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| 30 Yr Fix |
6.37% |
0.02% |
| 15 Yr Fix |
5.91% |
-0.01% |
| 1 Yr ARM |
5.17% |
0.00% |
| 5/1 ARM |
5.82% |
0.04% |
| 30 Yr Tres |
4.47% |
-0.05% |
| Fed Prime |
5.00% |
-0.25% |
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Zillow, Always Creative, Puts a New Twist on Mortgage Lead Generation
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Zillow has just inaugurated another aspect to its real estate services portfolio.
The Seattle-based company stormed onto the Internet real estate scene several years ago offering consumers tools to determine the value of their homes. The so-called Zestimates were derived from tax assessors' records, recent sales, and a proprietary formula that supposedly tweaked this data to keep it current. Homeowners could enter improvements, real or dreamed about, into the information on their homes and see how the value of their property is or might be impacted. The service was wildly popular as homeowners checked out the value of their own property as well as that of their friends, neighbors, and the boss.
As Zillow increased its coverage from Seattle to other locations satellite imagery was added and other features such as the ability for real estate agents and homeowners to list properties for sale on the site. Zillow even instituted a feature called "Make Me Move" in which a seller could post a price for his house that would motivate him to sell. In spite of the current market "Make Me Move" appears to be a popular feature.
The newest feature, announced to the press earlier this month, already appears to have taken off; possibly because it skirts many of the problems of similar sites/services such as Lending Tree.
Selling mortgage leads has been big business for a long time. Potential borrowers are drawn to a site by information, services, or tools, and if they provide information on their financial situation and needs, their names are turned over to mortgage brokers or real estate agents who subscribe, for a fee, to the lead generation services.
Now Zillow has turned the lead generation industry on its head.
Calling its service the Zillow Mortgage Marketplace, Zillow offers borrowers the opportunity to receive multiple free quotes without submitting sensitive financial information on the site and for lenders to receive leads for free.
Here is how it works.
The potential mortgage borrower creates an anonymous mortgage request to purchase a home, to refinance, or to take out a home equity loan. No name, address, phone number, or Social Security number is required, but it only makes sense that the borrower should expect to submit accurate information on the type of loan requested, the property, his income, debt, and an estimate of his credit rating.
We can see this being very appealing for borrowers. First of all, the lack of identifying data is a comfort factor. We assume that whatever information is provided to other sites is passed on to multiple subscribing lenders. Secondly, as will be seen below, lenders cannot contact the borrower which protects that borrower from repeated sales calls that can become more than mildly annoying.
Lenders (an unlimited number of them according to Zillow) review the mortgage requests and submit mortgage quotes for those requests. These will not be "insta-quotes" done by a computer but rather personalized, hand-written quotes. The quote consists of an interest rate with specific lender fees, easily broken down into average monthly payments that meets the requirements of a particular loan product (e.g., 30-year fixed rate).
Borrowers must review the quotes they receive through the filter that the lender does not have full information; it has not yet had an opportunity to verify the borrower's credit rating and other information in order to provide a Good Faith Estimate. Based on a review of these quotes the borrow can then decide which mortgage lenders to contact. Of course, once a borrower contacts a lender he loses his anonymity.
Zillow confirms that the lender is a professional either by contacting its mortgage institution or through the use of an independent third party and charges lenders $25 for this verification. This appears to be the only fee charged on either side of the transaction. Verification includes identity authentication, confirmation of brokers license status, employment verification, and checking of standard sources for complaints.
Once a borrower has contacted a lender he can rate it as to how likely he is to recommend it to others. These ratings will be available on the site to assist borrowers in deciding whom to contact.
The Zillow Marketplace apparently has a learning memory. Lenders are told that, once they submit a quote, they will receive e-mail alerts when other similar mortgage requests are submitted. They are, of course, free to search the entire request data base for other types of loans.
The one downside we see to this new service is that some highly attractive borrowers might be inundated with quotes from lenders, however Zillow states that, to date, it has has 17,813 requests for quotes and those requests have received 53,176 responses or an average of three quotes per request - certainly a managable number.
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Comments (23)
| Are any of your lenders in the Zillow Mortgage Marketplace interested in financing property, second homes, in Mexico?? |
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| Above Posted By:
ron
| Fri, 9 May 2008 18:40:51 EST |
| First of all you should never pay to receive a mortgage quote. You are in high demand during this time period. 2nd you should never give your financial information over the internet or on the phone. Allways insist on meeting with the broker or lender at their office. You risk serious harm to your credit as you have not verified that the lender is going to protect your private information. Insist that your private information not be shared with anyone other then the company you are working with. Since all mortgage lenders have various loan document requirements, you will need to provide more information and this is were it becomes very important to protect your privacy. I suggest starting at your local Credit Union and then to the local banks. Most people save on the loan as you will not be paying a broker fee or the lender does not have to charge upfront fees to cover the cost of the broker. I would say that your use of Zillow should be for referance only. A real appraisal should be purchased by the buyers lender. You can credit the buyer as an ensentive of the purchase agreement. This will make the buyer more comfortable with their purchase. When listing or buying a home you should refer to a local broker and allways negotiate the fee up front. Start at 1% for listing with flyers and a web show on the listing. The more pictures the better. 3-5% for a buyers agent or credit to the home buyer without an agent is fair in todays market if you want to sell. |
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| Above Posted By:
Douglas M. Thomson Sr.
| Fri, 2 May 2008 21:41:01 EST |
| I signed up for the referral program and Zillow debited the $25 fee but never contacted me after that regards how to receive leads. Looks like they made an easy $25 |
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| Above Posted By:
Mike
| Thu, 1 May 2008 06:01:46 EST |
| I care about people I do loans for, this will only hurt them. Nobody knows what their FICO score is - it changes every day! You need good financial counselors (not "credit counselors") to make wise decisions. Problem is this: not many really "good" loan officers.
This will only hurt people more. |
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| Above Posted By:
Michael Peake
| Thu, 1 May 2008 01:08:53 EST |
| I have been using zillow leads for about 3 days now. I can tell you one thing, I have low-balled just about everyone out there. |
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| Above Posted By:
Jason
| Wed, 30 Apr 2008 18:29:37 EST |
Hi, it's David G from Zillow.com,
This post covers all the bases. Thank you!
We understand that low-balling is a real issue in lending. We don't claim to have a solution for this industry's inherent problems but we do have three tools for combatting this practice that you won't find anywhere else ...
- First, borrowers review the quality of service they get from lenders on Zillow and those ratings and reviews are posted on the lenders profile on Zillow. Lenders that lie should quickly earn a bad reputation.
- Lenders quotes are visible to other lenders. I probably don't need to explain how effective that has been in identifying low-ballers.
- Our lender confirmation process provides a simple mechanism for locking out lenders that are found to be dishonest and since they're not paying us we obviously have no issues with seeing them leave.
If any readers haven't yet, I encourage you to check out a loan request and a few quotes in the Mortgage Marketplace. Here's a link to all loan requests in CA to get you started:
http://www.zillow.com/mortgage/LoanRequestSearch.htm?loc=California
@steve - you've got it!
@William - I totally agree with you that if you put garbage in you'll get garbage out. The lenders we've spoken with have actually told us that borrowers are typically far more informed and honest than you clearly think they are.
@Randy - do you really believe that bait and switch is less likely off Zillow where lenders can not see each others quotes? Come on! Think about it! We don't pretend to have a solution for the inherent complexities in mortgages but we do hope that this will be a much improved way to shop for one. So far so good.
@Scott - It's quite simple ... if a lender can't honor their quotes they'll get poor reviews on Zillow. That feedback loop is certainly an improvement on the way it works off Zillow. And if the lender can honor their low quote, so be it - that would obviously be a win for the borrower.
@Chris - I've got rate sheets in front of me from a few major investors and cannot find a single thing that's not included in Zillow's loan request that could factor into a loan. Why don't you check out a loan request on Zillow and let me know if you find anything - it's always possible that we missed something.
@hanh - .... so, when I work with a lender that's referred to me, rates don't change intra-day???? I'm just pulling your leg. Thanks for your kind words. We know there are many things about mortgages that we'll never "fix" - we simply want to put the borrower in the driver's seat for their mortgage shopping experience.
@Gary - we know just enough to know what we don't know and so we've been asking lenders for their advice for a year now and we're listening intently to feedback (like this.)
@Catherine - Zillow may not be ideal for all lenders but I've spoken with many that are thriving in the marketplace. If yours is a very high-margin-low-volume business, Zillow may too competitive for you but if you're a high-volume vendor - especially one who already uses internet leads - you'll probably find Zillow more effective and certainly a lot more cost effective. |
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| Above Posted By:
David G from Zillow.com
| Wed, 30 Apr 2008 16:38:49 EST |
| I agree in the short term this will allow telemarketers with artificially low rates an opportunity to deliver less than professional service. With the ratong system, that should allow the good guys to thrive. If any critics of this system take that into consideration, I think they should be able to see the long term value of this system. Fact is we have an internet driven, lowest price crazed society. The rating system is a good way to advertise the value of service. |
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| Above Posted By:
Anonymous
| Wed, 30 Apr 2008 13:51:17 EST |
| This is an attempt to put the mortgage approval process more clearly in the borrowers hands....which is a very good, American kind of thing...of, by and for the people, individual rights, freedom and equality and all. Yes, if the borrower inputs garbage, they deserve to receive whatever happens. But, if used correctly, and the borrower does in fact use real data, they have all the ingredients in their hands to control the process and legally stop the switch-eroos. |
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| Above Posted By:
steve
| Wed, 30 Apr 2008 13:27:42 EST |
| I am a mortgage broker and I cannot think how can an unknowing borrower get accurate information by providing facts such as "what I think my property is worth" or "what i think my credit score is" It will open the door for unscrupulous brokers/lenders to do the good O'l switch-a-roo on customers. You know the saying "you get out of it what you put in it" same thing applies, if you put bogus information your quotes will most likely be bogus. Waste of time and $$$ |
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| Above Posted By:
William R
| Wed, 30 Apr 2008 12:23:53 EST |
| oh how i love the timing! the lending tree mess this morning and ZILLOW in the afternoon.you mean to tell me that these guys give a potential client enough information to confusion them even more .what's next ? pyschic mortgage hotline? |
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| Above Posted By:
april fool
| Wed, 30 Apr 2008 12:04:45 EST |
| In response to the last blog, you must be another one of those victims who does not take responsibility for anything. You point the finger at Zillow, l.o.'s, and appraisers and yet you fail to realize everyone from the government down to the borrower is a scumbag as it relates to this mortgage crisis. Every single person involved had a vested interest in this. |
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| Above Posted By:
frank munoz
| Wed, 30 Apr 2008 11:33:53 EST |
| Fannie Mae is trying to clean up the mortgae industry and Zillow continues to try to mess it up. Zillow is as much to blame for the over-priced home values as the scumbag appraisers & L.O.s Are we really surprised Zillow is doing this. I am amazed it took them this long to think of this. What is next, Zillow Used Car lots. |
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| Above Posted By:
anonymous
| Wed, 30 Apr 2008 11:06:15 EST |
| A Bait and Switch Nightmare !!! |
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| Above Posted By:
Randy
| Wed, 30 Apr 2008 10:47:36 EST |
| This is going to be a tough road for the borrowers. I've been doing internet leads for a while and there is a ton of bait and switch tactics being employed. Without any accurate information, people will consistenly get underquoted on rate and fees, that's just the nature of a lot of these brokers and lenders. Then they'll formally apply and they'll find out about the changes then or at closing. |
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| Above Posted By:
Scott
| Wed, 30 Apr 2008 10:36:47 EST |
| Zillow's mortgage quotes are bound to be just about as valuable as their property value quotes - worthless! What about the value of their mortgage leads? WOT - waste of time. |
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| Above Posted By:
Randy
| Wed, 30 Apr 2008 10:27:49 EST |
| I know of a couple of LOs that had signed up for this service and one of them sent out over 50 quotes and heard back from one borrower. On the surface it seems like a good idea but the fact that there are people out there who will quote ridiculously low rates on scenarios that may not even be doable just to get the borrower in the door. |
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| Above Posted By:
Roy
| Wed, 30 Apr 2008 10:26:09 EST |
| How can you give a quote if you rely on the borrower telling you what he "thinks" his credit score is. The market today is also not just based on a FICO score. I think this is a great setup for bait and switch. If that is what borrowers want I wish them success. |
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| Above Posted By:
Anonymous
| Wed, 30 Apr 2008 10:09:50 EST |
| As a mortgage broker for 14 years I cannot think of a worse way for borrowers to shop for a mortgage or a bigger waste of time for mortgae lenders to participate. There is NO way to accurately quote a rate without knowing many, many details about the borrower. The only lenders that would participate in this are those who have way too much time on theit hands, and homeowners are going to get lowballed, bait and switched, hounded by desperate anklebiters. If you need a mortgage go local, get local references, know your lender and let him get to know you. |
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| Above Posted By:
Chris
| Wed, 30 Apr 2008 10:07:28 EST |
| Zillow's effort is great and this is a good tool. However, rates may change from three to five times a day given today's market conditions, so evaluating rate locks, Good Faith Estimates, in accordance with Federal Truth in Lending, and prepayment penalties, is strongly recommended and should be considered before making a decision.
I still would recommend referrals from people you know, trust, and respect, when choosing a mortgage professional as apposed to someone online claiming to give you the best rate with just limited information. |
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| Above Posted By:
hanh
| Wed, 30 Apr 2008 10:06:03 EST |
| With credit score adjustments from Fannie Mae being implemented early this year, it is imperative to have the middle credit score of the borrower.
Also, many other factors come into play when trying to buy or refinance a home.
I'm intrigued, but very skeptical. I see lowball artist coming out of the woodwork on this one. The sleaze ball brokers will find a way to lie about there fee's & get the borrowers funneled there way.
If Zillow has someone who really knows what a Good Faith Estimate must include & require honest quoting from the lenders that participate, it may work. However, it will require someone at Zillow to have extensive knowledge about the mortgage industry. |
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| Above Posted By:
Gary Clements
| Wed, 30 Apr 2008 09:53:45 EST |
| Nice concept unless you understand how invalid a quote will be from any of the contributing lenders. With out a full applicaton, accurate credit scores, etc. majority of the quotes will be invalid and will promote alot of bate and switch business practices. Not in the best intersest of borrowers that are already feeling abused by our industry. Good for Zillow in finding another way to make money though! |
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| Above Posted By:
Kregg
| Wed, 30 Apr 2008 09:41:23 EST |
| this will do nothing but confuse consumers and steer homebuyers away from competent lenders. there is no way (especially today) any lender can give a firm quote without having an application, credit report and income docs. And in most cases the quotes change once these on-line lenders get the full application because they quoted too low just to get the deal. If you call 100 lenders and choose the lowest you will most probably get screwed. Most professional loan officers/bankers do not use these lead services. they receive their referrals from Realtors/Accountants/Financial Planners....
Most of the "salesman" that use these services are merely telemarketers that have little experience or knowledge about mortgage lending. I have been a lender for over 20 years in a high volume marketplace and I don't know one professional who would work for these lenders and I would not hire any of these people to work for me. If your looking for a loan go to a Banker/Broker who you can sit down and talk to in his office. Going to the right person may make the difference between getting a loan or renting for another year. |
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| Above Posted By:
Anonymous
| Wed, 30 Apr 2008 09:33:08 EST |
| Why would I, an experienced loan originator, spend my valuable time looking for a deal for a nameless consumer? I sense that Zillow has no idea what goes into preparing a quote. |
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| Above Posted By:
Catherine
| Wed, 30 Apr 2008 08:57:50 EST |
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