As my daughter used to say when she was about three, “It’s a doggy dog world.” Zillow Mortgage is just another symptom of a trend that has been shaking up marketplaces for the last few decades now — the demand of the unwashed masses for the lowest price no matter what. It’s apparent in the explosion of self-service (”for your convenience”), the increasing willingness of consumers to accept crappy treatment (just try to get Best Buy to honor that extended warranty you paid extra for), the reduction of products designed to fit (”one size fits all!”), and the demise of knowledgeable specialists in all fields at the hands of those who can take advantage of economies of scale.
And in areas where the competition for business is done strictly on the basis of price, the competitors game away. Try shopping for a plasma TV these days — everyone quotes a ridiculously low price, then adds on installation, cables, mounting brackets, etc., until the $1500 TV costs about $8000. I finally found a local expert who charged a fair price and gave me outstanding service and installation. But I had to drive by all the “big boxes” and get past all the screaming to find him. And who knows how long he and his little electronics store will be able to compete?
I don’t think consumers will be that much better off in Zillow-World. Yes, I am pessimistic because I’ve where this leads in too many other markets. Baiting and switching will be the order of the day, and people will still be irresistibly drawn to the low-ballers. Just watch — even if a lender gets very mediocre reviews he will get business if his quotes are low. I see it on eBay all the time when I shop for car parts. The system is just not designed to reward those who take the time needed to become and remain experts in mortgage financing. And it allows / encourages consumers to play lenders against each other.
I can see this system being helpful to a new loan officer with no customer base and no track record. He can jump right in, no one knows the loan they are doing with him is his very first one. And if he works hard, does a good job, and is lucky enough to get a few reasonable clients in the beginning, Zillow might help launch a nice career. But those who are already established and prefer to spend their time providing service and building relationships rather than chasing transactional business have too much to lose and very little to gain.
Just for giggles I put my house in the Zillow valuation system and got interesting results. I had a brand-new appraisal at $1.4 million which was accepted and unchanged by my lender; Zillow valued my home at $865k. Looks like a “one-size-fits-all” mentality to me.
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{ 7 comments… read them below or add one }
As usual Gina a great article! In this market service is everrything. If I used the Zillow or Best Buy approach, I would be out of business. You get what you pay for.
I’m not used to thinking like a criminal, but when you think about it, why couldn’t one of my competitors pose as a borrower just to go through the process in order to give me a bad review? Why couldn’t I have my wife make calls using a phony profile just to give competitors a bad review? I’m not used to thinking like this, but rest assured, someone else is. Even still, why couldn’t I post fake borrower profiles to give a good review to myself? Is there a posting police that will be monitoring all this posting? If not, wouldn’t it make more sense for only borrowers who have made it through closing to post ratings?
Wade, I would say that’s a good idea except that it doesn’t allow all the consumers who get bait and switched, but then walk on the deal, to rate the LO’s performance.
You are right, Todd. There could be an off the books evaluation for those situations — bad reviews that went straight to Zillow without appearing on the profile page. It could be a 3 strikes and you’re out deal, even if you had a 5-star rating. Zillow could just boot those guys.
You’re absolutely right, Gina! But sorry guys, you’re not going to find solutions by making more “rules”. Consumers walking out on a deal get replaced by 3 that don’t, bad reviews disappear from online sites, and, Gina, your lender got lucky: your appraisal could have been reviewed by a computer and your loan turned down, no matter how well your appraiser documented your value. We’re in a time now where the ambitions of the few are ruining the masses. If a large business can’t make a little more money from one individual (as little as $100 more on a $1M loan), they can just skip that one and go on to the next one. That means that for an individual to actually get fair treatment, he has to lie and cheat. The devastating results of this kind of interaction, in the long run, is the total breakdown of human systems, like we are seeing in the financial markets now. None of this is going to get better until people start treating each other better. If the computer gives you a negative answer, have a person with a conscience review it before it gets trashed. If you can make $100 from a sale and everyone come out good, don’t go for $200 even if it hurts the other person. It’s got to be a human thing. It may be business, but it IS personal!
Great Post Gina, and great comments to all. the Zillow thing is not going to go away it is just like the big box, they all have there flaws. look at Walmart, they have the best prices but they still get bad reviews for other reasons. or you look at the small business owner they have higher prices beacuse of over head and cost so he get s bad reviews for that but he would get great reviews for customer service, There are Millions of borrowers andmore than enough loans to be done. it is all how you market and where you market.
Wade, I would say that's a good idea except that it doesn't allow all the consumers who get bait and switched, but then walk on the deal, to rate the LO's performance.