by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Back in the 19th century, when the stodgy New York Stock Exchange was already ensconced in the lap of luxury, the traders who would one day form the American Stock Exchange were stuck out in the rain.

Literally. Stock brokerages that couldn’t afford a seat on the NYSE instead rented offices on either side of Broad Street near Exchange Place. Clerks hanging out of windows would communicate bid and ask prices by hand signals to the traders working outside on Broad Street. Rain, sleet or snow, the traders effected their exchanges.

Last Summer I poked fun at Zillow.com’s CEO Rich Barton for a vision he had of a 19th century marketplace. This is Barton’s quote:

“I see an old-style marketplace formed, a city market like Pike Place Market. I actually dug up an old photo — Pike Place Market at the turn of the last century. People were gesticulating. People were buying things. People were gossiping. Negotiations were happening. Big billboards were advertising things above the marketplace. That’s the picture I have in my head.”

Give the man his due. I’m thinking Zillow’s Mortgage Marketplace is more like Broad Street than the Pike Place Market, but it definitely is a true bourse — the maximum flow of information between buyers and sellers with the minimum of friction — or even overhead!

I wrote last month that Zillow.com is leading us toward the realization of Capitalism’s promise. Everything we claim as a defect of Capitalism is in fact the confluence of two other systemic defects:

First, a small few people want to behave badly, which fact permits other sleazy people to malign honest traders who are themselves innocent of all wrong-doing.

And second, physical impediments to the flow of information prevent the overwhelming majority of overwhelmingly honest people from distinguishing the innocents from the crooks.

Software systems like Ebay and Zillow’s Mortgage Marketplace mitigate the second defect, leaving the bad actors fewer and fewer places to hide.

The Mortgage Marketplace is a small thing, so far, and, as with everything in the RE.net world, it looks much larger to us than it really is. But consumers — and lenders! — have Read more

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

The other bit of news to come out of Zillow.com is this: The real estate start-up is collecting, deploying and reselling advertising demographics in unique and interesting ways.

The vast quantities of demographic information — income, property values, credit scores — that will be collected in the new Mortgage Marketplace software will be stored in browser “cookies” on the user’s own computer. In other words, Zillow will not be storing this information in its own databases, but will retain control over it by means of software that will be able to access the cookies in future sessions on Zillow.com.

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.

But Zillow is also making these cookies available to other advertising vendors, such as Google’s Adwords system. By this means, other advertisers will be able to deploy the demographic information Zillow is collecting to target their own ads.

Obviously, the reselling of this demographic information is also a profit-center for Zillow.com — reports of whose financial demise may turn out to have been premature.

Technorati Tags: disintermediation, real estate, real estate marketing, technology, Zillow.com

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Seattle-based real estate start-up Zillow.com tonight releases its long-anticipated mortgage lending product. We’ve known for nearly a month that Zillow’s offering would include working loan originators in some fashion. What becomes clear tonight is that Zillow will basically be acting as a hands-off intermediary between mortgage-seeking clients and loan originators.

Consumers using Zillow’s new Mortgage Marketplace will be able to anonymously solicit bids for loans from participating lenders. The consumer will fill out a detailed form disclosing all pertinent financial details.

The form will be submitted anonymously to participating lenders, who will, in their turn, produce quasi-pro-forma loan quotes, submitting them, through Zillow, to the consumer. The consumer will then have the choice to make direct contact with particular lenders to decide whom to do business with.

To a very large degree, the information asymmetry between lender and borrower is done away with, since the loan quote will detail every fee associated with the loan. Moreover, Zillow will be implementing a reputation-management system whereby borrowers will be able to rate their lenders on their performance.

In return, the lenders will receive Zillow’s mortgage leads at no cost.

The new service is expected to come on-line at 9 pm PST tonight. I made screenshots in the product demo teleconference I attended today, but my expectation is that these will be obviated very shortly.

 
Elsewhere: Todd Carpenter, Rich Barton, John Cook, Drew Meyers, TechCrunch, Rhonda Porter, Spencer Rascoff, Joel Burslem, Kevin Boer, Jay Thompson, Rhonda Porter (again), Pat Kitano, Morgan Brown, Trace Richardson.

Technorati Tags: disintermediation, real estate, real estate marketing, technology, Zillow.com