Back at the end of August, exactly one post ago, I wrote of Googles pending entrance into the mortgage lead business.
Today Matt Carter at Inman News expounds on Googles 'AdveRateQuote' platform for the mortgage industry. Apparently they've partnered with pricing engines and lead generation providers to provide a better overall Search experience for the mortgage shopping consumer as well as a potentially better ROI (via higher conversion ratios) for the paying advertiser compared to a traditional AdWord campaign.
Google stomps into Zillow Mortgage Marketplace's sandbox by offering an anonymous contact system between the mortgage professional and the consumer until the consumer is ready to formally engage. ZMM is far more information intensive and polished but this is definitely a shot into their bow.
Who does this potentially pinch the most? The maligned and molested Mortgage Broker...their main value proposition was offering consumers access to choice, this same access is becoming more and more available by the day. Mortgage Brokers have been on the unprotected endangered species list for about 6 months now, and hunting season has only just begun.
There is still alot to be desired when it comes to accurate mortgage qualification under this ad based system. Its a sheer numbers play, doing little to improve the accuracy and efficacy of the mortgage qualification process. The results are gross estimates based on generalized information, which often leads to confusion on the consumers behalf. Mortgage professionals can still manipulate the data being displayed to their liking...but cleaning up the quagmire of mortgage qualification isn't Googles mission. Perpetuating greater ad spending is. To this point they're likely to create enough in new revenues to buy another small island, complete with private jet service for Sergey and Larry.
At the end of the day Google is building a bigger, badder, better funnel for comparison based products and services...like mortgages. Its a win for Google if advertisers increase their current spend and/or more playas come to the ball. Its a win because they don't have to deviate from their business model and risk alienating current users.
Reading between the lines a bit: I wonder what Google will do with the valuable mortgage data they stand to collect from the participating lenders? What happens when you cross pollinate hyper local mortgage data (yes mortgage rates and programs are very local in nature) with its real estate counterparts? Hmmmm...
Also read:
Originally posted at TheXBroker on 1/19/10
I agree, I doubt that Googles motivation is to aid the consumer. There are too many intangibles involved in the mortgage selection process for Google to truly be helpful. There is so much more than rates to consider.
These people offering rate quotes aren't in it for the consumer... they are in it for the money.
Will likely confuse the consumer even more. Which is only good for the honest professional loan officers. ;-)
Nice to read you on the rain.
Will need to look into this. To be honest while I like the ZMM place idea I have a bad distaste for customer service and sales
Jeff, pretty soon my toothbrush will be made by Google and allow me to search the Internet! It's actually getting scary! Thanks for the good analysis!
Very interesting indeed maybe they will challenge the MLS and change that because no offense ours is a piece of crap and someone needs to design something better.
We shall see what this does. All in all this business is still word of mouth.
Love Jeanean's comment. Me, I wonder how it will pan out. I hope it doesn't screw too much with how people find my website/blog etc. I tend to agree with Kevin about word of mouth. And if Google's system is anything like LendingTree / LowerMyBills / GetSmart etc., then it's just a new name and I'll certainly win more times then not being face-to-face as well as having Realtors refer me.
Jeff, The if mortgage brokers aregoing grow stronger instead of become extinct, they need to adapt and figure out better ways to take advantage of these situations. In 1995 real estate brokers also thought they were going to experience the same fate to befall the travel industry. Well, most of us are still around, but only because we adapted.
Thanks for the interesting post. It will be interesting to see how this plays out.
I suppose we could say the same about anything advertised online.
"anonymous contact system" Is this the new marketing platform for the real estate business? Seems that way.
In the name of creating a "connection", or "engaging the customer" we are willing spill our guts. Consumers, however, can remain anonymous, as they become more and more confused. (Trulia is a great example)
Do you ever wonder why other professions don't spill their guts online???? I do.
Getting a mortgage is not like buying a blender, but you would think so.
I have no problem with the information being out there for people to absorb. When they are ready to "engage" I believe they should not be allowed to remain "anonymous".
Jeff,
Interesting. Google seems to have a taste for every industry, don't they? Thanks for the post! I enjoyed reading it.
www.GarrigusRealEstate.com
Interesting! I am very excited about the Google leads. What do we do when we want information? We GOOGLE it!
Democracy and capitalism at work equals a messy, chaotic, but creative world. We will look back on the old days when Google was just revolutionizing search. The 800 pound gorilla is on a steroid cycle.
We are still in a people business. My whole problem with the new HUD1 and the "shopping" option for the customer. The customer doesn't know enough about loan pricing to even ask intelligent questions. For instance, lenders can still use one day of short interest for escrows and one month of taxes to make it appear they are cheaper for total cash to close. Of course, once the buyer has actually selected them, the real numbers will have to be disclosed, but how many buyers do you know who actually walk when they find out it is more? It's the same for looking a houses online. I once had a buyer ask me who took our photos because whoever it was, they could make a sow's ear look like a silk purse! Happy serving and selling in 2009!
kp
Thanks for the information!
Mortgage Brokers have been on the unprotected endangered species list for about 6 months now, and hunting season has only just begun.
Quite the opposite, Jeff. Until Google finds a way to present to underwriters, secondary marketing participants, and insuring agencies how to read 89 pages of corporate and personal income taxes, the independent mortgage broker willl always dominate the most profitable piece of our business. If anything, this is the best time to be a mortgage broker.
Now...will GOOGLE make things difficult for the retail mortgage sales representatives? I think so
Thanks for all the great comments...
Brian- You know im a huge advocate for the Mortgage Broker, alas I fear that Banks, Bankers and their legislative committees will stomp out this sector of the industry...or at least make it very difficult to practice w/o jumping through more hoops than a basketball. So, while Google doesn't help their plight and in fact disintermediates one of the Brokers core value propositions (access to choice), this rollout isn't an industry killer...but it does further change the game.
To your point, I think Google will make things more difficult for the sales rep who reps a bank that doesnt offer competitive rates and terms for a consumers specific situation. As a 680, purchase money, SFR, 70% LTV etc borrower looking for a 5 year ARM may find a far better deal at ABC Lender rather that XYZ Lender. In the alternative, ABC Lender may offer a better deal than XYZ Lender for the same borrower at 80% LTV...or some such variable.
Again, Google is just positioning itself at the top of a lucrative lead funnel- dressed up as more effective, engaging advertising...They're not interested in lead gen or underwriting loans, they're quite happy to remain in their well proven biz-model, collecting incremental $$ from mortgage professionals while allowing them to go about their business.
For those who compare the real estate industry to its mortgage counterpart, they're just not the same. Houses aren't a commodity, mortgages- specifically interest rates- are...and thus its primed for further disintermediation above and beyond what a real estate agent is likely to experience.
Banks, Bankers and their legislative committees will stomp out this sector of the industry...or at least make it very difficult to practice w/o jumping through more hoops than a basketball.
That's been the conventional fear for the past two years and, make no mistake about it, they've tried. They've tried and failed. How do I know they failed? They're back to courting brokers again.
If we could make lending more accessible, with rigidly defined guidelines and strict adherence to those guidelines, the Google proposition would work....but then we'd reduce choices further from the limited options available today. This meltdown couldn't have come at a worse time for the consumer. Just when we could have reduced costs to them, banks made it tougher.
If consumers are willing to properly educate themselves, read and comprehend the guidelines, adhere to the letter of those guidelines when documenting their income and assets, and stay on hold on the phone, to clarify that documentation to an underwriter, we can eliminate the need for mortgage brokers.
PS: As always, well written. Google could seriously grab the market share if they "pre-qualified" borrowers with verified credit scores and "verified" monthly expenses. Can you imagine what they could charge for that data? I suggested that to the Zillow folks, two years ago but it fell on deaf ears because of the desire for anonymity
PPS: To Janet's point:
I have no problem with the information being out there for people to absorb. When they are ready to "engage" I believe they should not be allowed to remain "anonymous".
I think Zillow or Google could REALLY improve the search/shopping experience (and dramatically reduce costs) by removing the cloak of anonymity. If you had a vetted consumer, shopping for a mortgage loan, the bidding for his business would be more robust
PPPS:Houses aren't a commodity, mortgages- specifically interest rates- are...and thus its primed for further disintermediation above and beyond what a real estate agent is likely to experience.
If that were true, why do consumers find it harder to secure financing than they do to purchase a home?
Agreed and points well taken...I sometimes use hyperbole, you'll have to excuse me :) Extinction was a little much...
Mass attrition caused in part by technology and in fact by economic tsunamis, is probably a more accurate term. Those relative few Brokers that adapted, adopted and survived will enjoy the fruits of their professional labor. Darwin economics...
'I suggested that to the Zillow folks, two years ago but it fell on deaf ears because of the desire for anonymity'
Since were link droppin:
http://thexbroker.com/2008/04/05/zillows-mortgage-community-on-the-cusp-of-an-anonymous-transparent-credit-and-personal-information-exchange-between-mortgage-professionals-and-consumer-to-create-a-highly-trusted-mortgage-transactio/
'If that were true, why do consumers find it harder to secure financing than they do to purchase a home?'
Im not sure I follow you here...purchasing a home and securing financing are intimately tied to one another, outside of bagging a Whale aka Cash Buyer. Even someone as utopian as I am cannot imagine buying a home without a real estate professional involved...primarily to physically show the property. Most anything else is simply data that can be exchanged electronically. NAR will see to a Realtors existence at the near center of a real estate transaction through the breadth and depth of their power, especially into the political arena as the 3rd largest trade organization.
The mortgage industry has no unified voice and no weight...Its like brothers, sisters and cousins stabbing each other, with different sets of rules for brokers, bankers and lenders. It's ridiculous, funny and sad. Greed is still apparently good.
Im getting all tangental...
Interesting post and answers from the forum. Brian was correct in most of what he said, but new laws and licensing requirements required of brokers definitely places them in the cross-hairs.
Really unfortunate that the loan broker is being made a scape goat when the real issues started with those getting the bailouts last year, and their connections on Wall Street and in DC with our elected officials. I saw this coming more than five years ago, but everyone in my broker's office thought I was nuts.
All in all, it is going to be an interesting year.
Too bad we can't hold our elected officials to the same scrutiny.
It will also be interesting to see how the Google model progresses.
Thanks for the post.
I was waiting for a blog update from you. I'm interested to check this out. The power of the web, and companies like good are just unbelievable. I've been reading about their new format to create more income (left side/ride side). Small Island and Jet sounds nice....when do I get mine lol.
Google also has a lead generation contact form in beta for their google adwords. That seems geared towards mortgage and real estate professionals. Unfortunately, Google acts as the middle man of that too. The advertiser can only contact the lead through a Google phone number and pin number... probably trying to push Google voice.
Lot's of rumors about Google + Real estate lately
Banks just have a better lobby than brokers do. Honest brokers are better for the consumer IMHO. It is Darwinian out here.
I must be missing something. Don't brokers have equal access to the loan pricing engines that integrate with Google's AdveRateQuote? For instance, any broker can sign up with Mortech Marksman and they're integrated with AdveRateQuote. Isn't Google just creating a margin war between banks, correspondents and brokers? Brokers have always fared pretty well in that arena. Am I missing something Jeff?
P.S. Comment number 6 totally cracked me up but be careful what you ask for because it might be exactly what you get. Google is looking to buy Trulia and where things go from there, nobody knows.
We gotta think about utopia if we are to execute any meaningful change, Jeff.
The mortgage industry has no unified voice and no weight...Its like brothers, sisters and cousins stabbing each other, with different sets of rules for brokers, bankers and lenders. It's ridiculous, funny and sad. Greed is still apparently good.
Sure we do; the NAR. Seriously, NAR and the Gov't has done more harm to the public than good by enacting silly housing policies at the expense of the bank shareholders taxpayers.
Our industry needs less special interests and more people who tend to their shops.
Thanks for the info. Is anything that Google will not lead the world in still out there?
Does any one not think that Google wants to control the world?
Mortgage brokers are definitely under fire, and this is just one more shot at them. However, many people don't seem to realize the value of mortgage brokers who take the time to eductate their clients, inform them of the different loans and why one might suit them better than another while also shoppoing for the best rates among competing lenders.
I think many people believe that all mortgage lenders do is shop rate. Although this is important, it is only the tip of the iceberg.
Google is losing serious traction to Bing. lol.
I'll just have to say it again... I HATE GOOGLE! I love them for their search engines, and I love it when I get leads from my SEO with them, but I hate what they did to YouTube, and I hate the way they bully everyone else. I have boycotted all but the few services I can't live without!
I think this could go either way, people will trust enough to go do it online or the person to person aspect will trump it.
Good to know, thanks Jeff
This is just another way for Google to bring in more advertising revenue nothing more nothing less. As mortgage rates change quickly I will be interesting to see how they deal with that issue.
Interesting post + the comments below. I am not anti-Google. But I hate the anomymity of the web that allows consumers to shop till they want to engage. I wish we could capture the data earlier. I know, web buyers spend 8-11 months maybe shopping online for houses before they engage a realtor. I'd love to be the one sending them updates for 8 months until they're ready.
Interesting post + the comments below. I am not anti-Google. But I hate the anomymity of the web that allows consumers to shop till they want to engage. I wish we could capture the data earlier. I know, web buyers spend 8-11 months maybe shopping online for houses before they engage a realtor. I'd love to be the one sending them updates for 8 months until they're ready.
At the very least it will take some of the market from Brokers .Mtg .shoppers will use google to shop the rate and than go to there bank .Thus banks should not be happy about this either in the long run !
If google directly or indirectly made leads from mtg funnel available to realtors the next step would be a forgone conclusion . Who would be to blame us or GOOGLE ?
Perhaps its time for a Realtors Union .? LOL
Having a good mtg broker is vital to my business model !
Scarey it is when I read comments like # 6
There is no try just GOOGLE .
Jim Straughan
Sales Representative
Realty Executives Elite Ltd.Brokerage
519 649 6900
voice 519 641 4355
Email jim@straughan.ca
London & Middlesex Real Estate
www.straughan.ca
Even someone as utopian as I am cannot imagine buying a home without a real estate professional involved...primarily to physically show the property. Most anything else is simply data that can be exchanged electronically
You honestly believe that the role of the real estate agent is at less risk than the mortgage professional because Realtors must physically "show the property?"
I don't.
You could take an entire tour of a property by sitting in front of a screen. You could research everything you need to know (assuming you were willing) on the Internet. You could arrange to see the property on selected days it was held open and hosted by someone (probably a bank official).
Gotta agree with Brian when he said this:
If consumers are willing to properly educate themselves, read and comprehend the guidelines, adhere to the letter of those guidelines when documenting their income and assets, and stay on hold on the phone, to clarify that documentation to an underwriter, we can eliminate the need for mortgage brokers.
Do it yourself mortgages are much more unlikely than do it yourself real estate transactions. Even if we are back stabbing cousins with no clear voice.
I think the Internet is more likely to put Realtors out of business first.
Any agents who are letting their clients shop in the online google world for financing are potentially throwing their paycheck down the toilet and are quite frankly a little mad!. In this current market with regulatory and underwriting rules changing everyday, a buyer needs the assistance of an experienced mortgage professional/broker to guide them through the loan process. If you shop online you will end up with a low cost loan no doubt, but understand that the majority of the time you will get terrible service and will end up with some rookie who does not care about your paycheck. Did you know the majority of loan officers at Ditech are college students with a script earning $12 an hour. Sure go ahead and have your buyers work with them and see what happens your transaction. You cannot underestimate the huge benefit you can have by having a trusted mortgage pro take care of your clients who will have your best interests. Many times i see the same old faces harping on about mortgage brokers etc, but these are the same folks that do not realize the value in a solid relationship with a mortgage broker/loan officer, the tops agents have top mortgage professionals take care of all their clients and when they refer them the business they do not let them shop online in the unknown world of mortgages for a cheaper loan. With top service comes a cost.
Michael
More information is always good, of course at the end of the day it will all come down to people again. I suspect there will be a lot of bait and switch as consumers look for the absolute best rate.
I like #27 and think he is pretty much on the money it was just too damn easy to make killer money and we all allowed it to get in this mess
between adwords and this I wonder how google plans to keep all sides of the transactions paying for thier search capabilities. Will potential clietns just use this option or still be driven to PPC sites that give google the big bucks. As always with this industry "the only constant is change"
Time will tell if this is a value proposition for the consumer. I doubt it.
Very interesting thoughts! I just had a client have to pay for a lot of delays because they had shopped rate instead of quality for a mortgage - a big company with no person attached, vs. a personal broker to care and watch the transaction through to the end..... In the end, I believe it cost more.
Google has their hands into anything dealing with datamining and will continue in the face of ZMM. Mortgage brokers will be just like agents in the sense that more information will be pushed to consumer and they will need to show their value proposition.
I have to agree with #43 -- only time will tell how this will support consumers. My guess is that this will just be another online tool that people use for leads.
It may help the 740 credit score, 70 LTV, with great income and substantial reserves find the absolute cheapest option for their new loan. Beyond that, I don't see it going to far.