Blog: Check, Check, But Where Are the Balances?


It’s never been easier to buy groceries, get a ride, watch the latest movie, or search for the house of your dreams. E-commerce has radically changed consumer behavior, the way we communicate, and the level of customer service we receive.

Tech or granola purchases, sight-unseen, are fairly safe bets, but have you ever bought a house? It’s not a process to be taken lightly, and deserves proper due diligence, certainly more than clicking “buy” online, to ensure you’re working with professionals you can trust.

This year, Zillow, the largest online real estate marketplace, launched Zillow Offers, which purchases homes directly from buyers, renovates them and sells them through their online platform. They’ve now expanded their portfolio even further with the purchase of Mortgage Lenders of America. What does this mean? Zillow will be able to buy homes and finance buyers of those homes through their mortgage origination company 100 percent online.

I see a business model for real estate marketplaces to merge with loan originators and create a one-stop shopping portal to buy a home. In fact, as a mortgage originator, I advertise on Zillow and use it as a lead generator. I also see, however, the need for traditional real estate and mortgage business models to continue. The current process offers a checks-and-balances system and leads to a competitive marketplace that is more conducive for home buyers and sellers.

Not only is Zillow expanding its home buying and selling process online, it is commoditizing users’ information. Zillow has an agreement with Realogy, the largest broker in the U.S. and parent company to some of the most well-known real estate brands, to automatically list Realogy properties as Zillow-listed properties on the site.

Zillow then charges agents to be a “premier agent” and advertise adjacent to these listings, leading many consumers to believe that they are the agent for the property. When a consumer, curious to find out more, clicks on any of the agents in that adjacent premium advertising space, their information is given to the agent they clicked on, the other agents advertising in the premium area, and the actual listing agent.

The housing industry is a pivotal part of our economy, and it’s imperative that its integrity is protected.

I understand that certain demographics, particularly millennials, prefer digital interaction over phone calls and in-person communication. Zillow’s new model, however, is removing competition from the marketplace and censoring a homebuyer’s complete shopping and purchasing experience.

While I am a fan of online shopping and its conveniences, some of life’s moments are big enough to deserve face-to-face communication and personal relationships. Local mortgage originators and agents intimately know our local real estate markets, and meeting with clients and building relationships allow us to understand buyers’ financial positions today, life changes on the horizon, and goals for the future.

Due to these relationships, we work with our clients to find the right loan products that fit their unique circumstances, not a program dictated by clicks, impressions, ad revenue, and algorithms.

Zillow is an innovative leader in the online real estate marketplace that I respect, but they’re taking steps that will strip competition from the market and remove the power from the consumer. The company’s online market place, when used properly, works well and is mutually beneficial to all parties while keeping the market fair and competitive, but its latest expansion goes too far.

Call me old-school, but while I may want the latest running gear or tablet delivered to me in 24 hours, I want to assess all of my options and talk with and know the person who is helping me make one of the biggest financial decisions of my life.

Andy Elder is principal of Elder Finance Group/First Securities Mortgage Services in Dearborn and Bingham Farms. He is a licensed mortgage professional with nearly two decades of mortgage banking experience. He specializes in a variety of loan options including conventional, Federal Housing Administration (FHA), Veterans Affairs (VA), Jumbo, and United States Department of Agriculture (USDA). He also has extensive expertise in a full suite of construction products, purchase money second mortgages, and portfolio financing.