Mortgages may be the next hot market in the World Wide Web’s emerging discount bazaar.
Loans on the World Wide Web show potential to cut time and paperwork. And by linking consumers more directly to lenders, eventually they might cut the cost of a loan for both.
“Paper smothers the ability to innovate,” said Scott Cook, chairman of Intuit Inc. “Finance will be one of the areas that the Internet will have changed forever, because you can deliver the final product live on-line.”
Software publisher Intuit’s Quicken.com Internet site plans to offer not only real-time mortgage rate quotes, but also on-line loan applications (complete with lenders’ closing-cost estimates) and home listings from Moore Data Services’ Cyberhomes.com site. Cook previewed its March 31 launch of the new features here at the Real Estate Connect technology conference.
Intuit already claims 1.2 million users of its interactive mortgage feature since last November. Quicken Mortgage also will be part of Intuit’s expanding presence on America On-line’s personal-finance channel.
More than 13,000 consumers have submitted income and other data on-line to lenders advertising on Quicken.com. That group now has grown to 11 national lenders, including La Salle Home Mortgage and Wells Fargo as well as Chase, Countrywide and PNC.
“Security is not an issue,” Cook said. He claimed a 94 percent customer satisfaction rate with Quicken Mortgage’s current rate-quote feature, and argued that computer users now are comfortable enough with credit-card transactions on the Internet to pay a lender’s fee on-line. Cook said the service can handle high customer volume because it does not rely on telephone follow-up.
Cook said listing and referral fees from lenders would pay for site operation, along with advertising revenue.
Microsoft also plans to combine home listings and multiple lenders on its Boardwalk real estate site, scheduled for a nationwide launch at midyear.
“We want to grow this category,” said Microsoft product manager Laura Rippy. “I don’t think of it as competitive.”
In a brief presentation at the conference, Rippy said lender fees and advertising would generate the site’s revenue, refuting speculation that Microsoft would seek referral fees from Realtors.
In fact, she said, Microsoft would pay Multiple Listing Services a bounty to appear on the site, and would not accept For Sale By Owner advertising.
“No part of our business model includes the real estate transaction,” Rippy said. “The future role of the Realtor is very solid and we’re not going to be affecting that relationship with the consumer.”
The site would also include a home-buying tutorial, information for use in choosing neighborhoods and a “My Boardwalk” feature that would register readers’ home-shopping needs.
Intuit and Microsoft are the newest entrants in a still infant on-line real estate arena.
Also planning to combine rate quotes and home listings is HomeShark (homeshark.com), a rate-quote site that refers 100 loans a month to participating lenders. At the conference, HomeShark announced acquisition of HomeScout (homescout.com), a search engine that scans 300 listing sites.
Mortgage banker Countrywide Home Loans, one of the first Web entrants in 1996, now takes 500 applications a month on-line, said Countrywide’s Cameron King. Its on-line lending is growing by 22 percent every month, King said, to a current pace of $31 million. However, that pales before the company’s $4.8 billion total volume.
Other on-line players include American Finance and Investments (loanshop.com), which underwrites 300 loans a month, and the rate-quote site E-loan (eloan.com), which generates 285 applications a month.
While on-line loan rates are now comparable to loans found elsewhere, King and other lenders see potential for cost savings on the Web–perhaps as much as one percentage point lower, he suggested. King finds more potential savings in regulatory and paperwork reforms that could merge the home purchase with loan application, approval, closing and related transactions.
Michael J. Anderson, president of Omaha-based discount stock brokerage Ameritrade, encouraged real estate executives to “opt for a win-win situation where both you and your customer have a lower cost for a transaction.” Ameritrade now gets 65 percent of its business volume from $8-per-trade Internet transactions.
Financial sites have grown as technology companies have adopted common data transmission protocols, particularly the Open Financial Exchange or OFX standard developed by Microsoft, Intuit and the CheckFree electronic banking service. Listings on the Internet might expand further with the World Wide Web Consortium’s recent adoption of the Extensible Markup Language or XML format for Web data.
However, Realtors first will have to figure out how much MLS data to share with customers on the Web.
“There’s a gap between what the Realtor wants to show versus what the public wants to see,” said Jay Huffman, executive officer of the MLS of Northern Illinois.
While consumers ask for as much information as possible about each listing, Huffman said, brokers prefer to go into depth about their business.
“How do we satisfy the public curiosity,” he said, “without giving away the store?”
Marketing consultant Gene DeRose of Jupiter Communications predicts that the Internet’s strengths in relaying advice and information make it an ideal platform for financial and real estate services. He notes that the 27 percent of the households that are on-line command 40 percent of total household income.
Even so, he acknowledges the limited reach of the Web with a statistic frequently cited among technophiles: that the global reach of the Internet equals only 4 percent of the global audience for the television series “Baywatch.”
