Zillow, the perennial surprise-maker of online real estate, has just launched its long-anticipated foray into the mortgage world with a “Mortgage Marketplace.” The company’s original online real estate product — the controversial “Zestimate” — is a computer algorithm estimating the value of homes. The logical mechanism behind a “Mortgage Marketplace” would thus also be a computer algorithm — say, a mortgage pricing engine that spits out rates from lenders based on the borrower’s situation.
In a delicious twist of irony, however, the mechanical Turk behind this new product is … a person. As in, homo sapien. Specifically, a mortgage professional.
In a pre-launch briefing with “What would David Gibbons do” David Gibbons, he described the all-too-typical grief that a potential borrower goes through with many lenders, whether online or offline: bait-and-switch salesmanship, hidden fees, inflated rates, and perhaps most egregiously, a complete lack of anonymity.
Zillow’s solution? Let consumers ask for mortgage quotes without revealing their name. Let mortgage brokers respond to these requests. Let consumers sift through the responses and choose the broker they want to work with; then and only then does the buyer have to reveal his or her name.
What about the whole bait-and-switch thing? Zillow deals with that in a very Web 2.0 way — consumer reviews of mortgage broker performance. Plus, the participating mortgage brokers are vetted — at least minimally — to confirm that they are, in fact, licensed mortgage brokers.
And here’s something sure to make at least some mortgage brokers sweat a bit: the competing mortgage offers are visible not just to the consumer who requested them…but also to the other mortgage brokers who submitted offers!
The cost to mortgage brokers? Zero. In David’s words, Zillow remains committed to being an advertising platform. The data they can now gather about consumers — what their home is worth, other homes they’re interested in, and now their income and credit score — makes it possible to target-advertise with nearly pinpoint precision. David assures us this is not being done in a “Big Brother” kind of way, but if I understand him correctly it may soon be possible, for instance, for Mercedes to target ads that will appear only in front of prospective buyers with an income of at least $100K and a credit score of at least 720.
Other commentary:
- Todd Carpenter likes it.
- Tribute Media reviews the product.
- Further explanation from Rich Barton, Zillow CEO.
- Drew Meyers weighs in.
- Greg Swann notes that this product reduces the information asymmetry in the mortgage lending business, and sheds further light on how Zillow manages the wealth of personal information they’re able to gather about consumers.
- Joel Burslem has some questions, but is submitting a loan request as we speak.
Tags: Consumer, Industry, Mortgage, Zillow
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