Addressing the Zillow problem

Bit by bit, Zillow is encroaching on the mortgage lending space, and it’s thought that other companies like Amazon and Redfin are sure to follow.

At the Colorado Mortgage Lenders Association (CMLA) recent Mortgage Expo, Steve Polston, president and CEO of HomeScout / Home Buyers Marketing (HBM) had a few things to say about the potential impact of these companies moving in on the mortgage market, what the companies really want, and how realtors and originators can amp up the fight against their encroachment on the mortgage space.

Lenders recognize that buyers want convenience and quickness and the option of conducting at least part of the home buying process online, but Polston said that lenders haven’t really spent too much time talking about how consumer’s expectations have shifted, and how they’ve done so largely due to Amazon’s model and dominance. With Amazon, customers can look, click, buy, and have something delivered—and Zillow wants to mimic that experience, to consolidate and move everything, from looking to buying to funding, into one environment.

There are some fractures in the veneer, one of which is the inaccuracy of listings and home values. Rather than that being a true weakness, however, Polston suspects that’s by design.

“If you’re in the lead generation business, and you have a really hot listing and it’s generated 500 hits in a week that they can sell leads on, when it sells, why would they take that down? There are algorithms watching the properties that are driving the most traffic and they’ll leave them up,” he said.

Another element that’s increasingly making consumers uncomfortable is that Zillow gathers a lot of information—and it’s not all related to property.

“When you’re on Zillow, if you haven’t logged out, they know where you’re shopping, whether you’re at WalMart or Nordstrom, they know whether you’re at a synagogue on Saturday, a church on Sunday, or if you’re sleeping in, they know if your kids play soccer, basketball, or football, because they can track where you’re at,” he said.

This lays the groundwork for selling that data to other interested parties—such as Amazon. Amazon has changed consumer expectations, but whether or not they want to be in the mortgage industry is still a big question mark. What they do well, however, is utilize consumer data. The possibility of obtaining access to massive amounts of data on homebuyers who are in the market for a number of household and electronic consumer goods, and the possibilities for that data, is staggering.

With so many more people coming to the table, how can mortgage originators and their realtor partners hold onto their shares of the pie?

“One of the secrets for you keeping your pie is going to be your customer experience. It won’t be pricing (there will be a few, you’re always going to have them) but most of it will be because of your customer experience. And you have to ask your realtors as a customer, ‘what experience do you want for yourself and for your customers?’”

At HBM, they form what’s referred to as “the triangle” with the originator, the realtor, and the consumer all connected around real estate data in the middle. The idea is that if all parties see each other as a part of a team both in communication and effort, each member is less likely to leave the team for greener pastures.

“I almost describe the relationship as, ‘we’re going to do this together.’ And one of the reasons that we do that is, it’s harder to cheat on two people than it is on one.”

Polston said that originators and realtor partners need to work together to first get to the borrower earlier, before the point of sale. Then, the key is keeping them incubated until they’re ready to buy a home, regardless of how long that incubation period will be.

Coming up with a conversion plan with realtors partners specifically, he said, is the most important thing. Every time an originator meets with a realtor partner, make the consumer experience part of the conversation and discuss ways to increase conversion, “taking those [leads] that you get and incubating them for the two weeks, two months or two years it takes for them to spend the money. In a fast market, it’s easier. That market has changed a little bit, now we’ve got to hold onto them longer.”

Originators know is that the key to doing this effectively is creative follow-through and database management, which is an area where realtors are admittedly lax. Almost all buyers, even those who fill out online applications, ultimately end up wanting to talk to someone during the transaction.

“People will still want to do business with somebody they see or can talk to and ask questions—if you’re there. If you’re not there, they’ll do it online with somebody else,” Polston said. “The only way to capitalize on that is to . . . have your agents understand that loyalty to you means loyalty to them. It’s that triangle concept, that together we’ll make sure that they don’t slip out of the triangle between us.”