Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
This week the online real estate juggernaut, Zillow, made a major announcement. Zillow disclosed their intent to buy a mortgage lender in Kansas to help expand its real estate services. This was not Zillow’s first venture into becoming more than an online resource site. In April they announced plans to “buy and flip homes” in key metro markets of the U.S. News of the announcement of their venture into mortgage lending caused their stock to plunge nearly 20% in what many investors see as much risk and uncertainty, citing “greater concerns.”
When I first heard the rumors from a friend in the industry before the announcement even became public, my immediate reaction was a little concern about another major ‘player’ that could potentially take away market share in an already competitive environment. After finding out more about the lender, Zillow’s “disclosed” plans, and researching their business model, I became less worried about the endeavor. Firstly, this lender is not operating, nor licensed in the North-Eastern states, which is not a simple mission to obtain. Chances are they may never get licensed or venture into this highly competitive and delicate market. It is uncertain as to their true intentions about becoming an online lender similar to that of a Quicken Loans.
Moreover, even if they do seek to pursue business in this region, the Zillow style of presenting data (as accurate or inaccurate as it may be) with little hands-on guidance or advisory services will not bode well in the mortgage business. Perhaps that is why its stock price dropped so significantly. I am no stock analyst, and while I think Zillow is a significant force to be reckoned with, I know mortgage applicants demand more than a flashy app to handle their mortgage financing.
One thing that we have seen in this marketplace dominated by online portals and apps, the quality of service and competence of information is something that pales in comparison to that of a local professional that you can speak and meet with freely.
Recently, one of my loan officers came to me with an emergency situation. He pre-approved his client on a pending home purchase that was a rush transaction. He tried to obtain as much information and details as possible up front, and we jumped into the process. Along the way, we realized that there was a significant discrepancy between the real estate taxes that our appraiser came up with versus the amount of taxes that the applicant initially told us. Notably different.
It was enough to cause the income to debt ratio of the loan to become ineligible. When we asked the homebuyer where they came up with that tax figure, the answer was “That’s what I saw on Zillow.” Unfortunately, this wasn’t the first, nor will it be the last time that a home shopper uses information on Zillow to make assumptions and decisions that may or may not be accurate.
I am not here to knock anyone. I think competition is great for everyone. It helps level the playing field, and ultimately benefits the buyers and mortgage shoppers. However, it is my intent to sternly advise people that they must do real due diligence when shopping for a home, which includes the guidance and insight of a real trusted real estate and mortgage professional. These online portals provide a real value for many things, but absence a true expert who is experienced in the marketplace, they are sure to be lacking real facts and figures along the way.
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