Zillow's mortgage tool: 2 years later

I always found it a lot of fun visiting Zillow.com and looking up my house. I type in my address and a satellite photo appears of my property bunched in with my neighbors' homes -- along with a price box superimposed on the roofs. Also, another bigger box pops up with pertinent information: price estimate, monthly payment, square feet, year built, etc.

What could be more fun than this, other than seeing a higher price on your home than the one you might be viewing right at that moment?

As great as Zillow is for getting a price estimate of your home, I could never figure out the Web site's game plan, i.e., how it created revenue. Because the Web site attracted a lot of eyes -- almost everyone you know probably has peeked at Zillow at one time or another over the past couple of years -- it garners a good deal of advertising.

That's certainly a good thing for the owners of Zillow, but, as a consumer, once you found your house and read the basic data, you moved on. So as a utilitarian site, I always felt the value was negligible.

Then one day I was on the site and saw a box for a subject that interested me: mortgages. After maneuvering around Zillow's mortgage pages a bit, I realized this was one cool way to find a home loan.

After you submit information, numerous lenders make an offer of a mortgage, and Zillow gives the consumer a way to slice and dice the offers so a potential borrower can judge one mortgage offer against the other to see which loan is more appropriate and at what price. Zillow wants you to be a comparative mortgage shopper.

Zillow Mortgage Marketplace was introduced on Zillow.com in April 2008 and ran for many months in a beta phase. Over the past year, Zillow has added new features; the most recent one introduced in third-quarter 2009 was "True Cost," a comparison feature within Marketplace that allows borrowers to shop anonymously across multiple loan programs, compare custom quotes and find the most affordable home loan.

The True Cost feature calculates up front how much a borrower will pay in interest and fees over the time period they intend to live in the home. Borrowers can then compare the "true cost" of the loans across all quotes received from lenders.

I checked in with Mary Miller, director of Zillow Mortgage Marketplace, to see what was going on. My first question was this: A lot of people come to Zillow to get a price estimate of their home, but would they also come to find a mortgage? After all, don't homebuyers just get a mortgage from whomever their real estate agent recommends?

I hate to admit this in my column, but that's all I've ever done.

"People come to Zillow for a variety of reasons," Miller answered. "Most are in the market for buying and selling homes, but another portion of our market is existing homeowners. Mortgages are tied to both those groups. If you are going to buy a home, chances are you are going to need a mortgage to finance that home unless you are extremely wealthy."

Fair enough, but let's try it again. Are consumers coming to Zillow to look for a home loan? The answer surprised me. ...CONTINUED

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