Zillow just got into the mortgage biz! Who Cares?!

No need to beat around the bush today, if you haven’t heard yet, Zillow is getting into the lending business as was announced yesterday. Zillow is buying Mortgage Lenders of America, a Kansas City based Mortgage Lender that closed around 4400 loans in 2017. While that is a ton of loans, to put it into perspective, Zillow received 23 million Mortgage applications in 2017 so 4400 loans isn’t even a blip on the proverbial screen. 

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However, while everybody in the lending business is screaming bloody murder and exclaiming ‘there goes the neighborhood’, here at the Real Value Podcast and in the Real Value Labs we try to always focus on what the news is telling us, where things are headed, what are the trends to be tuned in to, and how can we leverage the information and opportunities for our businesses and our clients. 
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A constant theme of the podcast, of our training programs, how we coach our trainees, the mastermind groups that we either lead or participate in, and how we try to lead our lives is one of positive recognition of opportunity, not bitching and complaining about things we cant control. If I’ve learned anything from my time studying Zen, leadership, and defensive tactics training, its that its far better to be a dispassionate observer of things, a quiet professional taking copious notes about ones surrounding, and training to be prepared to act when the time is right. What you’ll find if you peruse industry forums and comments sections, regardless of whether its Mortgage news, Realtor News, or Appraiser forums and news, everybody is bitching. Simple. Ineffective. Negative.  
  
If they’re not mad at Fannie and Freddie, they’re pissed off at Quicken Loans and Zillow. When they’re not bitching about Trulia and Goldman Sachs, they’re bitching about the next political distraction and something they saw on Facebook.  
  
Let me explain something my friends, we live in one of the most prosperous times that has ever existed and we conduct business in an Information Age where business is being done at the speed of thought! What one chooses to focus on in any scenario determines what one sees, what doors open or close, what opportunities and choices one has available to them and ultimately, what happens next. There are times to study and research, there are times to prepare, there are times to act, and there are times one has to create their own opportunities in order to survive and thrive.  
  
The news that Zillow has just acquired a Mortgage company is just that: news! Its information. Its just another set of facts that get laid at your feet for you to either step on, step over, pick up and put in your pocket, stomp on and groan, or simply ignore. What you do with the information is completely up to you. I would suggest, however, that you avoid at all costs jumping into some forum filled with a bunch of negative people with a collective consciousness that spews nothing but lack and doom. Are things changing in all of our industries? YES! And fast!  
  
The news that a major online real estate brand has just acquired a mortgage lender is a statement about the speed of information. Try to look at it without emotion. When you add in emotion to the process, you add in layers of decision making that are being skewed by that very emotion. Emotion adds an unnecessary layer to the process of deciding what to do with the information. Its like being attacked by bees while wearing a heavy sweater and snow pants. The sweater  and snow pant offers you some level of protection from the bees but you’re going to struggle trying to run away and get to safety. As you’re running away from the bees, you’re trying to shed all of this unnecessary clothing and falling along the way. Eventually, you fall to the ground with the sweater half off and your snow pants around your ankles getting stung by all the bees and unable to get away. I get it, it often feels good to bitch and complain about something. It’s the minds way of sheltering you from the prospect of possibly having to change. However, if change is going to happen, its going to happen with or without you, often in spite of you! There is absolutely ZERO things gained by bitching about Zillow, Trulia, Quicken, Rocket Mortgage, Fannie, Freddie, the Fed, the President, or anything else that comes across your news feed.  
  
Instead, take a step back, become a researcher, learn to read the news with no emotion added, and collect the vital bits of information that the story is telling you. Zillow acquired a mortgage company as a means to more growth, more control of profits, faster processing of loans, building yet another potential profit center, and so on. If you’ve followed any of the news over the years about Zillow, they got into the real estate business some time ago with their home buying program whereby a homeowner could upload all of their home info and get an offer directly from Zillow to buy their home. Zillow does the updates and any repairs and puts the home back on the market for sale. Having an in house mortgage division makes sense from that business model because they can make the loan decision quickly and reap the additional profits from the lending side of things. Is that whole system fraught with problems? Maybe, but who cares?

Does it really matter to you what zillow is doing inside of their business? I’m not saying that companies like Zillow don’t make things difficult for us as Appraisers, realtors and mortgage professionals. We all know they do and in a variety of ways. What I’m saying though is that Zillow is!!! Zillow exists and there’s nothing you can do about that. If there’s nothing you can do to make Zillow go out of existence, the best thing you can do is to accept that they exist, research what they do and how they do it, be able to educate homeowners and clients about what you do and how you’re the expert and authority in the field, do it all without negativity and emotion, and win your market. It really is that simple.  
  
The take away from this most recent news about Zillow acquiring a mortgage company is simply that things are moving very fast and will only get faster.  
  
There was a recent round table discussion between 5 mortgage and real estate company leaders discussing what’s next for the mortgage industry. When asked what’s next for them in 3 to 5 years, one of them replied. “We are taking what we know about how a car loan is done, how simplistic that is interconnected from all these different areas to create the 8 day close. He’s talking about closing a real estate deal in 8 days, from application to closing table in one business week. Another one of the gentlemen said, “The whole industry is trying to figure out data and information. There are a couple of holes… the average age of a loan appraiser is 175 and they’re not making them anymore.” Yes, he really said that. 
  
Now, when you hear that,  what happens inside of you? Did you just freak out and say, “that’s stupid! That’s ridiculous, I’m booked out 2 to 3 weeks as it is and now they want me to get an appraisal done in 1 or 2 days so they can close their loan in 8 days?!  I’m out!!” And to that I say, good! Not because I want to scramble to do an appraisal in a day, but because I’m quite happy to so those that react to their environment in that way move on. I’ve observed it in every business and industry I’ve ever started, built, run, consulted for or simply observed. Those that can take in information, understand what that means for them and their business, potentially see (or create) an opportunity, create some kind of advantage, pivot quickly and evolve, those are the leaders that are still in business today. Those that stand around and bitch about all the changes, well those are like the poor souls who stand on the beach staring at the huge wave building a mile out in the ocean. The elephants and other land animals are rapidly heading for the hills signaling some kind of danger while you folic in the surf as a 30’ wall of water heads your way. Its called a Tsunami and its devastating. Those unaware of the danger, those who sit and bitch, and those who simply deny what is happening are the ones swept away when it lands. 
  
Well, the tsunami has been building for some time my friends. Its been building and giving us clues to its imminent arrival. The clues are named Amazon, Apple, Microsoft, Alexa, google, Day1 Certainty, Zillow, Collateral Underwriter, UAD portal, bitcoin, verge, litecoin, crypto, blockchain, SpaceX, Tesla, AI, Sophia, and the list goes on and on.  
  
All of these things are signs of change…rapid change. Those who accept what is, and not stand around wishing it was some other way, will always get swept away by change. Again, its called evolution. You either adapt or die. Its not whether or not you’re strong enough or big enough to survive, in fact, being big often means a faster death because big can mean difficult and slow to pivot, to adapt, to change with the trends. 
  
Look, my friends, it doesn’t matter if your in the real estate industry, the mortgage industry, or the real estate appraisal industry. All of these things are simply facts. Facts about what is going on in our collective worlds. I’m not a fatalist or a nihilist, I don’t relish seeing industries destroyed. What I am is a realist and an adapter. I believe we have some time left to adapt and evolve. I don’t believe things will change overnight. But I know as a fact that things are changing. You can change the change but you have the opportunity to adapt and flow with some of the changes and I can assure you that with every change, big or small, there are always new opportunities for those with a mind and attitude to see, take advantage of, or create new business models and new ways to profit from the change. You simply have to decide which one of those you’ll be. For my appraiser colleagues and friends, there is no doubt whatsoever, change is afoot. You’re either starting to adapt and evolve or you’re one of those 175 year old appraisers that says ‘they can have my tape measure and clipboard when they pry it from my cold dead hands”. While I get it, I wont be one of them and I encourage all of you not to be either. 
  
There are many opportunities to begin adapting immediately. One of them, of course, is to be utilizing mobile tools. If you’re still pen and paper, you’re standing on the beach staring at the big wave. I don’t care about your reasons. I don’t care about your justifications. I don’t care about your complaints about technology.  Nor does the market and nor will your clients. None of it matters when the wave hits. I can guarantee that not one of your clients cares that you use graph paper, a mechanical pencil, and a hundred foot old school tape measure or wheel. You’re adding zero value to the process. They might not care right now how you get the work done because you’re a good appraiser and you get the job done…but you’ve added no value to the process by sticking to pen and paper. You might as well be using chisel and stone tablet.

You can complain and justify it all you want, but like a child throwing a tantrum in the Walmart check out line, eventually you just get scooped up, thrown in the cart, and paddled in the parking lot. And by paddled, I mean the competitors in your market who are utilizing mobile tools, using software to do regression analysis and filling their reports with market data from around the internet, and ultimately completing good reports very quickly will lead the market. Its already happening my friends, right behind me, in our offices, and in mobile offices all around the country. We’re utilizing data entry and support staff in remote locations, using the cloud to gather and store data, and speeding up the process with no loss whatsoever in quality, credibility, and supported information. In fact, our information has never been more supported given that we can literally have up to the minute reports about market trends, yield curves, interest rates, home sales around the country, markets booming and busting, contamination threats, and tsunamis heading our way.  
  
These are just some of the ways we are, and have been, adapting to changes. But there are more changes heading our way as Appraisers, real estate agents, and mortgage lenders. Staying ahead of the curve by researching information without emotion is one of the keys to survival. Not everybody can do it, I get it. That’s one of the reasons we do some of that research for you, but I highly recommend developing a new skill if you don’t have it already. If you are to survive and adapt, you MUST be able to take in information, process it without adding emotion to it, and attempt to interpret what that may mean for you and your business. From there you can spot or create opportunities to dominate in your market. Without that ability, however, I fear that you may be swept away when the waves start to come ashore.

​Nobody is coming to save you. Nobody will rescue you. Nobody is going to coddle you and tell you everything will be ok. It will be ok, but ok from the standpoint that whatever becomes the next new normal will eventually just be considered ok. That’s how ‘ok’ works folks. We’ve entered the new economy my friends, where speed is the primary driving force. That doesn’t mean quality has gone out the window, it simply means speed is important. Google operates based on a speed algorithm, page load times, and how quickly it can deliver results based on your search. Amazon delivers your stuff in 2 days. Tesla goes from 0 to 60 in 3.2 seconds. And banks are looking to close loans in 8 days in the future. What are you going to do with that info? ​