Zillow Mortgage Marketplace involves a lender feedback system where lenders can in fact be rated and reviewed. This adds to the transparency that Zillow is after, which is an extension of the Zestimate feature the company added nearly two years ago. I'm sure this new Marketplace will face some push back, as most transparent-rendering processes do, but the time is ripe for such matters to come about. When it's all said and done, every party benefits from such transparency, and it's something that only a web-based platform can offer in such a far-reaching capacity. As we've seen with services like Lending Club, the web is offering a number of transparent alternatives to the lending process, and this process will in fact be applied to a great number of other industries that can manifest within a web-based environment. Apply and have their professional and employment status confirmed.[7]
Let me clarify a few things. This new product is great for borrowers. It is a HUGE improvement versus the status quo. With Zillow Mortgage Marketplace, borrowers are in control and don't have to offer up their phone #, and avoid being inundated by lender phone calls.[8]
Zillow calculates a monthly payment for each quote by estimating taxes and insurance for the house. Brian Brady, managing director at San Diego's World Wide Credit, a national lender and broker, said he signed up for the Zillow mortgage marketplace a few weeks ago and has mixed feelings about it. He said it has the potential to be a great tool for both consumers and lenders. He's concerned that borrowers will be seeking quotes without first getting advice from mortgage professionals about the loan that best fits their needs. He's also concerned about the kinds of leads the site might generate.[6] Lenders who have signed up with Zillow, paid a one-time $25 registration fee and been approved as valid mortgage professionals can then peruse the various loan requests. Based on the criteria, they can choose to put together a quote along with their contact information. It is then up to the consumer to reach out to the lender to discuss the quote. Each lender also is required to have a profile page that includes an online ranking system where consumers can rate its performance on a scale of 1 to 5.[9] For mortgage professionals'''who pay a one-time fee of $25 to participate'''it will provide an excellent lead source. This new platform will compete with others already available in the loan industry, such as MortgageMarvel.com and LendingTree.com, both of which allow mortgage professionals access to customer information. Both companies list fewer than 280 lenders in their network, while Zillow received over 300 registrations last week alone.[10]
Zillow also does not sell a borrower's personally identifiable information, which often leads to a barrage of unwanted phone calls and e-mails from multiple lenders vying for the borrower's business. This is a primary worry of borrowers. More than 80 percent of people who plan to shop for a mortgage or home loan in the future say they have concerns about doing so. More borrowers say they are concerned about having their personal information sold or shared (58%) than they are about missing the opportunity to get the best rate (55%), according to a recent survey(i) conducted by Harris Interactive on behalf of Zillow, which the company reported separately today.[1] People applying for home loans online now have to supply personal information to get quotes. Their information is often sold to other marketers, their credit rating can get harmed from so many credit checks, and the rates are usually higher than initially advertised. Zillow's Mortgage Marketplace aims to solve those problems.[11] The real estate mortgage market has been in crisis because of high default rates on subprime and other adjustable rate loans, but Zillow, which has raised $87 million in funding, still sees an opportunity. Visitors to Zillow Mortgage Marketplace can request customized loan quotes by filling out a form that keep their identity private.[12] In addition to getting loan quotes through Mortgage Marketplace, Zillow users can ask questions and find or share answers about numerous home financing topics via Zillow Discussions.[1]
Only lenders who have registered on Zillow and been confirmed as mortgage professionals may participate in Mortgage Marketplace and submit quotes. Zillow does not limit the number of quotes a borrower can receive and offers a standardized quote form to make comparing these quotes -- along with each lender's ratings and feedback -- easy.[1] The site received 5.2 million visitors in March, up 30% from a year earlier. The Mortgage Marketplace could have a head start in attracting lenders because about a third of all U.S. mortgage professionals visit the site in a given month, he said. Todd Carpenter, owner of Lenderama, a mortgage industry blog, said he hopes Zillow's mortgage service will be successful. "It's structured in a way that's to the advantage of the customer," he said.[6] Zillow is one of the most-visited U.S. real estate sites on the Web, with more than 5 million unique users each month. These users include more than one-third(ii) of all mortgage professionals in the U.S. -- or approximately 125,000 -- in any given month.[1]
Zillow.com on Thursday added a mortgage marketplace for lenders to get in front of the millions of monthly visitors to the online real estate site. The Seattle startup, formed by two former Microsoft executives who founded Expedia, takes publicly available housing data such as closing home prices and displays it in a mashup fashion on maps.[12] Zillow.com is an online real estate community where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes, for free.[13]
For lenders, Zillow wants to create a system by which mortgage professionals can quickly and cheaply obtain leads. "This is revolutionary -- offering free leads to lenders has never been done before in this manner," said Spencer Rascoff, vice president of marketing at Zillow.com.[9] Zillow CFO and VP of Marketing, Spencer Rascoff said that the new platform is intended to protect the privacy of consumers while providing a more accurate and transparent process for quoted loan rates. This tool seems will be a great coup for buyers and mortgage professionals alike.[10]
"We think an educated consumer, an educated borrower is a better customer." Last week, Barton was talking to government officials in Washington, D.C., about its open marketplace for mortgages. He said there was a lot of enthusiasm about the idea, noting that politicians are looking to create a standardized quote form for lenders. "A lot of what we are saying really lit up the politicians in D.C. because we seem to be answering and putting on display a lot of the things they are talking about right now," Barton said. By creating a marketplace, Zillow is hoping that consumers will be able to anonymously shop for rates that apply directly to their specific loan situation.[9] Zillow's Rascoff conceded that some of the borrowers seeking quotes on the mortgage marketplace might be "early in the decision process." He said a borrower who decides to call a lender is more valuable than one who simply answers the phone.[6] Lenders can browse borrower requests and see competing quotes from other brokers before making a bid. "This is a huge step forward in terms of putting borrowers in control and giving them access to information," said Spencer Rascoff, Zillow's chief financial officer and vice-president for marketing. The company is entering a field of established mortgage sites such as LendingTree.com and Experian Group's ( EXPN ) Lowermybills.com, which charge mortgage companies for borrower information.[6] Spencer Rascoff, Zillow's vice president of marketing, says people are looking for exactly what Zillow is selling. In the Zillow Mortgage Marketplace, which launched last night, users looking for a mortgage enter their finances but not their contact information. Mortgage brokers and banks make their offers, and users get to decide which deals to pursue.[14]
Then certified lenders make offers that can be compared side-by-side. It's up to the borrower to reach out and contact those lenders, not the other way around as it is with services like Lending Tree. Zillow cites a Harris Interactive study showing that it's more important for borrowers to keep their contact info private than to find the best rates. Apparently lenders are a bit too eager to sell you on a deal after they know how to find you. The main advantage of this marketplace lies in protecting borrowers' identities and tipping the balance of power into their favor.[8] Create a public profile and accept borrower feedback. Once lenders are confirmed, they automatically receive a public profile on Zillow, which lists their contact information and a link to their email address. Lenders are able to add a photo and other information about their credentials or service philosophy. Lender profiles will also display ratings submitted from borrowers who have contacted them. Through these personalized profiles, lenders are able to build a reputation on Zillow based on responsible lending practices, competitive and accurate rates, and great service.[7]
Zillow said it verifies every lender's identity, employment and broker license. Each lender will have a public profile on the site with contact information, an e-mail link and ratings submitted by borrowers who contacted them.[2]
Borrowers ask for personalized loan quotes from real lenders, then decide whether to contact the lenders. Zillow launches with a relatively small group of participating lenders -- it says roughly 300 individuals have registered with the site, which gives them the right to "bid" on loans.[5] Lenders fill out Loan Quotes, which are responses to each of the borrower's Loan Requests.[8] Borrowers fill out detailed loan request forms but do not provide any personally identifiable information. When customized quotes are available, the borrowers get e-mail alerts and can choose which quote and lender they want.[11]
The site will register lenders and relay applications, returning loan offers in a standardized form for apples-to-apples comparison. Borrowers won't have to provide any personal information, such as name and--thankfully--a phone number.[15] Borrowers will have more than fees and loan rates to consider; the site gives a 1-to-5 rating to each lender based on borrower feedback.[6] I can't tell you how many good faith estimates I've had lenders prepare so I can compare the loans easier. Another point that I find important is that you can rate lenders. I bookmarked this page about average closing costs in my state - I can't find any more of the survey (it is for 2007). This guide saved me from paying exorbitant fees (each lender has a unique set it seems). It's often tough to get real numbers, so I hope Zillow will do similar surveys of their lenders.[16] I've worked with three lenders and locked in a rate with two. Zillow actually played into this - because one lender based the worth of my property on Zillow's rates, which were about $30k higher than the appraisal came in at. My bank practically takes their valuations as gospel. I've seen some sloppy numbers and some excessive fees in this process, and it makes me nervous. Plus, it's tough to compare loans side-by-side.[16]
For lenders, Zillow Mortgage Marketplace is also a big step forward. Instead of paying a lead generation company $50-$100 for a phone number (which has been sold to 3 or more of your competitors), Zillow is offering these leads to lenders for free.[8] Zillow Mortgage Marketplace lets borrowers compare quotes from different lenders side by side.[11] "Zillow has expanded into the home financing arena with today's launch of Zillow Mortgage Marketplace that we designed to help illuminate the complicated lending process and provide borrowers greater control and transparency than exists elsewhere and addresses many of the common borrower concerns and preferences," added Rascoff.[13] Zillow, the site where you can find pricing estimates and other info about houses around the United States, aims to disrupt the online lending market with the launch of its Mortgage Marketplace.[8]
Unlike other online mortgage services I've tried, Zillow promises to keep me hidden from pushy lenders. The service is perhaps best known for its real-time estimates, known as "zestimates," on home values. Zillow execs say their service will stay out of the lending process and not take a cut of the business.[15]
In all, Zillow is looking to severely streamline the home buying process by making communication between borrowers and lenders as transparent as possible. Given Zillow's position in the market, it's quite necessary for it to provide such integral resources as part of its own larger service, as well as for the economy at large.[7]
Zillow is unveiling an online marketplace that will attempt to link borrowers and lenders -- a move that Chief Executive Rich Barton said is a "big deal" for the company since it represents an entirely new market segment. Barton said the goal of the new service is "to deliver power to the people through transparency and information and tools, so that they can get smarter and feel more confident about a scary process."[9] Despite the housing slump, the time is right for Zillow's new offering, Rascoff says. The benefits to lenders are obvious and it's not just people buying a house who need a mortgage, but also homeowners desperate to refinance before their rates increase. Banks want to cut out the middlemen, and those middlemen (namely, the brokers) are struggling, so both banks and brokers will jump on any opportunity to connect with borrowers.[14] They've added a news service to complement their property valuations - mortgage rate quotes. Their Mortgage Marketplace connects lenders and people shopping for a mortgage or refinance.[16] The mortgage rate-quote platform will not only help buyers shop for the best mortgage rates, but will also be a lead source for mortgage service providers. While users''' contact information is not released directly to these mortgage groups, enough information is supplied to enable mortgage professionals to determine the best rate quotes for buyers.[10]
Zillow's entry into the home mortgage business comes at a time when many consumers are feeling less than confident about the industry and many mortgage professionals are working harder to find leads. Because the market is in transition, Barton said, he thinks Zillow's timing is good. "Clearly there has been a lot of misunderstanding that has gone on in the past," he said.[9] There's no guarantee that people who visit Zillow to peruse homes will want to research mortgages. That's a valid concern for Barton, who says any marketplace takes time to build. "It is certainly not going to be easy, but we are heartened and confident and patient," he said. "I think it is a logical extension of Zillow into this business."[9] A mortgage marketplace will do well not despite, but because of the suffering home sales market, according to Rascoff. "There will be fewer new purchases but it's a good time for new refinancing tools," he says, because rates are low and adjustable-rate mortgages will be reset and need to be refinanced.[11] For more information on Zillow(R) and its new Zillow Mortgage Marketplace, visit the Zillow Press Room at http://zillow.mediaroom.com. To see how these survey results compare to those from Zillow users, visit the Zillow Blog.[13] To access Zillow Mortgage Marketplace, simply click on the new "Mortgages" tab on Zillow.com.[1]
The foreclosure crisis and its larger economic consequences are raising a lot of political heat. "That raises the visibility of the issues that Zillow Mortgage Marketplace helps solve," Rascoff says.[14]
Of course, the success of any marketplace is dependent upon people using it. At this point, Zillow has about 300 of the estimated 400,000 mortgage professionals in the U.S. signed up.[9] The company hopes that it can attract more mortgage professionals since it claims that about 125,000 lending professionals visit Zillow every month.[9] Zillow is a very cool idea but I find it to be very misleading. As a former owner of a Mortgage Lending company ('former' being the operative term which should prove I have no ax to grind and I can take a completely objective viewpoint), this new service is ripe for challenges and fraud.[8] Zillow's new product also includes lender-rating system like Ebay's, so you can find out more about a lender's reputation when sorting through offers. This kind of reassurance is particularly important now, given recent stories of unethical lending.[14] "Transparency" is a 2-way street. How can a legitimate lender who's following proper financial controls make an "offer" if they know nothing about you? Most legitimate lender's terms and rates are posted on web listings by state for buyers to find a la carte; the best they could do under the Zillow format is send you their general rates.[5]
Bill Rice, founder and CEO of Kaleidico, a Flat Rock (Mich.) and Cleveland lead-management and distribution software company, said the Zillow service will be appealing for borrowers who want to shop for low rates without getting bombarded by lender phone calls. For the lender, the quality of the lead from Zillow will not be as good as it would be from other sites such as IAC/InterActive's ( IACI ) LendingTree.com in Charlotte, N.C. These are more likely to attract serious customers, he said.[6] Zillow is trying to simplify the process with a matchmaking service that is free to borrowers and lenders. It works like this.[9] The marketplace is a free service that hooks lenders up with borrowers. It works very much as Zicasso does for travelers (see our review of that service here ). Borrowers submit just the essentials - what type of loan they need, where they're located, their estimated property value, their credit history, etc - without divulging any of their contact info.[8] You won't find the best deal by going on line and picking the "highest rated" lender -- you'll find the slickest salesmen. If it's as inaccurate as their home values, we're in for another mortgage crisis. "I provided my loan amount.You don't need to know my loan-to-value, debt-to-income ratio, whether I'm a W-2 wage earner/ self-employed/retired, FICO score (everyone, btw, thinks theirs is "good", even the person who has been late on their mortgage 10 out of the last 12 months."[5] A person looking for a home loan would click on the Zillow mortgage tab and anonymously post a loan request, including details about the type of loan, ZIP code, credit score, income, etc.[9] Zillow bemoans the fact that borrowers spend more time researching a car loan (eight hours on average) than a mortgage (five hours), according to a recent survey it commissioned.[15] Real estate website Zillow wants to give borrowers more control when they're looking for a mortgage. It may seem like an odd time to be entering the mortgage market, since the subprime crisis is still shaking up the national economy.[14] You can't "shop" for a real estate loan like you shop for a car or for some crap on ebay. It is so incredibly different. I remember when I was dealing with the public during the boom if you will, providing them with financing and I would tell them that rate doesn't exist for you or you will have a pre payment penalty or the other guy will switch the terms on you when you have to close escrow. It was always the same thing well this mortgage broker said they can do that for me, so I'm going to try it anyway.[5] SEATTLE, April 3, 2008 /PRNewswire/ -- Despite the fact a home is one of the largest and most expensive purchases most Americans will ever make, those adults who have obtained or refinanced a home loan in the past 5 years typically spent only 5 hours researching a home loan, according to a recent survey(1) of 2,897 adults conducted by Harris Interactive(R) on behalf of leading real estate website Zillow.com. More time is typically spent researching a car purchase (8 hours) or major home improvements, such as a kitchen remodel (10 hours), and equal time is spent planning a single vacation (5 hours)(2). When calculated as time spent per dollar invested, this means Americans typically spend almost 80 times more time researching their vacation (.159 min. /dollar) than a home loan (.002 min. /dollar).[13] '''Real estate professionals are looking for the best tools to help them so despite the fact that it is a downturn, it is a great time for people who have solid resources,''' said Peter Ill, president of Dominion Homes Media, a unit of Dominion Enterprises, a real estate services firm.[12] The Seattle-based company, which also offers estimates of people's homes and other real estate services, gets around 5.2 million unique views a month, Rascoff says. It's raised a total of $87 million.[14]
One of the most-visited U.S. real estate Web sites, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process -- buying, selling, remodeling and financing.[13] Zillow.com receives about 2 million unique U.S. visitors each month and was the 10th most visited U.S. real estate Web site in February, according to Web site tracker comScore Inc.[2]
Millions of people visit Zillow.com each month to research homes. Now, the Seattle startup is hoping that some of those people will stay on the site a little longer to find a mortgage.[9]
It's just setting people up for disappointment and a gimmick to drive traffic to their site. Lending Tree promised competing quotes when they started out, but then it came out that they were steering the borrowers into their own mortgage unit. The only way to compare apples to apples is to a) submit ALL of the application and documentation to two or more lenders and then have them commit on paper to specific terms to which you will hold them (but bear in mind that even lock committments were regularly broken up til now by some lenders).[5] As someone from a lead management company, Kaleidico.com, I deal with lenders all day. The problem that Zillow may face (and I am not downing the concept here) is that they are asking sales people to be information people.[15] Why is it that car dealerships mandate a salesperson get the name and contact information for someone "just looking"? Because, unfortunately, dealerships, just like lenders, are not in the information business. They don't want to educate their competition's client, so to speak. For a lender to have conversations with "might be" clients all day, they are reducing the time they have for closing a loan.[15] The borrower is in control during the entire process, Rascoff says. This seems like a huge improvement over the existing model exemplified by LendingTree, where borrowers' contact information is given to lenders.[14]
The lenders decide when and if to contact you, which means borrowers can get barraged with phone calls. You also get a more detailed, customized offer than those found on Bankrate, where mortgage offers are sorted by zip code.[14] The last time I tested online mortgage offers, I dodged phone calls for several weeks from overanxious lenders.[15]
There are other advantages to the system as well. Borrowers can rate lenders and leave comments about them so that others can make better decisions. The extra transparency also lets lenders know what types of offers they are competing with, which could lead to more competitive deals. That's okay with lenders, though, since they're gaining access to a larger market for which to make their offers.[8] While identity is omitted, lenders are provided enough detail to generate quotes with real rates, customized to the borrower's circumstances.[4] Once the borrower submits a request, any lender visiting Zillow can browse among outstanding requests and view competing quotes offered by other lenders.[4] Zillow's marketplace lets the borrowers and lenders find each other, but does not participate beyond that in the transaction.[11]
Lenders typically pay sites between $15 and $65 per lead, Rice said. Zillow's leads are free, but might not be as solid and could take time to nurture, he said.[6] I asked Spencer Rascoff, chief financial officer and vice president of marketing for Zillow, how the ad-supported site plans to weather an online ad slowdown that already seems to be curbing spending by online lenders. He responded that "big banks are increasing their spending during the downturn because they see it as an opportunity to gain share as the small guys go under."[11] '''Rates are very low and there is huge pent-up demand for loans, but there is not an easy way to shop for loans without putting yourself out there so I think our timing is great,''' Zillow CEO Spencer Rascoff said.[12]
Unlike other lending Web sites, Zillow is not a loan originator and is never part of any transaction.[1] Zillow won't get a commission out of any loans it helps arrange. Its business model is similar to that of most media properties: first attract a large on-line audience, then sell advertising served on the site.[5] According to the company, Zillow attracts about 5M unique visitors monthly, 1/5 of which are looking for a loan and 2/3 of which are looking to buy or sell a home.[8]
Zillow.com, Zillow and Zestimate are registered trademarks of Zillow, Inc. (i) The Home Spending survey was conducted online by Harris Interactive within the United States on behalf of Zillow.com between March 6 and March 10, 2008, among 2,897 adults ages 18+, of whom 1,821 are homeowners. This online survey is not based on a probability sample and therefore no estimates of theoretical sampling error can be calculated; a full methodology is available. (ii) According to employment data published by the Bureau of Labor Statistics, the number of mortgage bankers and brokers declined to 365,000 as of January 2008.[1] Zillow.com, Zillow, Zestimate and Zindex are registered trademarks of Zillow, Inc. (1) The Home Spending survey was conducted online by Harris Interactive within the United States on behalf of Zillow.com between March 6 and March 10, 2008, among 2,897 adults ages 18+, of whom 1,821 are homeowners. This online survey is not based on a probability sample and therefore no estimates of theoretical sampling error can be calculated; a full methodology is available. (2) Median number of hours among adults who purchased each item and spent at least one hour researching and shopping before doing so.[13]
The company, which promised to challenge the brick-and-mortar industry, put tools in the hands of consumers to price homes using the startup's Zestimate, or Zillow estimate. [12]
The Zillow estimates have been widely criticized by the real estate industry for returning overly inflated values.[12] I've limited my dealings with the public now. The majority of people are lazy and they like to be lied to. Really they don't like to hear the truth. By the way it's very obvious that zillow is trying to get into the financing side of real estate.[5]
Launched some two years ago, Zillow.com provides online real estate listings and tools.[3]
I had some people call me in a year or so wanting to refi and telling me I was right. Great I was right but the other guy made money off them and a lot by the way. It was really difficult to stay honest but I did because I had/ still have good programs. It gets to the point though were you really have no sympathy for these borrowers, they want and wanted everything for free or they would get suckered into the whole name brand mortgage company. Whereby the MC charged them fees up the you know what, but b/c it was so and so. It's the same with these large brokerage houses, they take 5% and list your house on the MLS--but because they have a name, people wrongly believe that they can sell it better than the little guy/gal. [5] As people have already said, anonymity doesn't get you the greatest or quickest service. How do you deal with people who are just testing the waters? That could turn out to be a whole lot of work for nothing. This is yet another lead-gen for mortgage brokers with the exception of withholding the borrower's information until he/she is ready.[8]
Dozens of companies -- from LendingTree.com to Citi's Mortgage.com to comparison shopping service NexTag -- offer places where people can obtain or research home loans.[9] A lead that requires time and resource from a loan officer with zero commitment from the random, anonymous, researcher very low on the value chain. Double that up with the low, if any expectation that can be created for the customer that we will ever get an offer makes it a low value proposition for them as well.[8]
The borrower gets to see customized loan quotes and then decides which lender to reach out to.[8] On the lenders' end, they get to receive an increased number of loan quote requests, which they can respond to.[7] Potential borrowers can then request customized loan quotes by filling out a detailed loan request form.[4]
Zillow's standardized quote form allows customers to compare rates, fees, and lenders' ratings. [6] Zillow is utilizing the help of a leading independent third party to support a confirmation process that may include identity authentication, employment verification, broker license confirmation and checking standard sources for complaints or comments. To cover the cost of this confirmation process, lenders pay a one-time registration fee of $25.[7] A few hundred lenders across the country have already signed up to participate in the new service and have paid a one-time $25 fee, which covers the cost of a background check, including employment and broker license verification.[6]
We've also been told that 1 in 3 professional lenders visit Zillow every month. This traffic is therefore a natural fit for a service like this, which shouldn't have a problem gaining traction. [8] Zillow vets the lenders so only reputable ones can offer quotes and any lender can view competing quotes, but only lenders that have registered on Zillow can submit quotes.[11] What happens if lenders use the old bait-and-switch, offering great terms until it comes time to sign on the dotted line? Zillow loan-shoppers get to rank the lenders in an EBay-like feedback system, which in theory will keep lenders on best behavior.[5] The Code of Conduct also prohibits 'bait and switch' tactics by lenders, and Zillow reserves the right to ban any lender from the marketplace for which the public feedback system will be an important barometer.[1]
Research is becoming the job of third party services-- look at Motley Fool, Cars.com, etc. I think Zillow is taking a risk in having the lender deal in too many "might be" shoppers and not enough "am" clients. Look at Housevalues.com's foray into mortgage leads--it didn't end quite as they thought, either.[15] Like the rest of Zillow, the company plans to make money on the mortgage offering through online advertising.[9] AfterthoughtI'd like to see Redfin and Zillow combine at some point. @Chris (#8) I agree with your comment about Zillow's estimates. when I sold my house in Memphis about 18 months ago, I used Zillow to show me the comps in the neighborhood and then spoke to my realtor about the huge discrepancy in her projected sales price of my house vs. what I came to expect when I checked Zillow; Zillow's estimate was about $30,000 higher than the actual comps in my neighborhood at the time.[8]
The quotes must use a standardized form that discloses all fees and Zillow estimates the taxes, insurance, and monthly payments, making comparison shopping easier.[11] "There's no way for the lender to harass you. All they can do is return a good-faith mortgage quote with details."[6]
Borrowers do not provide any personally identifiable information to the lender -- no name, address, phone number or Social Security number.[1] The quid pro quo is that lenders allow themselves to be rated (like ebay sellers), which reduces the likelihood of lenders using bait-and-switch tactics just to get that phone call from a borrower.[8]
Certified lenders give estimates based on that information so you can compare rates.[16] We're the first and only completely transparent comparison shopping site where you can use the power of the community to find the best rates and keep lenders in check.[8]
Launched in early 2006 with Zestimate values and data on millions of U.S. homes, Zillow has since opened the site to community input, data and dialogue.[1] Speaking of transparency, Zillow needs to be more open about how its' "Zestimate" of home values are arrived at; it just isn't fair to arbitrarily post a number that home sellers have to bargain against with buyers but can't determine what goes into it. Having influence over so many transactions by offering a real-time pricing algorithm makes Zillow a power player, but also carries with it some responsibility to be fair to those whose financial interests are adversely affected by the result.[5]
Barton says it is looking to make a bigger push into remodeling and home improvement information. Earlier this month, it unveiled a "Dueling Digs" feature with which consumers can compare kitchens, backyards, bathrooms or other home features. "It is a fantastic advertising category. and our surveys show that there is very large consumer interest amongst our Zillow users in remodels," he said.[9]
The more transparency in any marketplace the better, especially one as corrupt and weird as mortgage banking. It will be interesting to see how this pans out in this touch lending period we are in. [5]
SOURCES
1. Zillow.com(R) Launches Free Zillow(R) Mortgage Marketplace
2. The Associated Press: Zillow Launches Mortgage Marketplace
3. Zillow Launches Mortgage Marketplace
4. Mortgage Orb: Content / Residential Mortgage / Zillow Introduces Mortgage Marketplace
5. L.A. Land : Los Angeles Times : Zillow enters mortgage marketplace
6. Zillow Opens Online Mortgage Marketplace
7. Zillow Marketplace Makes Home Loans More Transparent
8. Zillow Disrupts Lending Market With Mortgage Marketplace
9. Zillow to help link borrowers, lenders
10. The Brink Tank: Zillow Launches Mortgage Rate Valuation Tool
11. Zillow launches 'Mortgage Marketplace' | Tech news blog - CNET News.com
12. Zillow Hosts Mortgage Open House
13. Zillow.com :: Americans Spend More Time Researching a Car Purchase than Their Home Loan, According to Recent Zillow.com(R) Survey
14. Zillow offers new, better way to find mortgages » VentureBeat
15. Zillow Adds Mortgage Loans - Dave's Download (usnews.com)
16. Zillow Offers Mortgage Rate Comparison Shopping
Get more info on Zillow Opens Online Mortgage Marketplace by using the iResearch Reporter tool from Power Text Solutions.
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