zillow.com, the US based real estate marketplace, has changed the pricing model in its mortgage marketplace, introducing “market-based pricing” for customer-initiated contacts.
The mortgage marketplace allows borrowers to submit requests for loans and then review lenders’ quotes. Under the new pricing model, lenders will continue to be able to submit unlimited loan quotes for free, but will have to pay a fee when borrowers email or call them regarding their quotes.
zillow.com says the market will determine the price for each contact, but estimates the cost will be under $100, pointing out that Google clicks for mortgage keywords usually range from $7-$25, and that zillow.com’s contacts “should be significantly more valuable”. The new pricing model is being rolled out in four stages over the next few months.
A post by community director David Gibbons on zillow.com’s advice forum explained the reason behind the pricing changes:
“When we launched the marketplace in April 2008, it was an experiment to see if we could build a service that successfully connected borrowers with lenders. The results exceeded our wildest expectations: borrowers are submitting an average of 50,000 loan requests per month, and thousands of lenders are helping these borrowers close loans.
While we are thrilled with the outcome, it has been a resource cost to build this vibrant service. In order to continue to grow the marketplace, make it better for consumers, and create more value for lenders, we need to continue to invest in the business.”
The changes have attracted some negative responses on zillow.com, particularly in terms of the exact cost of contacts and the removal of lenders’ contact information in favour of the phone number zillow.com uses to track contacts.
Spencer Rascoff, chief operating officer of zilllow.com, responded to techcrunch.com’s report on the change, further detailing how the cost of contacts will be decided:
“The pricing of a CIC [customer-initiated contact] will be determined by the market, much like the pricing of a keyword in Google Adwords is determined by the market. Pricing will range from $0 to $100. So for example, if a particular refi Loan Request has terrific credit and a lot of equity in the home, a lot of lenders will want to quote for it so the price of a contact from that borrower will be quite high.
On the other hand, a Loan Request for a purchase loan with $0 down on a non-conforming loan with bad credit is less desirable to lenders so the market will price that contact much lower, maybe even at $0. One additional benefit of starting to charge for CICs is that the quotes in the marketplace will become even more accurate and complete because lenders won’t want to receive contacts unless they can close the loan on the terms they laid out in their initial loan quote.”