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| Zillow Go Sit in the Corner |
Millions use Zillow to search for home listings and real
estate valuations but Zillow doesn’t care if their listings are incorrect or
two years old. Zillow profits from selling leads and advertisements, not on
providing consumers information.
Now Zillow the online aggregator of Real Estate old and
outdated information has found new pockets for revenue source. Before 2009 it
was the Title Representatives paying referral fees for leads, or gifts to
encourage business from Real Estate agents. That is gone. Now after reforms Title
Reps offer a ten dollar plastic or paper item with their company logo.
Zillow sales agents in the Irvine and Seattle offices push
a scam on lenders and consumers. Here is how it works:
Real Estate Agents need leads. Realtors want to be seen on
Zillow. To be ranked high (visible first) on Zillow one must pay for
advertisements. Even the reviews and ratings of agents on zillow.com are known
in the industry to be fakes. Real Estate business is highly competitive and the
market has been tough. Most agents can’t afford the $200- 500 per zip code monthly
fees to be ranked.
Sales staff of Zillow in Irvine and Seattle pitch to real
estate agents that they can team up with a lender and “split” the cost of the
advertisement (wink wink). The Real Estate agent invites every lender to be
their partner in Zillow ads. To the ears of a hungry loan officer who needs
leads this sounds great.
A discussion begins about what area, zip code, and monthly
costs are to be listed. Emails and calls from Zillow sales representative and the
Realtor instruct the lender they must make the first payment directly to the
Realtor. Lender goes ahead and writes a check to the Realtor and gives credit
card or bank account routing number and account number to Zillow sales person
to be billed monthly going forward. Savvy Realtors hit up many lenders offering
a variety of locations to potential lending partners.
The problem is: After a month or so: no, none, zero leads
and no business develops from the partnership. Zillow leads are not loyal
buyers. Zillow provides wrong emails, wrong phone numbers that customers
entered into Zillow’s sign up. Zillow customers don’t want to be hounded with
phone calls and emails so they provide wrong number or an email they never
open. The lender begins to complain and checks around to discover they are
paying not half but one hundred percent of advertising that features the Realtor
at the top left of the page but buries the lender scrolled down to a dungeon
where no consumer will ever read.
Why does the consumer care?
Some agents steer business to their lender of choice, as in
the one who pays the most advertisements for them. They put the lender in the
counteroffer as “must cross approval with my lender at imortgage.” Borrower is
forced to apply with the Listing agent’s lender. Buyer’s agent plays along to
close the deal. Listing agent’s lender is never the cheapest or best choice. I
have seen five transactions this month where listing agent put their lender in
the forced cross approval position. The lender first offers verbally unbelievable
rates, tells scare tactic tales, and in the end closes with a higher rate.
Borrowers pay for that advertisement that
the Lender ran with the agent. The Borrower pays in the form of hidden overage, higher rates and fees. It is a scam.
Zillow has drawn more real estate consumers since 2004 to
their site. They have grown the business to a profitable stock. American real
estate consumers want information to find bargains and deals. New platforms are
arising that compete with Zillow. I have mobile software that offers Consumers
access the MLS in real time rather than Zillow’s old listings and errors. There
are nine new contenders for online Real Estate shopping, and more in beta
trials.
Is Richard Cordray is investigating Zillow’s advertising
practices? The Consumer Financial Protection Bureau
takes its job seriously to protect individuals from unfair business practices.
Zillow and its media staff made no comment or
response to my request for their take on this story.