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Zillow Mortgage Marketplace: Changes Make It Better For Consumers

by Justin McHood

in Justin McHood, Mortgage Related Topics

I have found that few things in life separate the sheep from the goats men from the boys efficient from the not-so-efficient like the free market does.

Earlier this week, I received an email from the people at Zillow saying that they were making changes to their Zillow mortgage marketplace and were going to start to charge lenders for each contact with borrowers and my first thought was:

“Well, this oughtta be fun to watch”.

I think it might be the social scientist in me that casually enjoys watching people squirm whenever a perceived “big change” is announced – whether it is a global, national, corporate or maybe even just a marketplace change.

It has been my experience that whenever change occurs, there is almost always a group of people who thinks change is “fun” – no matter what it is – and finds a way to adapt to the change and continue on with life. It has also been my experience that there is also a group of people who resist change and can’t figure out why they never end up on the good end of the changes.

If you enjoy seeing both sides (and everything in between), be sure to follow the debate about the recent changes Zillow announced and how people are reacting to them.

What This Change Means For You: The Consumer

If you are a consumer, be sure to put Zillow on your Holiday greeting card list. They did you a big favor by making sure that lenders are valuing your contact – in fact… they are making your interest and qualifications a “market”.

If you are interested in a loan, have good credit, good income, good assets and want to buy a $500,000 house do you think you are more valuable to speak with than someone who has lousy credit, no money and wants to find out how to use the $8000 tax credit to buy a house?

Of course you are.

So now the lenders on the back end are going to be actually “bidding” for that interest and hoping that you contact them.  When you do contact them (hint: if I were you, I would contact one of the ones who has a stellar reputation), then they will be charged.

Just a hunch here, but I wouldn’t be surprised if Zillow doesn’t start out segmenting you as a customer and assigning a different value to you based on certain criteria, they will over time.  Which will only help the process.

I know, I know – it still remains to be seen just exactly how much money Zillow will be willing to pay lenders to talk with people who have lousy credit and no down payment (that was a joke) but one thing is almost certain:

Now that there is a price-tag that lenders are going to be paying each time you contact them – you as a consumer have an even higher chance of getting the best service from your loan officers working right here on Zillow.

Or, maybe I should say it like this: It seems to me that if a lender has to pay $100 for you to talk to him, you have a better chance of getting his/her full attention than if they didn’t have to pay anything for you to talk to them.

Or at least that is where I always try to put my mouth… where my money is.

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“There Will Be Death Panels Enacted By This Congress”

Are you working at a non-depository financial institution? Starting at :38 We will be providing a mechanism for putting non bank financial institutions out of everybody’s misery. [Is Secretary Geithner smiling?] There will be death panels enacted by this congress. But they will be for non-bank financial institutions that will not be considered too big to die. And I say that because we have this euphemism that we are going to be resolving these institutions. It has not been my experience that when someone says that they are going to resolve something, they kill it. We are talking about dissolution, not resolution. We are talking about making it unpleasant for the entities… Note: The underlining emphasis and [commentary] was mine of course. I don’t know for sure what the future will hold, but it sure seems like the winds of change are starting to blow when it comes to how mortgages are originated. Hat Tip Rob Chrisman (by far one of the smartest mortgage people I have ever followed) for sharing the video.

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Zillow Mortgage Marketplace: Setting Expectations Will Make or Break You

Today, I thought I would take a minute to cover the fourth rule of negotiation and how Zillow’s Mortgage Marketplace puts the consumer in control of shopping for a mortgage and simply arms them with every advantage possible when it comes to the rules of negotiation . Previously: We learned that the first rule of negotiation is the first one to talk loses . The second rule of negotiation is that when you are explaining you are losing . The third rule of negotiation is the person with the least interest controls the relationship . And the fourth rule of negotiation? It is vital to set expectations and then over-deliver on under-commitments. In every negotiation… in every relationship… each party will have numerous opportunities to set the other parties expectations. This applies across life , not just when shopping for a mortgage. Become astute at under-committing and over-delivering and you will become known as reliable. As competent. As trustworthy. As someone who can be “counted on”. Fall into the habit of over-committing and under-delivering and you will become known as just another ordinary, every-day average idiot. This subtle -but-not-so-simple skill of being able to set and manage expectations and then over-deliver on those expectations is one that every lender on ZMM knows all too well — they absolutely * must * be stellar at setting expectations and then over-delivering on those expectations or they will simply go buh-bye . If you are a lender and you somehow manage to hose up this rule of negotiation, you will soon be marked with the digital equivalent of the Scarlet Letter thanks to Zillow’s feedback mechanisms available for consumers to report “how you did”. For example: look at a few of these top lenders on Zillow. Look at how many people they have helped. Look at their feedback scores. Think they know how to under-commit and over-deliver? Yes. And you can take that to the bank. And if you happen to somehow become one of those lenders who hasn’t learned how to set your client’s expectations by under-committing and over-delivering? Here’s your toaster, have a nice day. Toaster as in parting gift. Parting gift as in: you won’t win any of the “grand” prizes here. Sure, everyone still loves you, but it is back to cold-calling and LendingTree for you because no one that uses ZMM is going to want to be seen with you and your well deserved big, bright, shiny red “A”. Lastly: a personal note to anyone who is thinking of using ZMM to shop for a mortgage: Today, more than ever before (in my experience at least) it is difficult to get a loan done for a client. If your loan officer says to expect something and it doesn’t happen *exactly* in the time frame that he said – believe me when I say that there are crazy, crazy things happening regarding lending guidelines and turn times. So when leaving feedback – just keep that in mind. Maybe even give your loan officer the benefit of the doubt. Or hand him a toaster, tell him thanks for playing and maybe – just maybe it will be the thing that helps him become suddenly stellar at the fourth rule of negotiation: Set expectations clearly, then get busy under-committing and over-delivering.

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