Is Zillow Slowly Phasing Us Out

Not when it's split two ways, then taxed... no. My take-home pay on the Zillow deal that closed was abysmal. Yes, I hope to get referrals... but, no more undercutting for me. I'll leave that to others who don't have to split with anyone. They have a huge advantage. Let's not forget though that Zillow is not to blame, it is the loan officer who feels that a $250 paycheck is better than nothing. While that is true- it IS better than nothing- I feel like reminding them they could make as much working at Home Depot and have less responsibilities. Earn what you are worth.

  The squeeze is definitely from how we use Zillow and the standards we collectively set.  I read the recent events you mentioned and agree that undercutting seems to be the new business model.  That practice will lead to less quality from a new round of "order takers" willing to sit at the computer and engage clients.    

A basic economic principal is at play here....supply and demand.  As of right now, there have been 60,430 loan requests from client, and 337,888 quotes by mortgage pros.  The supply is about 5.6 times more than the demand.  This drives the equilibrium price point down, like it or not, on this market created by Zillow.  Those willing and able are meeting this equilibrium, and even driving it down.  This is exactly what this type of platform does, and clients get great deals, while our margins have fallen. 

Obviously, there are other variables driving this, i.e. a significant decreased in misinformation of clients, but the internet will change many elements of our business.  For me, it seems that my Zillow closing range between .5 and .75 total compensation.  This may be low for most, but volume plays key, as well as the understanding that this is only a supplement to our regular books of business.  Wait until someone comes out with a $500.00 flat fee per loan, regardless of loan amount.

Rob S.

What have all closed? I get confused with all the formualations and equations. Closed versus quoted.. loan sizes, etc.. PS... closed #2 last night...  1 for 88 quotes.. I'll take it and be thankful.. 2/2 for apps and 2/3 for GFE's  (3rd one was actually INV instead of 2nd home)..  Both excellent borrowers and totalled $500K (1 REFI/last night   1 PUR)... office take...150bps.  I do not know of the percentages of closed loans versus quotes of others and thepossible formula, but I do not work or price loans at 50-75bps and never did if that helps in the discussion.

If you are relying on Zillow as your main source of loans, then you have some serious problems ahead.

Don't get me wrong, although I am small and only have to pay myself, I will still not settle for less than nothing.  I will not do a deal for $500, while $500 is $500, it doesn't even make my SUV payment.  I may do a Zillow deal for less than a regular deal, but unless I am making enough to support the hours involved, it's not worth it. 

I will not take .5 on a $96,000 deal, no way no how.  Waste of my time.  When I quote, I have to make at least $1800 on a deal to feel it is worth it. 

Wait until someone comes out with a $500.00 flat fee per loan, regardless of loan amount.   - Good Luck to whomever does that, I see a failed marriage in sight!

One thing is for certain, Zillow is phasing us out, US being the honest brokers.  It's a shame, but it's the truth.

GeorgeD,

I have the utmost respect for you as you 99.9% of the time have something to say that I learn from.  Saying this, I totally disagree with you concerning this thread and your comments on GVD because you really don't know his margins, how he processes a loan and how much he has to give to his investor.  I do as I have talked to him extensively about his office, pricing, fees and what he gives to his company.  You never dialed the phone and asked him.

You really have no right to critisize anyone else's business plan or model.  This is free enterprise, it is America and Capitalism at work.  If GVD wants to do a loan at whatever margins then it is his right to do so.  If you can't generate a profit from his quote, then you can't and why comment?

Zillow isn't sqeazing anyone out of business and creating a thin profit margin for us.  This is a phase that Zillow is going through and if any of us don't like it then don't quote until such phase is over.

Again, nothing GVD, FHA or anyone else who quotes low and can do the loan is doing anything unethical, underhanded, illegal or against Zillow policy.  It only unerves you because you feel that you need to make more of a pfofit from a loan. 

If it is good for the borrower, and the lender can make a profit then isn't that why we are on Zillow?  And, saying this, don't you think that the lender will do more volume through referrals?  Finally, like FHA mentioned, if this is ones only source of business then one is in for a rude awkening when loan requests get less and less and less.

As said from the outset, I have deep respect for you but don't blast another lender for what they can do and you can't or won't.

"If you are relying on Zillow as your main source of loans" ~ Mazurski -

It is not a matter of main source or not, but rather the idea that some will "encourage' the borrower to leave their current local broker for a few dollars difference.  Each of us could end up being the local broker being dumped for a Zillow deal.  

We  need to realize that our efforts in our local market and the expenses of local advertising could end up being reviewed here and undercut.   We've developed a local relationship, rceived a good referral and priced a loan well.  Then the borrower decides "I'll just check it at Zillow"  and next thing we see is our loan out the window to someone "guided" by blind Zillow cheerleaders. 

Wayne,

I hear you but that is the price we pay for being in our business.  In one way or another, haven't all business owners faced something like this since Capitalism in a competitive market?

If your LO trusts you'll take care of them, they won't leave you for a few dollars.  I have yet to have a single person take their business elsewhere.  EVER. 

A flat fee could work.... but only for the DIY mortgagors with excellent credit.  Not sure of the structure, but people didn;t think scanning their own stuff at WalMart and Home Depot worked or works, but it is there...  The problem still comes down to the 80/20 rule of fools in our industry along with every other industry including medicine. Very few care about their craft and are more concerned about their check and will do anything and I mean anything to protect the check.  Say, promise, do...  I still see countless mistakes of advice on the threads and poor quotes and slippin' here and slidin's there...  RE firm with rebates have a place just like full service.  1 will not replace the other.  So, using the $500 flat fee  (could be through a crappily priced wholesaler) versus $1800 through a much better-priced wholesaler with red-carpet service.. may be the exact same price to the consumer.. How much does a ROLEX really cost???  $5,000 new.... 10 years later, resell for $4500-$5,000 with box and papers...  $500 for a Bulova or whatever... 10 years later... $5 at a garage sale.. ROLEX on your wrist for 10 years    $5....  We all think it is price price price, but I do not see every one of you buying all of your goods and I mean all of them at WAL-MART..  It's all good and there is a place for all.

It comes down to service, and how well you treat clients too. Let's say to make the numbers work, I have to bring in $3000 in compensation. That's probably double what others who have no splits etc to worry about have to bank on. That basically equates to .125% in rate. Peanuts. If someone prefers my track record and service LOCALLY (I do try to keep it local), then great. They still get a great deal, and it's a win-win. BUT, if they want that $15 extra dollars a month (or $40), then they have all the right in the world to go and get it. I cannot do it for less, but wish I could. That is mostly why I can't seem to compete out here. I am by NO means greedy. Never have been.

I am glad that Zillow is not my only source of leads. I am also glad that mortgages are not my only source of income. Diversify, and don't sell yourself short. If you CAN do it, great. But for people like me, who can't, we just have to hope that our winning smiles win people over.

BTW- I have found that those who are all about the bottom line, and number-crunching to be much less 'referral-happy' than others. One of my most recent purchase clients was not nit-picky at all, and she got a SPECTACULAR deal, she has already sent me a handful of referrals- in just a few short weeks! However, past clients who have nickel and dimed me AND also gotten a spectacular deal, albeit with less fees, or .125% or so better in rate, have referred NO ONE. Not a single one. I'd be curious to see if those that are hoping for heavy referral volume have seen any yet, and if it's more/less than a regular, local customer.

The low fee lender will always do business.  They have been around for years and will be here to stay.  Some are really good, the rest are really bad.

Tammy, I do understand and agree with you.  I won't even quote on a loan for $96,000 unless it was a Heloc and now I won't even quote on that since most investors cut the compensation.

I won't quote of loan requests where I cannot generate a profit, period.  There are tons of loan requests for 150k and lower.  But, I cannot give them the same rate as a loan for 400k because the margin is not there.  Again, I don't quote.  It is that simple.

In states where the norm is 150 to 200k loan requests, then you might see a rogue or two quoting the same rate as a 400k loan, with no points, but who are they kidding?  I see them come and go but they never stay because the market won't let them: they can't make any money with their quotes.  They won't make $500.00--they will make $0 dollars.

Jen,

Cheapskate borrowers don't refer people and don't come back to do business the second time around.  You are right.  But, the borrower who is a bottom-line borrower is not a cheapskate and will give you business again and again.  There is a distinction between the two.

I had a title company that was bottom-lined oriented.  Since 2002 they have given me more than $100 million in loan volume. 

How in the world can Zillow phase us out, that's the government’s job........

With the amount of actual closed loans done on this site (Legitimate) Zillows impact on the mortgage market is non existent

As a consumer and someone not in the mortgage industry I can only relate my personal experience with my current LO.


I try to be as educated as possible and especially when it involves the largest single purchase I will make in my life. Even before I posted in the Zillow forums for the counsel of others in the industry I did a 5 minute search online and could tell that my LO was trying to take me.


I've worked my entire life to maintain an excellent credit score and to keep my finances in order so that when the time comes (now) that it should be a walk in the park to qualify for a loan on my home and then reap the benefits of having an excellent credit history by getting the lowest rate possible and the best deal without too much fuss. This is what I've been working my entire life for right?


To then find out after further investigation that my LO not only stood to make a very healthy profit on my loan but other mortgage professionals found it to be in excess as he was planning on charging me 3% (of $350k) for a peanut butter & jelly sandwich which was infuriating. So the next time you have someone like myself in your office think twice about upgrading your Extra Value Meal to "Biggie Size" at my family's expense.


I'm speaking figuratively and not to anyone specifically on this forum but we are nearly 2 years past 2006 - get with the times. It seems as though a great many mortgage professionals on this message board use Zillow as a way to supplement their existing business. If you treat your customer right everytime and respect them for the professional they are as they do you - then I'd be willing to bet you won't have much to worry about.

So the next time you have someone like myself in your office think twice about upgrading your Extra Value Meal to "Biggie Size" at my family's expense.   -Good thing most of us don't supersize, but most of us won't go skinny size either.  We also have bills to pay and families to feed.

103 on $350K.... no wonder you have feelings that way.  Sorry for you getting hooked up with someone attempting to take advantage of  your situation with him.  It's a very simple business where you take care of your clients and whether or not they come from here or the negihbor across the street... bring your best, price it well and consistently and let the chips fall.  Trying to "specialize" in "A" - "F" lending is really impossible.  Be the best at what you do and if you want to be a turn-n-brun lender, be the best at that.  It's all good.  1PAW,  glad you were able to right the wronging, but a good  majority of people here do not 103 "A" clients... At least the ones on the duscussion boards helping others without pandering.  It's all good.

Tammy - I'd be careful feeling so sorry for yourself.

"We also have bills to pay and families to feed"

Where have I heard that quote time & time again? Oh ya - the used car dealership.

1PAW,

you are correct in your line of thinking as the same "I have a minimum" mentality is in the Seller's side of the RE market as well and they will learn for better or worse what the market will offer. I will tell you this about your previous LO and I take it you did not close with him or her.  Your broker was a bad egg, but not all brokers are bad eggs.  Some attorneys are underhanded, but not all.  Because the housing industry is in such a state of funk and denial, we are not at a bottom until the "fighting" is over.  Many mortgage people believe that FHA will save their pay.. Not true.. Many MTG Brokers took advantage of the "market" running up to overprice their services on suspect loans for sure and pricing greed on the way up.  Some now are offering to assist, for a fee, to help plead a hardship case for the same loan types they put them into.  Yet, why are we not simply finding these companies and individuals and never doing business with them again.  That is how this gets turned for the better.  But we still patronize those same types for.... price and money only.."He's crappy, but he got ME (and me is all I care about) a good deal!..  It's a sad reflection on society in general.  Keep rockin' and thanks for having and maintaining great credit.  More of you will help solve this housing/mortgage problem.

Good one OnePaw....

People making 3 points or .25 points on a deal will phase themselves out not Zillow. Unfortunately it will take a long time since there seems to be an endless supply of LO's right now.

OnePawUp, when you posted your figures in the discussion board, you put the figures the Broker and Coldwell Banker were quoting you. Neither quote had 3 points of profit in there.

Broker was basically 6.375 with 1 orig and coldwell was 6.5% with .375% orig. Rates came down on Friday and in fact, I received several price improvements on saturday. Since you probably got your quotes on thursday, they looked higher than what we were telling you on Friday.

"To then find out after further investigation that my LO not only stood to make a very healthy profit on my loan but other mortgage professionals found it to be in excess as he was planning on charging me 3% (of $350k) for a peanut butter & jelly sandwich which was infuriating."

Most of the rates I saw you were quoted on Zillow were 6.375% and no origination. That is in line with your other quotes that were before the improvement on friday. Telling people some broker was ripping you off is not accurate, based on the figures you posted here.  

Unique...In defense of OnePaw, I think I posted that the broker was making almost 3 on him.  At the time that combined YSP/SRP that I was seeing along with what was being charged up front.

UniqueLoans - how much was my existing LO standing to make then? Would you agree that it was in excess?

I think you post highlights a key problem in your industry - I shouldn't, as an informed consumer, need to be mired in such things as SRP, YSP, the back end, your comissions,  etc.

Give me the best deal the first time.

1 PAW,

Was your exsiting LO from the RE firm or from ZILL?  I am a little lost here.  I remember the contract thread and saw the 2 prices... 1st one was courtesy of ???  2nd was your bank???  Names would help and origin and the venom and tone would subside as we are here to help.

I see my ol bud has popped in to say, hello.  1paw, how are you?

1st one was courtesy of a mortgage broker (a referral to me)

2nd was thru coldwell banker that I received via my pre-approval to make an offer on the property that I am now under contract for.

Greg Darlin,

I am doing absolutely fantastic. In fact - things could not be any better if they tried.

All the Best,

OnePawUp

OnePaw,

I do understand you want the best program the first time.  Pick someone who will help you.  If you are in Cali, GVD will help you.

I do apologize that, at times, lenders appear to be like used car salesmen----not on this site that I have seen.

Everyone deserves to make a profit but not at the other's expense.

Since I am always coming up with corny sayings, please allow another:

"If you sheer a sheep, it is good for the sheep and you get wool for the lefetime of the animal.  But, you can only skin him once."

The point above is obvious.  No matter what the professional is, when one is dealing with the public and their money, wolves and sharks appear.  It is just the nature of man.   Jut stay away from them and deal with soemone who is direct, honest and will not cut corners for you.   Because if they do, another corny but true saying, "If I am going to lie for you I will lie to you." 

Choose someone from Zillow.  You will get a mean, lean loan where everyone wins.

GSD