Zillow Enters The Lead Gen Fray for Mortgages

Well the timing isn’t necessarily that great, but Zillow is trying to throw a further wrench into online lead generation for mortgages by launching what is essentially a “reverse auction” for mortgages.

As described on TechCrunch, “Borrowers submit just the essentials – what type of loan they need, where they’re located, their estimated property value, their credit history, etc – without divulging any of their contact info. Then certified lenders make offers that can be compared side-by-side. It’s up to the borrower to reach out and contact those lenders, not the other way around as it is with services like Lending Tree.”

My first impression thoughts (literally, I am writing this no less than five minutes after reading the story):

1. At first glance, it seems like it gives borrowers more control over the lead gen process for a mortgage. But looks could be deceiving. It may be fairly easy for Zillow to create a system that appears impartial but is very effective at getting users to contact the lender that provides the highest level of monetization for Zillow (e.g., sort results by monetization, ‘feature’ certain lenders, etc).
2. Good for Zillow for coming up with innovative ways to monetize its immense traffic base – it’s about time.
3. As with Prosper, whenever you give consumers more control, there is always the chance that the quality of the consumer data can get skewed. In some respects, a consumer might actually be more honest when filling out a form and expecting to be contacted by lenders, because the last thing most people want is to get totally irrelevant phone calls. I can imagine people continually editing the information they submit to Zillow as a way of trying to get matched with ‘the best rate’ (sort of like the way people try to game Priceline).
4. There’s no doubt that the lead generation experience for mortgage could be improved for consumers. The consumers’ inability to filter their matches prior to getting phone calls is a definite benefit (from a consumer user experience perspective) to the Zillow model.
5. You could argue, however, that giving consumers choice could actually result in poorer results for the consumer. First, because lazy consumers may not do enough due diligence and actually contact multiple vendors. Second, because consumers may be swayed by ‘brand name’ mortgage companies and eschew lesser known lenders who might be able to provide them with better service.
6. Overall, when a major Internet brand like Zillow launches a product like this, it’s worthwhile for everyone in the lead gen space to stand up and pay attention. If successful, it could fundamentally change consumer behavior, for the mortgage industry and eventually for other similar lead generation businesses.