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.