Zillow's New Mortgage Quote Forum

My take on Zillow's new mortgage match service: I am going to try it.

I have, on more than one occasion, made plain the problems with online quote services.

Here is the first question Drew asked me for their article. Neither it, nor the answer, found its way into the finished product, for tolerably obvious reasons:

What are some online resources consumers should be using to find loan rate information?

None that are any good, as in the sense of providing good relevant information that's applicable to specific cases. There are many loan quote forums that will quote you a rate. They quote you a low rate or a low payment to get you to contact them - and that's all that it is, a teaser. I have literally gone right down the line in two different comparative quote forums, contacting every company and asking for quotes that comply with the standards they are supposed to quote to. Not one company was even prepared to quote me what they were advertising. Nor did the forums themselves do anything when I complained - they are not interested in policing the quotes, as to do so risks losing some hefty income when the companies quit subscribing to their service. The few companies that advertise honest rates that are really available have given up on those forums in disgust - they attract clients in other ways.

Nonetheless, I'm willing to give Zillow the benefit of the doubt. Why? Precisely because of the way they have handled their "zestimate" service. It may be useless for the purposes of buying and selling, but they have done their dead level best to make it suck less. They may be trying something for which the medium is not suited, but they've spent a lot of money and programmer time trying their best to make it work. Internet mortgage quote services are nowhere near as intractable of solution. It's just that nobody has wanted to do it correctly yet.

I'll give Zillow credit for wanting to do it correctly. Whether or not they carry it through is something else again. But they've earned a certain amount of respect for their willingness to try to correct perceived problems. I'm reasonably confident they will want to make efforts to improve

The internet being what it is, I understand about their "one way transparency" policy. I, among others, have been unstinting in my criticism of the way on-line quote requests are handled (even if they weren't actually a quest for quotes, as in the linked article). Furthermore, the vast majority of internet users are very guarded about their privacy, and if lenders could contact them directly, they would be unlikely to use the service. I believe that Zillow evaluated the trade-off between more people being willing to try the service, and more transparency on the part of consumers, and made the choice that results in more people - potential customers - willing to try the service. If the loan originators who are complaining about this stopped and thought a moment, they'd realize they're complaining about increasing the size of the potential market. Bullet. Foot. Not much assembly required.

This isn't to say I think the service is perfect: It most decidedly is not. One thing I think Zillow needs to add is a space for each and every lender to detail their quote policy, so that consumers know what is and isn't included (I like to quote all inclusive costs, others do not), as well as limitations on the value of their quotes. My margins are such that if wholesale rates rise, there is no way I am going to be able to honor any quote I make four days later. Zillow also needs to make something very plain that they have not - that all rate quotes are subject to change until locking. That needs to be graven in size forty bold font on the top of every page in the category. Trying to ignore this is a guaranteed failure for both consumers and originators.

Zillow is also going to need an arbitration department, or at least committee. Many consumers will complain about things they themselves with the cause of. "Sure, I said I make $8000 per month and it's really $2000, I said I have a FICO of 804 and it's really 408, but they didn't honor their quote!." I don't believe Zillow is ready for either that, or the lender who says, "but everyone knows there's two points of origination, and the title company and escrow fees are not my fault!" In the former case, that person should have no credibility to make a rating, and in the second, that originator should be unceremoniously branded as unworthy of professional status. Time will tell if Zillow has the guts to undertake those actions, or if they're going to take the low road of passing all allegations, no matter how thoroughly it's been debunked. If it's the latter, they shouldn't be surprised if the professionals that gravitate to them tend towards the low end of the reputability spectrum. My reputation is valuable to me, and to others. I will not have it libeled, and if Zillow does anything less than ruthless purging of incorrect information, I won't hang out waiting to become a victim.

Several people have already made the point that Zillow is going to begin charging at some point. Well, duh. At that point, I'll make a decision as to whether or not to continue participating. I'm hoping they use this initial period as a way to work the bugs out. I can stand to risk $25 and some of the time I'd otherwise spend surfing the internet to no particularly good purpose to see if I can pick up a few loans I wouldn't otherwise get.

A couple suggestions: Give the consumers more information on the prospective lenders. And since it's consumers contacting lenders, there's absolutely no reason why lenders shouldn't be able to participate immediately upon sign up, albeit marked "provisional". If the consumer can verify enough information to feel comfortable contacting a provisional lender, they should be able to. This also would have made it easier for would-be reviewers to work. I was invited to their pre-launch briefing, but they dropped the ball despite my best efforts to be included. Not precisely a great omen, but mistakes happen. It's how we with problems that defines us.

This could be a really wonderful thing, for both consumers and originators. On the other hand, it could be the worst disaster since this one. How Zillow behaves in handling the issues will determine which. I can lurk and participate a little around the edges, and see how things shake out. I don't need to know right now. I can gather evidence before making up my mind.

If it's not for you as an originator, don't feel threatened. There's plenty of market to be picked up elsewhere.

Caveat Emptor