I’ve always loved this commercial.
It must be ten years old, and I’ve been using the term “flaming logo” ever since. To me, a flaming logo is something that looks really cool, but once the shine wears off, turns out to be less than useful. I’m willing to be persuaded otherwise, but my first reaction to Zillow Mortgage’s new charts is that they are a glorious flaming logo.
As my previous posts reflect, I’m a big fan of Zillow’s mortgage platform. They’ve leveled the playing field for consumers more than any other product to date. I won’t even argue that they may have “leveled” it a bit to much (and I like that too). But adding these charts is a step backwards if you ask me.
I get the premise, the charts average up to the second rate quote information that allows consumers to look at how rates are trending in their markets, or even nationwide. The technology behind the charts is top notch, but the results are gobbledy gook.
If rates have trended up for five days straight, what does that mean?
If the average rate quoted for a 30 fixed with a 720 fico in California is X, what does that mean?
If rates are trending lower in Florida than they are nationally, what does that mean?
The answer to all three questions is that it means nothing. At least they mean nothing to a consumer who’s trying to find a good mortgage. Zillow’s already built a fantastic platform that allows borrowers to compare quotes that are specific to their situation. What other people are being quoted is not relevant. It may cause them to think they are not getting the very best deal for them (when they are). Or even worse, it may cause them to settle for a rate that is not as good as it could be. These charts are TMI, and TMI is the chief reason why consumers become discouraged in their search for a decent mortgage.
Just like the Zestimate, Zillow has a lot of innovative and fun tools to get the conversation rolling. These charts will definitely qualify, and consumers might even say they like them. But I think it’s hurting the very people they’re targeted to help. I’m all for transparency, but relevancy is just as important.
It will be the death of loan officers everywhere:
“I”m going to wait until that blue line goes down again.”
A little knowledge is a dangerous thing…..
LOL, Todd, I also LOVE that ad; truly Dilbertian. I don’t agree however that it’s a good characterization of our rate explorer tool. I hope I can better explain what we’re doing here …
As you know, recent rates have always been popular content and are featured in all types of media. Your criticism applies equally to your local newspaper and so I find it a bit unfair; Zillow is actually the only one of these media outlets where users can take the next step and get a totally customized quote while remaining anonymous.
Even Lenderama reports on historical rate changes in your weekly market updates. You guys reported that rates were up a quarter point last week; what does that mean?
The ubiquity of (recent) rate information in the media is a clue to lenders of the enormous demand for that information amongst consumers. Now, I fully understand that trying to explain the utility of recent rate info to an L/O is like trying to explain the utility of a Zestimate to a Realtor but the consumer interest in this information is undeniable and should be an important insight into how borrowers approach loan shopping. Like home shoppers, loan shoppers start by doing research, then they choose a trusted service provider and then they select a product. L/O’s typically deal with only the serious borrowers who are in those last two phases and so battle to understand what a consumer is doing during the research phase. Likewise, consumers are increasingly choosing to do their research before they bother professionals. It’s in this research phase that tools like Zillow’s rate explorer plays a role and satisfying this research requirement is critical to optimizing the interaction between lenders and borrowers because it separates serious borrowers from window shoppers …
And so this tool, as pretty as it is, actually serves two very intentional purposes on Zillow ….
1) It’s a great way to market ZMM to borrowers who don’t yet know they can get a quote on Zillow but more importantly,
2) It satisfies a borrower’s curiosity during their research phase which means that borrowers who aren’t ready to select a service provider are less likely to bother our lenders.
41% of ZMM borrowers say they’ve contacted a lender via the site. We’re VERY happy with that result and so are our lenders but we’re continuing to focus on improving that conversion rate.
The rate explorer should yield improved conversion rates for lenders on Zillow and more instant gratification for borrowers who are not yet ready to apply for a loan.
We all know you can’t take historical rates to the bank and consumers, for the most part, get that but rates are a starting point for most borrowers’ research and so they play an important and relevant role in the mortgage shopping experience.
David, the market information provided on lenderama is for the benefit of loan originators, not consumers. Those LO’s can then apply that market data to an individual borrower’s case.
If it’s any consolation, I hold the newspaper’s rates quote information with an equally low opinion. But in your case, I’m holding you to a higher standard because you already were smart enough to build a platform that accommodated the variable’s involved in providing accurate data to a consumer.
Any good loan officer knows not to answer the question, “where are rates at” without getting more information from the borrower. The question can’t be answered responsibly until then.
Your parameters are either too wide, or too narrow. You’ve qualified the consumer just enough to make them think the rate might apply to them. When most of the time, it won’t.
It’s true that some consumers will misinterpret this information in a bad way, but I think that most people understand that the rate they are getting is customized to their situation. Thus, assuming there are enough participants to get decent averages, then I think it’s nice to know where your rate quote stands in comparison to other peoples rates.
I know I’m going to sound like a politician when I say this, but I can see both sides of it:
1. Todd, I like you, dislike rate quotes that show up in the paper. They are out of date and irrelevant by the time they show up.
2. On the other hand, the rates that show up on Zillow are supposedly (right David?) accurate up to the most recent minute and do provide some details so that if a talented professional loan officer gets to talk to a customer, they can explain why the quote is different (due to cashout or whatever).
Is it a perfect system? Nope. Do I like it better than what is in the papers? Yep. It’s merely an indicator of the overall direction of rates, not a quote getting tool.
David – While I haven’t converted any deals yet, I have been pleased with the initial response I’ve gotten to the quotes I’ve put in. Keep up the good work.
Tom Vanderwell
A very good Statistical presentation of data, through which one can understand better… http://www.sherwoodsproperty.in