Zillow Disrupts Lending Market With Mortgage Marketplace
Mark Hendrickson
33 comments »
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.
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. 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. So the main advantage of this marketplace lies in protecting borrowers’ identities and tipping the balance of power into their favor.
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.
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. 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.
Some other fun facts about Zillow: of the 90m homes in the US, 80M are listed in Zillow and 70M have estimated prices (”zestimates”). A full 45% of the 90M total homes have been looked up on the site; in San Francisco that percentage is around 90%.
sorry Mark, lendingtree link is broken. I don’t know public or just for me?!
Zillow is nice!
isn’t this stupid.. since lenders can not contact user the value of “lead” has decreased 10 times..at the same time if I am seriously looking for mortgage I go at least 5 places to look for mortgage..and don’t want to keep revisiting the places but indeed wants lenders to contact me..it is once in a lifetime decision so no i am not distracted by getting lender offers.. i am doing only that .. so this is useful for people who want to just test water..not looking for mortgage.. so value of the lead has gone down 100 times.. so it is an alternative to zillion mortgage rate calculators and not lending tree.. those people run profitable business but don’t sit on millions of dollar funding..
I just submitted a loan request to see how it works. No responses yet. It’s not clear how long it should take to receive loan quotes (help screen says “a few hours”). Mortgage Marvel is a rival system that returns prices in real time.
There is still quite a bit of work for the borrower….estimating your credit score, payment amounts on various types of credit and so on.
But if you get good results it will be worth the time. And the anonymity helps the borrower get past that first hurdle of “applying” online.
To make it viable long term, it will also have to work for the lenders. Will the anonymity result in a bunch of worthless apps of people just testing the waters?
It’s a good effort and it will be interesting to follow.
http://www.watchhandbag.com
Zillow.com’s long-awaited mortgage lending service offers anonymous customized loan quotes to consumers, affording loan originators the opportunity to compete transparently for free mortgage leads | BloodhoundBlog: Real estate marketing and technolo
wow never heard of it - why has this never been thought of before?
i’ll definitely be using it for my next home, lenders are ridiculously annoying.
I think I am in the Robert Hurley skeptic camp. 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.
Net result: a moderately interesting PPC strategy for Zillow. Certainly doesn’t feel disruptive.
Zillow’s zestimates are a total waste of time. After checking a bunch of houses of friends and family in my area, I found they were tens of thousands of dollars off the mark. So I looked up the houses of people I know in other states. (ten states in all). Same thing. Tens of thousands of dollars off the mark. I think they just link to the county appraisal offices around the country. Collectively, that information is worthless.
The mortgage marketplace could be a great service. But as people have already said, anonymity doesn’t get you the greatest or quickest service. And 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.
Not all that disruptive.
Zillow even has the following ad for brokers on the Mortgage page which pretty much says so:
Are You a Lender?
Get FREE, unlimited leads
* Build your reputation by providing reliable quotes
* Promote your customer service strengths
* Get e-mailed when leads match your criteria
Finally, finally, finally!!! Somebody attempts to level the playing field in the mortgage industry!!!
I can’t wait to see how this goes, and to potentially use it in a couple of months, if their is “smooth” sailing!
Afterthought…I’d like to see Redfin and Zillow combine at some point. They could become a real estate superpower in the technology world!!!
@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. 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. Due to the complexities of lending today, there is no way a lender can quote a factual rate based on such basic preliminary information unless the borrower is putting >20% down payment and has PERFECT credit (>740) which is RARELY the case; and even then, there are always other circumstances to consider when quoting a rate - Sadly, the only folks that will be hurt due to this type of service are potential borrowers and honest lenders. What a shame…
“Zestimates,” that’s the word I was looking for! I saw the headline and started reading the article, saying to myself, “Isn’t this the site that told you what a piece of property was worth in ‘Zollars’ or ‘Zalue’ or something like that?”
Robert commented that he thinks lenders should be able to contact the individual to make the lead that much more valuable. Well that’s being too one-sided. I think the majority of consumers are going to want to control their personal information and decide who they are going to give it to and allow in-bound telephone calls. After all, who wants annoying tele-sales people randomly calling and pitching loans. Just my two cents.
It will be interesting to see which lenders are best able to bait-and-switch consumers! This platform should truly take bait-and-switch tactics to the next level!
Zillow’s only exit is to get acquired. They clearly have no real plan to make money and this latest attempt to justify their large wad of gambling cash simply will not gain traction.
You’re no longer under the MS umbrella Barton.
Spencer from Zillow here. Thank you for the comments on our new product. Let me clarify a few things.
First, 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. Instead, the borrower gets to see customized loan quotes and then decides which lender to reach out to.
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. Lenders fill out Loan Quotes, which are responses to each of the borrower’s Loan Requests. 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.
@Michael @John DeMayo,
I agree this is a great step forward, but doesn’t fully address the bait and switch problem.
You may also want to check out SmartHippo. 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.
We launched in the DemoPitt at TechCrunch40 last year.
Aiming to disrupt a market and disrupting a market are two entirely different things. . .
Zillow takes another page from the HomeGain play book…
http://blog.homegain.com/homeg.....ery-zillow
Spencer - With all due respect, if you think the ‘ebay’ approach solves the bait and switch problem, you are living in never-never land. Fact is, it’s not really a ‘bait/switch’ issue (although many who don’t understand how the mortgage business works may see it that way). The issue of rate-quoting is one of ‘qualification’ - due to the complexity of mortgage guidelines these days (even post meltdown) what you (a borrower) get for a rate is dependent on so many factors that in some cases have nothing to do with the borrower or their credit (e.g., sometimes rate is governed by the property type and the MI company’s risk factors).
Bob,
Please, check out the loan request form on Zillow. If you think we’re not asking something that would be required for an initial quote, please let us know - but note that we’ve covered more than just the borrower’s credit (for example, the property type.)
Quote form: https://www.zillow.com/mortgage/CreateMortgageLoanRequest.htm