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Tag: Zillow (page 1 of 1)

April 15, 2008

A Bourse is a Bourse and Zillow Mortgage is a Marketplace and Never the Twain Shall Meet

by

Real Estate Renaissance Man

Author website

Bourse is a funny word isn’t it?  What exactly does it mean and why do people keep referring to the Zillow Mortgage Marketplace as a Bourse?

Bourse: \ˈburs\ Function: noun
Etymology: Middle French, literally, purse, from Medieval Latin bursa — more at purse
Date: 1597
1: exchange 5a; specifically : a European stock exchange
2: a sale of numismatic or philatelic items on tables (as at a convention)

Wikipedia equates a bourse more generally to a stock exchange.  This seems to be the connotation meant when Zillow Mortgage Marketplace is referred to as a Bourse: an open marketplace where pricing is transparent.

Hogwash… or more accurately: Pork Bellies.

I was an options trader on the floor of the Chicago Board Options Exchange.  That means I stood in a pit with other traders and made the market for various options on various stocks.  (I reiterate this to make clear my bona fides).  When a broker (representing “the public”) came into the pit and yelled out an option strike, my job was to have the best bid/ask and be FIRST.  If I accomplished both goals, I got to do the trade.  If someone else was tighter or faster… he/she got to do the trade.  This is the most transparent, open market type of bourse that exists.  How does Zillow Mortgage Marketplace compare to this?  Not even close.

There are more than a few discrepancies, but let me cut to the chase: In a transparent exchange, whether it be a pure “open market”, “open out-cry” system like in Chicago or the “license to steal” that goes on at the New York Stock Exchange, one thing remains true: the underlying commodity is fungible.  One share of IBM stock is interchangeable with another share of IBM stock.  One call option is interchangeable with its mirror strike and expiration date call option for the same underlying equity.  Its nature does not change based on who buys them or who sells them.  This is a bourse.

MORTGAGE IS MORE FUNGUS THAN FUNGIBLE
Now you might say that all 30 year fixed rate loans are fungible, but they are not.  A lot more information must be presented before claiming two such loans interchangeable.  Read more

April 4, 2008

Zillow Mortgage: I’m Still Looking for the Yellow Brick Road

by

Real Estate Renaissance Man

Author website

There sure have been a lot of posts recently regarding Zillow Mortgage Marketplace.  Greg Swann gave us a pre-opening preview here, the advertising aspect here, and the capitalist and cookie aspects here and here.  Brian Brady takes a “the last shall be first” attitude here and presents Zillow Mortgage as online dating here (this is the Great and Powerful Oz so, trust me, he ties it together).  I have been following this closely and am, in fact, one of the “approved” lenders on Zillow (I still pay many of the bills originating).  But, in my search for the Emerald City of Transparency, I am still looking for the yellow brick road.

Before commenting on transparency and the great Zillow experiment, let’s quickly dispense with the true purpose of Zillow Mortgage; it was made clear two days ago by Greg Swann when he wrote:

What this means is that Zillow will be able to deliver highly-targeted advertising to its users, zeroing in on products and services that would be most appealing to that user’s sex, age, income and other demographic characteristics. This by itself will make Zillow extremely profitable to advertisers, who seek assurance that their promotional efforts are aimed at the right prospects.

Despite the conclusion one reaches when we “follow the money”, there is still an important tool being implemented here and I hoped it would be a step down the yellow brick road, but it is instead only a blueprint.   I am talking about the consumer’s ability to rank the originator.  The most common comparison made is to Ebay, but here is the problem with that comparison.  Ebay works because both parties have a horse in the race.  They are both interested in performing some transaction and can be judged for their behavior.  Not so with Zillow Mortgage.  The originator has an interest, she, in fact, has a couple of interests: creating business, protecting reputation, creating a raving fan for future referrals and even, possibly, the noble interest of helping others.  How much of that can be said for the potential borrower?  If these leads are anything like the standard internet lead, you are Read more

March 8, 2008

Zillow creates the end of the world as we know it, and I feel fine

by

Rust Belt Realtor

Author website

Perhaps it’s cabin fever; Dayton is dealing with a late winter blizzard. The city is shut down giving me plenty of time to put on my own little version of a big-thinking cap and ponder away the what-ifs. Call me foolish but today, with a fresh cup of coffee at my side, I’m taking on the subject of repealing real estate licensing laws. Oh my. First things first: I’ve never read Ayn Rand and I don’t study the finer points of Capitalism. I truly love freedom, but I don’t philosophize about it. Now that we have that out of the way…

Let’s do a little time traveling. Step into the Way Back Machine and return to that point in time when you decided that real estate is what you wanted to do with your life. Do you remember that moment? You want to sell real estate. Forget what you know now and concentrate; remember then? You want to sell real estate. Consider what would have happened if there was no licensing. How would you have gone about breaking into the business? Don’t tell me you would have simply hung up a sign, c’mon, you know you wouldn’t get hired! Really think about this a moment- what would you have done?

Is it reasonable to think that you would have spoken to someone who was already in the business? Would you have picked just anyone in the business, or would you have carefully considered the reputations, the business models, the success rates of different brokerages? I know we wouldn’t have brokerages the way they exist today, but for our purposes, we’ll stick with that terminology. So. Would you have looked- really looked- at the other agents working at that brokerage? Would you have sought out past clients to get their opinions and comments?

Use your imagination and stay with me here. This is how you are going to feed your family. What are you going to do to make sure that you can put ramen noodles on the table? What if you want an occasional steak? You are working where you live, or in close Read more

March 7, 2008

Zillow Nation? Zeelocation?

by

Real Estate Broker

Author website

As I wrote about just a couple of weeks ago, Zillow and other online players have an opportunity to do something incredibly different as the national/local problem begs to be resolved. With the new Zillow announcement regarding mortgage connections, the network gets closer to realization of true partnerships. I believe, and I might be wrong, that Zillow is testing the waters — mortgages are a safer micro-experiment. It’s not that Zillow is creating tough criteria and selecting the best to recommend, but they are establishing criteria.

A couple of more steps and you might have something like this:

Zillow announces today it’s new Zeelocation Program. What Zillow will be doing is inviting RE professionals from around the country to join a partnership in an attempt to strengthen its online efforts to provide consumers with cutting-edge home searching experiences, and begin solving the problems of localism, personalization and context.

What does this mean? Well, the main home search experience for consumers will be unchanged. Home shoppers and home sellers still have free access to listings and all the useful functions Zillow has to offer. However, for those home-buyers who are more seriously and immediately looking for a home and who want reliable local information, Zillow will be creating what is called The Zeelocation Program. Consumers will pay a $15.00 monthly subscription fee for access to a list of RE professionals in the area of the consumer’s interest. These professionals have been vetted by Zillow and meet strict requirements for inclusion in the program. RE brokers, Mortgage brokers, RE attorneys, inspectors, etc.  from all areas of country, after meeting the criteria for acceptance, and after paying the yearly fee that Zillow charges for acceptance, will be local partners with Zillow and will be offered to consumers who have subscribed to the program.

RE professionals will be required to follow strict guidelines dealing with consumers in the Zeelocation program – for instance, all forms of spamming are a violation of the program’s guideline and can cause the RE pro to be dropped from the program. Consumers who subscribe to the program will be given a list of local RE pros along with contact information Read more

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