I don’t think anyone outside of Seattle has pondered Zillow’s entry into the mortgage vertical more than I have. I’ve blogged about what I would do, what I thought they would do, what they shouldn’t do, and even asked other mortgage professionals to weigh in. Well, it’s all over now. Zillow officially launched the Zillow Mortgage Marketplace tonight.

From Zillow’s Blog.

David Gibbons was kind enough to give me a sneak preview a couple days ago, and here’s what I think it has to offer to both you, the loan professional, and to consumers.

For Consumers

Zillow provides a free and anonymous way for potential borrowers to shop for a bonafide mortgage offer. There was really only one qualification Zillow needed to meet for me to like this product. They made it. Zillow has reversed the rabbit hole so to speak.

As I pointed out in this post, the problem with the competition is that they either do not collect enough information to properly quote a loan, or they collect all of it, and give it all to a bunch of tele-marketers who bombard the borrower with phone calls. Zillow strikes the correct balance.

Here’s how Zillow works for consumers.

The borrower sets up a free profile/loan request with Zillow. The profile asks them what type of loan they are looking for, why they want it, and several qualifying questions. It gives the borrower the opportunity to enter their FICO score, or in lieu of a solid number, Zillow has partnered with a third party (my pure guess is CredCo) to offer a credit guesstimator based on series of profiling questions. The result is a mini application for the Loan originator to work with.

Next the profile is thrown into the marketplace without the borrowers identity being revealed. Loan officers then respond to the profile with a full quote that includes closing costs.

As Zillow receives these offers, they privately send email notifications to the borrower. The borrower is able to view all offers together on a private page hosted by Zillow. this report not only lists the offers, but provides links to the originators web site, or to discussions they’ve participated in on Zillow’s forums. It also offers up a Ebay style rating grade for each originator. The grade is based based on what they promised on Zillow as opposed to what was offered in real life. The borrower gets to review the loan officer.

Once a borrower chooses one or more originators to move forward with, they can contact the originator off line. With the exception of a later written review, Zillow’s involvement ends at the point of contact.

For Loan Originators (LO’s).

Ok guys, after reading the above, you are no doubt realizing that Zillow’s Mortgage Marketplace is weighted heavily to empower the consumer. To succeed, you’re going to need to be patient, competitive, and humble. It’s going to take you a fair amount of time to quote each possible client, and there’s no guarantee that you’ll ever get the opportunity to talk to them in person. I can’t imagine very many of you would be willing to pay big money for such an opportunity The good news is, you won’t have to.

Zillow is free baby! I’ll be the first one to say that free is never truly free. Your time is money. But write now, most LO’s have a lot more time than they do money to devote to marketing. What Zillow is offering you is free qualified leads, delivered to your email box. Real leads too. People who actually want a mortgage. No “do not call” lists to worry about, no mailers that are basically mailed to trash cans. Real, free leads.

How Zillow works for LO’s.

First you need to get approved to work with Zillow. They have a registration system that includes a background check to make sure you are who you say you are. There’s a $25.00 fee for a third party to perform this check. Greg Swann and Brian Brady at Bloodhound thinks this approval process might be the start of some sort of a standard of approval, like Underwriter’s Labs. I don’t think that’s really the case. What it will do however, is allow Zillow to ban bad actors. If you’re an ethical lender, this can only be seen as a smart move on Zillow’s part. The fact the service is free is going to make it a tempting place for cheaters to frequent. But it won’t take long for Zillow to vet them.

In addition to Zillow’s approval, you will need to opt in to a Code of Conduct. You’re promising to be honest & ethical. I forgot to mention that the borrower signs the same pledge. I don’t know that Zillow can do a whole lot to a borrower, but failing to live up to this pledge is going to get you booted. In addition, most of Zillow’s readership isn’t going to be likely to put up with a dishonest originators shenanigans. If you’re a BS artist, Zillow is going to be a waste of time for you.

Once you’re approved, you’ll have your own account page to visit. Here you can choose the kind of leads you are looking for, and how you want them delivered to you. This is done through the search feature. You can search for any and all leads in your area, or get more specific. for instance, you may only want leads from consumers with really good credit, or even really bad credit. It depends on what your good at. Once you performa search, you can save it, and tell Zillow to email you any time a new lead that fits your search comes in. You can also do searches for more than one area. It all depends on where you do business.

Now that you have a lead, you’re expected to send them a best effort quote. This includes rates, program details, and closing costs. Zillow automatically estimates the payment plus tax’s and insurance based the extensive public records that they already track. You also have the opportunity to write a personalized note to the consumer. I predict that this section will be largely misused by LO’s who paste in a canned response. I would use it to discuss variables like how the rate might differ if it turns out their credit differs form the guesstimate.

You can offer more than one quote as well. Send one for a 30 and one for an ARM. Use those notes to explain why you sent them both.

Then, you’re at the mercy of the borrower. You can see what your competition is quoting. you can also see when the borrower closes the offer. If you didn’t get a call, then you’re out of luck. If you do get a call, you’re good to go! Again Zillow is out of the picture from here on out, with the exception of a review.

It’s important to set expectations, then follow through on them. Because you will be reviewed, you need to be able to do what you say. Keep lots of notes as well. We all know there will come a point when an unforeseen issue will keep you from being able to deliver the rates you promised. If this results in a bad review, you’ll be able to respond to it through Zillow, and all consumers who see the bad review will be able to see your response.

The platform as a whole

I really, really like it. David said their goal was to create a transparent environment where, “ Lenders & Borrows are on equal footing”. I think they erred to the advantage of the consumer, but I also think that’s a good thing.

One downside to this model is that early on, I think some bad actors will be involved, and in the time it takes for Zillow to boot them, they could do just enough damage to sour the initial rush of traffic that will be coming Zillow’s way. It will be interesting to watch how aggressive they will be in policing the system.

In the long term, I think the package is great for both consumers and for honest and ethical loan originators. Really, it couldn’t be any better timed either. Consumers are suspicious of the entire mortgage industry. Originators are struggling to find new business without spending a ton of marketing doe. If Zillow can drive in enough early traffic, I think it’ll be a winner for everyone involved.

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