Zillow, a popular real-estate listings site, recently tweaked the pricing model in its marketplace for mortgages, angering many of the lenders who pay Zillow for customer leads. A few weeks ago, the site announced that it will be introducing a new pricing model for these leads to lenders.
Zillow’s mortgage marketplace, which launched in 2008, lets borrowers submit loan requests for mortgages and then review quotes provided by lenders. Basically, lenders will be able to submit any number of loan quotes for free, but will be required to pay Zillow a “market-priced fee” when any borrowers contact them regarding their quotes. When a contact is made, the lender will be charged a market-priced fee.
Zillow insists that “the market” will determine the price for each contact and it will not be setting the price itself, but rather it seems to be based on how much each lender is willing to pay for a lead. The company did warn lenders that Zillow contacts are more valuable than Google clicks for mortgage keywords, which typically range from $7-$25. Each Zillow lead is can be anywhere from $1 to $100, with lenders able to set a maximum price to pay per contact. Lenders will also be required to pre-fund their Zillow accounts with a minimum of $250 so Zillow can automatically deduct the price of the lead from the lender’s account.
On the site’s forums, it’s apparent that lenders are not happy with the new system. First, lenders are angered because they are now not allowed to list contact phone numbers or link to any of their contact systems, because Zillow needs a way to monitor whether the lender does in fact get a lead. Zillow will post a 1-800 phone number for each lender, which is actually forwarded to the lender’s actual phone number. Zillow records any calls made from a borrower to a lender to make sure leads are accurate (which works in the lender’s favor but is a little sketchy, as some lenders point out). The first phase of the new system rolled out a few days ago and already lenders are complaining of disconnected calls.
And of course lenders are frustrated by the fact that Zillow is even implementing a fee in the first place, when the site has long been known as a free and open marketplace for both lenders and buyers. Apparently realtors on the site, who often get leads from advice forums, aren’t being charged for their customer contacts (yet).
The change in policy is interesting considering the fact that a few months ago, Zillow’s CEO and co-founder Richard Barton told CNET that Zillow is growing, despite the credit crunch and implosion of the real-estate industry, because the site “doesn’t try to over-monetize.” But in its message to lenders, Zillow said the free marketplace that was launched in April 2008 was an “experiment” to determine if the site could connect borrowers with lenders. The project worked and Zillow is currently seeing borrowers filing an average of 50,000 loan requests per month, with thousands of lenders helping to fund and close these loans.
Nothing stays free forever.
It’s always humorous when an old media/business model gets upset when a new media business actually wants to charge for a service that provides superior quality to anything the old business can do itself…
Why are people surprised?
Pretty good move -although they are opening can of warms about the “quality of lead”.
Best of luck!
It’s interesting how people want to complain about paying for something. If they don’t like it don’t use Zillows service.
Interesting how they have stepped up lead gen to not see every lead as equal.
Hi,
I’m Spencer Rascoff, COO of Zillow. I wanted to respond to a few themes mentioned in this post.
First, let me provide some background. We started Zillow Mortgage Marketplace as an experiment 18 months ago because we thought that online mortgage shopping on other sites was very unappealing to consumers. So we came up with a better way — the borrower remains completely anonymous and receives custom quotes for free. He/she can then evaluate the quotes anonymously and decide which lender(s) to reach out to, on his own timetable. Contrast this with the traditional “lead gen 1.0″ mortgage shopping sites (you know who they are…) which sell the borrower’s phone number 4 times and the borrower is treated like a piece of meat. Zillow Mortgage Marketplace is a better way.
After 18 months, the Marketplace has surpassed our wildest dreams. It now receives 50,000 loan requests per month (49% of LendingTree’s size, a company that has spent hundreds of millions of dollars on advertising over a decade) and the typical borrower gets 26 customized loan quotes back within minutes. We have 5500 lenders in the Marketplace and it’s very vibrant. It’s an unbelievably cool mortgage shopping experience. I encourage you to try it, especially since mortgage rates are at historic lows right now.
When a borrower decides which lender to contact, we call that a “Customer Initiated Contact” (”CIC”) rather than a “lead”. This is not just a question of semantics; the two things are quite different. A CIC is when the borrower specifically selects a particular lender to reach out to; that’s not a lead, that’s a contact.
For 18 months, Zillow Mortgage Marketplace has been free for lenders to quote, and free when lenders receive a CIC. We’ve decided to start charging for Contacts in order to be able to invest in this product even more so it can fulfill its potential. The pricing of a CIC will be determined by the market, much like the pricing of a keyword in Google Adwords is determined by the market. Pricing will range from $0 to $100. So for example, if a particular refi Loan Request has terrific credit and a lot of equity in the home, a lot of lenders will want to quote for it so the price of a contact from that borrower will be quite high. On the other hand, a Loan Request for a purchase loan with $0 down on a non-conforming loan with bad credit is less desirable to lenders so the market will price that contact much lower, maybe even at $0. One additional benefit of starting to charge for CICs is that the quotes in the marketplace will become even more accurate and complete because lenders won’t want to receive contacts unless they can close the loan on the terms they laid out in their initial Loan Quote.
We believe that Zillow Mortgage Marketplace is by far the best place to get a mortgage. Try it.
http://www.zill...w.com/mortgage/
As a lender that participates in the marketplace I can tell you my experiance has gone from impressed to soured. Soured not because of the new fees about to be imposed. Soured as Zillow has encouraged lenders to automated their quotes. This automation has allowed consumers to be bombarded with too much information. Zillow has also done a poor job keeping track of bad lenders that consitently bait and swich quote or are not upfront with their fees. The mortgage market place worked great when lenders had to manually enter their quotes. You had to actually read the cusotmer posted scenario and make sure you were offering something of value. I did some great business. At some point, Zillow began pushing the automated quoting provided by several third parties. Some lenders went whole hog and by the look at the way they were quoting, it appeared that Zillow was making money on the automated quotes. Zillow denies this but why would they push it so hard?
While zillow might claim they are great for consumers, they have created some sort of cost comparison completely separate from the traditional APR meathod that is the law of our industry. Some customer quote requests get 100+ replies thanks to the automated system. my feeling is that those customers that are bombarded like that will run away to seek an easier way to compare. Zillow might feel that this will create demand from lenders that they can capitalize on, but my feeling will be that most lenders will stop working with Zillow. In the end the customer looses. The only lender I expect to be left on Zillow will be the Nation Bank of Kansas City. I wonder what might show up in an internet search of that co??
Typical spin by someone involved in the company but who is clueless about the industry. If you are in a real estate/mortgage business shouldn’t have have an idea about mortgages for example? They constantly allow things that make no sense by the big lenders who are obviously making them money already. The service to the client has basically disappeared. I used to close a fair amount of loans and had happy clients. Now the only contacts I get are people that are already unhappy with the system and have had to wade through 100 meaningless quotes. 98% of the quotes I make are never even looked at because they it’s hidden in the mix of all the automated quotes that zillow encourages. They encourage the auto quote instead of the actual person because it lines their pockets. But the auto quote is a disservice to the consumer and pretty much ruined their website. Good luck zillow, I won’t be using you guys anymore.
Smart move on Zillow’s part. They have make money somehow.
Won’t be long before the lenders release their own version of Zillow.
1) Tech’s There
2) Money’s There
3) People with the Right Skillsets are Available
Anyone can tap into the same information that Zillow does. How many people does Zillow employ, 50 – 100?
You don’t think the 5 biggest lending companies can get together and hire the right people to create something that would compete against and/or replace Zillow?
Side note: Ive used Zillow once. After it gave me innaccurate data, I have not been back.
Zillow had to charge, it is a for-profit organization. I expect that Zillow’s reason for moving to paid leads/CICs was that it was difficult to monetize Zillow Mortage Marketplace through display ads like they have been doing elsewhere on their site.
The mortgage brokers should have expected that eventually Zillow would move to a paid model. As I have said on my blog (http://www.thel...w-me-money.html), th fact that Zillow is now charging is a good sign; there is clearly huge consumer demand and charging allows them to justify investing to make this service better.
That is probably going to be important. The mortgage lead industry is going through quite a transformation. Zillow’s model is very similar to that of the recently announced Google Comparison Ads so Zillow is going to need to bring everything they’ve got to win in this marketplace.
I’ve suggested to Zillow that they include the lender’s lock period in their summary page, as this info is just as important as rate & fees. A low rate is only a good deal if the lender is holding it through the closing date. The only way to see the lock period is to click on the “details” section of each quote which can be very cumbersome to do when reviewing 75 quotes. Some lenders are using very short rate lock quotes to attract the borrowers eyeballs. Once contact is made they can quote higher rates to cover the longer lock periods required by some consumers. The consumer would discover a more attractive deal just scanning the summary page if a the lock periods were all included there.
I’ve sent this suggestion to Google as well. It”l be interesting to see if they include it.
“Zillow insists that �the market� will determine the price for each contact and it will not be setting the price itself, but rather it seems to be based on how much each lender is willing to pay for a lead.”. Are you kidding? What do you think “the market” means? Go back to school…
I think Zillow’s kiss of death will ultimately be their arrogance.
You can’t survive by turning your back on the people who helped grow the site. Also, consumers do not benefit from ANY of Zillow’s features. Their Zestimates are awful, still. The mortgage marketplace is still filled with fraudsters and liars. If the don’t do some QC on the actual COMMUNITY they have built, who’s to say this new change won’t bring more problems? I can’t count how many problems this new way of doing things could cause. They should have just charged lenders $1000/year or something. Flat-fee, be done with it.
Oh they have to pay back their investors. Well sorry, the investors should wait until they fix the mess they have created.
The fact that is missing is that the benefit to the consumer was the great rates and pricing they were/ currently are able to get from Zillow lenders. As the price goes up the great rates and pricing begin to disapear and the real benefit to the Marketplace begins to disapear. As long as the cost remains nominal it will still add value…As the expense goes up the value decreases. I am a bit of a glass half empty guy and it’s just a matter of time before greed takes over.
Andrew –
I get it but remember that lenders in the market set the price – you won’t pay more than you want to for a contact from ZMM.
So ultimately, it will be lending tree…. consumers will only get offers from the lenders willing to pay the most!
And, in the end……..the consumer will pay.
Charging is one thing, but the way things are set up already is a mess. It’s about the money and not the service. Ask anyone who posts a request on there – you get 100 responses and 99% are a waste of your time. I contact all the good options and only choose one. So they will all have to pay for me to get info from them, but I will only close with one of them. That doesn’t seem right to me and appears like it will make things more expensive for me. There are ways to make money and still provide quality product – a lot of companies do it. I for one will be looking at http://www.knowyourpro.org as a few people have told me that is a nice up and coming option.
Hi Jennifer! Moving the spam from Zillow Advice to here, huh?
Lola-Do you work for zillow? you might want to get all the divorce attorney spam off the mortgage boards. The activity on the mortgage boards has tailed off in the past couple days. No doubt as Zillow is loosing there luster to be a great place to exchange information.
This is so silly on a number of levels.
1. Of course they are going to charge and that was the plan from day one. Duh
2. I love how each Zillow rep, now including their COO, wants to claim they are charging to make the platform better as if they were a non-profit. Wake up Zillow! You launched the product claiming you were innovative and you were not selling leads. Your drew a line in the sand between you and the lead gen industry. Meanwhile BankRate had this exact model years prior and now you are literally selling leads, regardless of if you want to try and differentiate the leads by calling them Customer Initiated Contacts. Stop playing people like they are idiots. Seriously.
3. Rich is right with his points, regardless of if you are going to respond by saying the average consumer receives 2 quotes. I call your BS. Consumers get bombarded and the consumer experience went down the toilet. With any luck your new pricing model will thin out the competition and be what you intended it to be 18 months ago.
My suggestion is to play the game, but stop acting like your playing anything different then anyone else, your not. Maybe because this is your first time around the block you think you are, but it is nothing new. You simply have a ton of traffic to make it work quickly and kudos to your for find another way to monetize your traffic.
Next thing your going to do is implement a long form so that you can better qualify the leads and start selling those too.
Getaclue – Zillow’s loan requests already are a long form. Try it out. Thanks for the kudos, I’ll take it (in a totally for-profit way.)
I think you guys nailed it. The fact of the matter is that charging will now weed out the 99 crappy automated quotes. So it’s really a Win Win:
A) Zillow makes money like it should
B) Higher quality & more concentrated quotes for Home Buyers
However, I do see there being a lot of room for more diversification for Zillow downstream after the lead is passed off.
As this might possibly be your most profitable revenue stream, I anticipate seeing you guys build a lot of functionality to allow for completing the lending life-cycle for your home buyers and your lenders. The result will be more accurate rates for borrowers because of truly committed lenders actually interacting on the system with a borrower until funding.
However, it might really need brokers in the mix, somehow guiding the process. Think Mortgage Brokers provided by Mechanical Turk, on demand. Or maybe something more traditional involving brokers for the time-being.
James
from
FaceySpacey.com
If the loan request includes the number of days a borrower needs to close, why are lock periods left out of the summary page? Borrowers should not have to search the details section of 50 or more quotes to determine if a lenders attractively price loan covers their needs.
Am I wrong but making th lenders pay for the CIC or Lead or wtf you want to call it will actually help improve the process, no, as they don’t want to pay for having somebody respond to a BS respond to a mortgage app.
In theory yes. In reality, I think not. There are enough bait and switchers on the site now. Once the good guys leave, the only mortgage people left quoting and buying customer contacts will be the scammers.
My “good guys” are the lenders at the top our leader boards who have closed the most loans on Zillow and received the best reviews for their service from the borrowers that they met on Zillow. I speak to these guy regularly and yes, some are not thrilled about paying for business that was free but they are all funding their accounts or have told me they plan to. Our goal in this transition is to ensure that the borrower experience in the marketplace is maintained and improved. I’m personally confident it will be from what I’m hearing from our best lenders. Remember that it’s the market that sets the contact price on Zillow; no lender pays more than they can afford to receive a contact.
Must be that bank out of KC…
Your “Good Guys” may be the ones that are willing to pay the most for the loans.
Andrew –
If you think about it, it will actually probably work out that way. The best lenders will see the best ROI because they close more loans per contact than than those lenders whose service is less than stellar therefore the cost per closed loan will be lowest for our best lenders who will in turn be able to afford to pay more per contact and still beat the next guy’s ROI. This is why marketplaces are a win-win solution for lenders and borrowers.
Your reasoning and explanation is totally flawed. You obviously have no loan experience because how you “think” it’s going to work is not even close to how it will pan out. The lenders with the big pockets will flood the market with the quotes, they will provide piss poor service because they are in Timbucktoo and they will then end up charging the borrowers more to make up for all the bogus quotes they had to pay for. That is what has been happening since the API took over – a lot of quotes, poor service and higher prices. Simple, basic, market economics. To think that “the market” is going to determine a price and cost for a loan that is in the borrower’s best interest is impossible. The smaller lenders will see their $250 eaten up in a week after they get a bunch of shopper requests and then they will drop off. Soon you will have 3 or 4 lenders that are backed by big banks and everyone else will be gone. Great for them, crappy for the borrower. The continued, tired story about “the market will determine the cost” and “this is so good for the borrower” is such complete BS that it’s incredible.
David…Your opinion of the lenders that are willing to pay is far too great. I also think the reasons they will pay are different than you think!They will up what they are willing to pay to price those that arn’t out of the market to reduce their competition. It is bad for the consumer and ultimately in my opinion be bad for Zillow. I will likely fund my account but will continue to pick and choose what I quote.
I am an upFront Mortgage Broker in CA. I’ve been a regular participant in Zillows “Mortgage Advice. I also did quotes.
I stopped quoting in June of this year. The quotes are not effectively monitored and over 80% where impossible for me to meet and I sell at Lender’s PAR Wholesale Rates. I don’t earn Yield Spread Premiums. Most of the “Reviews” are “Fake and the same goes for those quotes. Their “Bait & Switch!”
The main issue most of the concerned lenders (Brokers) have with this new format is one of legalities. Not of paying for the lead. Since Zillow is not licensed to sell leads their fee is called a “Customer Contact.”
Which for a Broker is illegal because it’s against the law for us to pay a “Referral Fee.” The other Legal Issue is with the new “Transfer Over-Toll Free Number” they issued to the “Confirmed Lenders” being monitored/tape recorded without the “Beeps” or an “Announcement” to that fact. This is a blatant violation of the Law on both Zillows and the Brokers part.
Unfortunately, the most State’s Department of Real Estate/Finance and Department of Corporations are understaffed. From what I have heard, all have been notified.
As far as I’m concerned, for those of us that only participate in “Mortgage Advice” leaving our contact information intact, I’ll remain. If not, you’ll find me in the exodus with the masses participating in other consumer websites.
I have a friend that is also a UMB. He gives advice for Credit.com and several medias of print. He gets paid!
We do this for free. We all feel we have provided Zillow with an asset that had an effect on their growth. There expense for this was Zero. In fact, we paid Zillow $25.00 for the “privildge!
Rudi –
Can you point me towards the licensing you believe that Zillow’s required to have but don’t? I garuantee you that we’ve done our homework but we’re obviously open to correction on that. As to call recordings; both participants are being informed that calls are recorded – if this is not the case on you line, please let me know – that would be a software error.
Lenders do not pay Zillow $25, or anything for that matter, to give advice in Zillow’s forums. It’s a great community and I understand that many lenders earn business that way; cool! We collect $25 from lenders to cover background checks before they join the marketplace only. It’s my understanding that marketplace lenders earn on average around 1 to 2 points on loans they close via ZMM so they are certainly not working for free.
You can argue that but it’s not what happened on Lending Tree…leads get funnelled to the highest bidder. Consumer looses out! Granted that is not the intent but the direction they are heading.
And zillow gets soooo defensive when you say they are like lending tree. Its kind of funny. Next time you talk to someone there, say zillow tree. Its fun for all…
Not defensive Rich, it’s simply a sign we need to better communicate how Zillow Mortgage Marketplace works. No-one who has tried both services could think that.
… which can’t happen on Zillow because in Zillow Mortgage Marketplace, the borrower selects the lender(s) they contact. We’re committed to maintaining the awesome borrower experience in Zillow Mortgage Marketplace which is also why the marketplace will set the price of contacts.
Many lenders actually see paying to use ZMM as a good thing, but its the way it has been rolled out that is at question along with many other recent changes. Everyone should expect Zillow to want to make money, however, there have been a few pitfalls recently including:
1. Recording phone calls without consumer and lender consent. (I believe this was corrected because of a lender’s input on a thread.)
2. Unsecured method of accepting payments for prefunding accounts. (I believe this was corrected because of a lender’s input on a thread.)
3. Lender’s information being removed from profiles if you quote and pay. But, if you don’t quote or pay, the contact info remains in your profile.
4. The quality of the quotes has deteriorated with the addition of API (automated quotes). The consumer is bombarded with numerous bogus quotes within minutes and the actual good manual quotes are never reviewed. (Not that all API users are bogus). Its not fun for the consumer to look through 120 quotes when 100 are from seven lenders and aren’t legitimate quotes.
5. Lenders are supposed to pre-fund accounts in good faith of a system that has many flaws and unanswered questions.
The system used to work, but it has been deteriorating over the last several months. It has been a great place for lenders and consumers. Lenders are willing to pay, but this system is a bit bizarre and the API has seriously deteriorated the integrity of ZMM. I believe with the reduction of quality, the site will suffer.
If it were simple like a quarter per quote or $10 per contact made, I don’t think many would have a problem. But, to record phone calls and try to gauge several lenders for $50, $75, or $100 is a little steep. Many borrowers will ask several lenders for quotes…could be 5 GFES X $100…. Nice ROI Zillow.
Bob –
1) Callers are informed that they are being recorded. This was always planned but we had a minor bug in that system which is now rectified.
2) Yep, another software bug, now repaired. Credit card services were browned out but have now been restored.
3) Yes, if you don’t quote you don’t participate in the marketplace and don’t receive contacts. Not sure what the issue is here but yes we do allow non-participating lenders use the rest of the site.
4) We believe (and have learned via surveys, usability studies etc.) that consumers appreciate as much choice as possible. And that lenders appreciates the convenience of automation. I understand that some lenders would appreciate less competition in Zillow Mortgage Marketplace but we believe lenders are best served by putting borrowers’ interests first. If your primary concern however is quality, consider that there’s a good chance potentially poor performing lenders would be priced out of the CIC market.
5) I hope your questions are now answered. We gave lenders a months’ free access to the system to ensure there are no questions or kinks when we launch. Furthermore, funding your account is 100% risk free: you set the max. price you are charged per contact and you can request a refund of unspent funds at any time. Regardless, we respect the leap of faith that takes without seeing the pricing engine kick in and so are offering a 25% discount in month 1 to lenders that dive in.
There is tons of legitimate competition. I am concerned on behalf of the consumer with the bait and switchers and their phony reviews. Beware to the public.
Yes, my concern is quality and I have seen it deteriote in recent months.
And the service will obviously NOT be free to the consumer as the lenders that do opt to quote will be forced to pass this cost on to the consumer.
Thanks for the tip on this thread Rich.
lolathozz, David?, SPAM is what Zillow is bombarded with day in and day out on the forum threads. Those ridiculous threads somehow stay up for hours at a time touting this attorney, or that CPA. The quality of the content on the site has gone down considerably, don’t blame me for any part of it.
Unlike lolathozz, I am using my real name. I was a lender on Zillow since it’s inception, but have not utilized their quoting mechanism in quite a few months. As stated above, the auto-generated quotes that now fill the inboxes of consumers across the country ruined what was a very personal, very valuable service.
My site, http://www.knowyourpro.org, is not competition to Zillow in any way. It is not a lead generation site, it is a community. And a new one at that. I could not have asked for better publicity, thank you Hozz for creating a little buzz, I appreciate it. I hope you are a member of the site. David, did Hozz’s post sound remotely like me? Seriously, cut the crap with your God complex. It’s getting old.
Nope, not me Jen. Conspiracy theories will eat you alive. Good luck!
By the way, Zillow states they receive no income from the Auto-quoting API services, which I find very hard to believe. They have pushed those services from the beginning eliminating the honest, caring, personal approach that was being forged. Big mistake. They are now just like every other lead site, grabbing every dollar they can, and providing inferior service and value as a result.
Believe it! Not. One Cent. As I say, “Conspiracy theories will eat you alive.”
Believe it. Not. One Cent.
So you guys make 1 cent on each quote?
David, if Zillow receives no compensation from the API companies, why in the world would you push the product as much as you do? It’s not really good for consumers, it isn’t all that great for lenders (unless you are lazy and prefer impersonal communication). So what gives? Are we REALLY supposed to believe that there is nothing in it for Zillow?
Conspiracy theories, or just common sense?
90% of the loan quotes borrowers receive on Zillow are from lenders who quote via the API Jenn — it’s quite surprising that you don’t get how that automation benefits lenders, borrowers and Zillow (seriously, it is common sense) but again and for the last time, Zillow is not paid by the software vendors that integrate to its quoting API.
It is easy to say that 90% of the quotes are API when you see a loan request that say has 50 quotes 45 of them are from 8 lenders spewing out 5-6 different scenarios half of which have no bearing on the actual wishes of the borrowers. I have been trying hold judgement for ANOTHER month but more and more it seems that borrower is only going to get quotes from the highest bidder. Not sure how that is in the borrowers best interest. Oh and David. Not sure if it is still the case but earlier this past year, reps from Broker Buddy were saying that Zillow got a piece of the pie.
Mr. Rascoff, Zillow’s COO stated above: “One additional benefit of starting to charge for CICs is that the quotes in the marketplace will become even more accurate and complete because lenders won’t want to receive contacts unless they can close the loan on the terms they laid out in their initial Loan Quote.”
I disagree.
As Zillow helped to prove, borrowers blindly seek the lowest rate, unaware that a rate quote is just a quote—not a guarantee. Unfortunately, “Bait and Switch” lenders have had a field day on the site. Honest lenders have posted threads exposing many of these ripoff artists, but they keep coming back to the trough. Auto-quoting has only muddied the waters as borrowers are forced to sort through a literal “information overload”.
Mr Rascoff, I believe you fail to realize that lowball lenders could care less about being accurate…their phone only rings when they dangle low rates. Since the info provided by an anonymous borrower’s Quote Request has yet to be confirmed, lenders are not bound by the quote provided. True and accurate pricing is not available until certain criteria is met (including verification of credit scores—vs. a borrower provided estimate).
The “CIC fee” (lets call it was it is OK?–a lead is a lead is a lead) will simply be passed onto the borrower. Broker X may have paid for 6 of these CIC’s in order to close the 7th deal. Lucky #7 is going to have his broker fees jacked up to cover the six window shoppers ahead of him. Low-ball lenders who live and die on rate quotes alone will simply continue quoting undeliverable rates to get the phone call. It’s P.T. Barnum School of Sales 101.
Not true Doug. Zillow Mortgage Marketplace has a closed-loop customer review system that keep lenders honest and that rewards honest lendersfor their hard work. Just speak to the lenders at the top of our leaderboards and you’ll see what I mean; this system is probably only online mortgage shopping system I know that puts Joe Borrower in the drivers’ seat of choosing which lender to work with and which archives lender reputations for Joe to use to make his decision.
David…What about the bait and swtich lenders that badger customers to remove their bad reviews. Or the ones that will come up with 5 fake reviews in order to bury their bad review on another page. How is that an honest review system.
Ray S –
If we catch lenders abusing the review system they are removed from the marketplace. I challenge you to show me another reputation system in all of the mortgage industry with half the integrity of Zillow’s lender reviews. At this point, most of the US mortgage industry still can’t even keep dishonest loan officers from opening up shop down the street. The standards for honesty and accuracy that we hold lenders to in ZMM are certainly way beyond the mortgage industry’s ability to clean up its act.
David,
Zillow relies heavily on “flagging” by honest lenders to weed out the bogus quotes. But without fully staffed a QC dept flagging has its limits. If you believe the mortgage industry can’t keep these crooks from opening up shops…how could Zillow possibly have a better mousetrap when it comes to the ethical standard? These guys ARE NOT ACCOUNTABLE to you or anyone else. We’ve seen many lenders with fake quotes kicked out the back door then allowed back in the party. The first line of Zillow’s disclosure starts with “Although a loan quote on Zillow is not a binding Good Faith Estimate…”
The #1 sales gimmick is price. Get ‘em in the door and they’ll buy something. Zillow doesn’t have any tracking device to see post-closing figures…so its a major assumption to think that borrowers got the same deal that attracted them to the lender in the first place. And as we’ve dissected already…glowing reviews of some lenders are suspected as being self-created. (for some reason those guys refuse to write fake bad reviews of themselves…)
As I’ve stated before, the CIC cost will have to be born by the consumer. It doesn’t matter if Broker X is paying $100 per lead or $5. The borrower pays when costs go up.
I think one of Zillow’s key flaws is that they have a far, far better opinion of the quality of the loan requests than really exists. Not a big deal when they weren’t charging for contacts, but now it is. My own estimate of real potential borrowers who would seriously consider completing a loan with a Zillow lender is that it’s less than 5% of the loan requests. Now in the lead generation business, that’s probably pretty not too bad if you’re paying a very, very small fee per ” lead” or zero as these are not qualified leads, but the model that Zillow has put together is quite different. The premise is that a single lead could cost as much as $100 per contact–presumably $100 for a well qualified borrower with an easy to place loan.
In my Zillow filter there is one guy (a computer running a script to make money for the API firms? and Zillow?), for example, that submits a very well qualified identical request every hour or two. Each request is bombarded with over 100 robotic responses as the ‘borrower” has requested 3 different loan programs be quoted. The ‘borrower” ( a Zillow employee? Oops, I’m out of line) can now request a GFE for each quote. Here’s the math – 10 quote requests per day, 100 quotes per request = 1,000 GFE requests at $100 each equals $100,000 per day to Zillow.
I certainly hope I have a chance to get in on the IPO as this example (in a less flagrant form) is a very, very common example of zero lead quality control at Zillow. Once again, when there were no fees, this was an annoyance but not a show stopper. Now it’s going to be just plain highway robbery with lender’s $250 deposits obliterated potentially within in a few seconds of roboquoting (which I personally don’t do – robo quoting has really destroyed Zillow as a high quality consumer source for mortgages.)
The Zillow model might be a tolerable one if those that requested GFE’s were serious potential borrowers that were contacting only one or two lenders after screening the quotes provided (which Zillow seems to think is the real world) The reality of the Zillow marketplace is quite different.
Bill –
You are assuming that Zillow will be pricing these contacts; WRONG! Lenders will set the price so what we may think they’re worth is truly immaterial.
That said, I’ve spoken to lenders who’ve closed 100 loans off Zillow in a year. I’ve even had multiple lenders say to me that they close 50% of these calls. These numbers sound pretty good to me so yeah, I am bullish about the success of this marketplace but again, contact pricing will be limited to the value the lenders see in them.
It sounds like to me all the people complaining are people that don’t have the know-how to use the automated quoting API and generally don’t offer as competitive rates. It’s just the losers complaining on this wall. I’m 100% sure of this. The system setup by Zillow is the future. If you don’t like computers, that will be your downfall.
James-that may be your opinion but that’s all it is. No magic lenders, no magic pricing …. Every lender gets the funds from the same sources. At the end of the day the difference should never be rate or fees. Consumers want to believe that they can find a lender that can defy gravity and do something no one else can! It’s just not reality!
Why then did zillow push lenders to get going on API quoting if they were not getting something from it in the way of money? Makes no sense. What does make sense is that the quality of the lender-customer back and forth went away when the LO went to API.
robo -
It’s quite simple really; quote automation is just more efficient for most lenders. It actually reduces manual errors and allows the LO to focus on that part of the job where they can really add value; namely providing service to clients and ensuring that their loans close on time.
That said, Zillow has no preference for automated quotes; our system supports both a manual approach and automation via integrated pricing engines.
90% of the quotes in the marketplace now come via the API — besides the obvious benefits mentioned above, lender adoption and continued growth of the marketplace confirm that the API program’s been a huge success.
I completely agree with David Gibbons. All the people complaining about this are just not with the in crowd. If they would spend more time suckling David’s supple nipples and fondling his testes they would see the unbelievable opportunity to make a fortune quoting whatever they want, whenever they want.
Tea bags are not just an antioxidant is what I always say.
Dave, love the shades, you stud you!
OK that was seriously hilarious! David is so full of bs though. Cracks me up. The issue is Zillow knows everything and hasn’t listened to the borrowers about what they like and don’t like, what matters and what works. This will be their ultimate downfall. Pretty sad too because the site used to give a great service to borrowers and now they are the farthest from what matters to Zillow. The dollar always wins.
Jerry –
RIGHT, the ZMM borrower experience rocks!
WRONG, we don’t plan to change it (other than improving it of course.)
I’m gonna’ quote you on that “knows everything” piece; how nice of you to say that.
Alan, can you please get your head out of his butt?
Step into the Matrix, David Gibbons wants to have a chat.
Nice shades, dude.
Jen
David G, can you please clarify……. Will ZMM still be considered a place where consumers can receive free quotes ? Ya know……without anything passed through to them?
Did everyone miss the David’s statement that lenders earn on average 1 to 2 points for each loan they close? No one is going to dispute this?
John, you make that statement as if lenders are netting 1 – 2 points. I wish that were true. In many cases after expenses the lender is making about a half point. Sometimes more, sometimes less.
Funny how people think 1 – 2 points of the loan amount is usury, but the same people pay RE commissions of 5 – 6 points on the total price of the house without blinking.
The point here is that lenders will not be getting 100% usable CIC’s. The total cost of all CIC’s (usable or not) will be born by the consumer. Lenders will have to make up for this new Zillow Tax by charging the “paying” customer…the one who actually does close a loan.
Similarly, appraisal costs have recently risen due to new HVCC regs…but the lender isn’t “eating the difference”, the BORROWER is.
Doug –
Two points on costs in this marketplace that you’re not considering:
1) ZMM borrowers get quotes in what’s arguably the most competitive consumer marketplace in lending. Lenders and borrowers both tell us that they’re doing competitive deals. This competition is a core feature of ZMM and will continue ensure consumers get good value.
2) Lenders set the maximum price they pay for contacts. The marketplace for CIC’s won’t allow costs to exceed whatever they decide is a reasonable ROI.
Where is the automated quoting API documentation located on Zillow’s site anyway?
it’s not here:
http://www.zill...APIOverview.htm
Is it only for select lenders?
you have to email nate@zillow.com to request it
It makes sense they pushed the API system first before discussing the pay for lead program. Manually quoting would mean about 20-25 quotes per day vs 10 times that using automated, which gives Zillow a 10 times chance someone will request a GFE and make them money. They refer to their ” top lenders ” often and I suppose they are referring to the National Bank of Kansas City. The top Rep, Allen Mische, has put out 96,700 quotes and has 45 reviews, just pathetic. He also says in his notes to the borrowers that ” we never charge an origination fee “, however he does charge a loan discount of 1% ( ZQ-LGLXRZL ) just like his coworkers Michelle ( ZQ-RMSWRTV ) who has 2 reviews out of 55,800 quotes and a 2.5 rating which is really pathetic and Mary ( ZQ-QMQZSXQ ). The problem is these quotes are par rates which do not require a loan discount to buy the rate down so it is origination fee and they are lying, plain and simple. This is Zillows favorite lender and they are quite aware of this situation and continue to enable them by allowing the lies. Another issue is all the lenders who quote 10 year fixed rates without any regard to DTI, in almost all cases, the payment would push the DTI to 70% or higher and the borrower would never get approved. The only reason to quote this is to show the lowest rate and APR in Zillows new loan comparison chart and get the phone to ring.
Big difference between gross revenue and actual income. They may be getting revenue of 1-2 points but the actual income to the LO is 25-50 BPS or .25-.5% of the loan amount. The realtor in the transaction is getting 4-6% Revenue and the income to the realtor is between 2-5%.
David thinks loan officers make 1 to 2 points because he relies on people like me for his information. He does not speak to the whiners at Zillow that post on the forum complaining about everything. Zillow listens to the paying customer and that’s why you guys are out.
David G is a little wimp just like any other ass-kissing, wannabe, middle management suckup. He thinks he’s important and he is not. Zillow will fire him as soon as they achieve their goals. All you have to do to get what you want from David G is to stroke his big ego and his tiny penis and tell him that his man boobs are not noticeable. He doesn’t know anything about mortgages, or the internet so it’s a mystery how he has the job that he does. Maybe there is a prerequisite corporate ball sucking mandate at Zillow for all employees.
Zillow will be gone in a year, make the money off of them while you can.
DBR-That’s also why the Consumers will ultimately be the ones that loose!