How A Zillow-Trulia Merger Could Hurt Mortgage Lenders And Consumers

BLOG VIEW: The proposed merger of Zillow and Trulia would be a great win for shareholders of both companies and a hit to real estate agents and listing data providers, but I see a number of reasons why it would also not be in the interest of consumers or mortgage originators.

First, consumers will see less technology innovation. In a time where so much market and transaction data is moving online, the two largest real estate search domains combining would almost certainly negatively impact innovation.

Second, consumers will see less competition for their business. The pre-approval feature that Zillow recently rolled out essentially routes a borrower to a loan officer preferred by Zillow (i.e., paying the high monthly fee), so not much of this is in the consumer's interest to begin with. But it certainly won't get better in a consolidated platform offering.

Third, consumers will be less empowered to move toward self-service. The Gen X and Gen Y demographic – the current and next generation of first-time home buyers – are ready to take activities traditionally performed by real estate agents and loan officers and execute these tasks themselves. A combined Trulia/Zillow entity will be hard-pressed to cannibalize its core revenue model to facilitate this trend.

Fourth, mortgage originators will pay more for leads. Advertising on a combined platform means that many originators will have little alternative than to pay an increased fee. And if you believe – as we do – in the online convergence of mortgage and real estate search, after, there really is not a viable alternative to Zillow and Trulia when it comes to this space.

Finally, the deal might mean mortgage originators have less control of their pricing technology and data. It will not be surprising if a combined organization would give preference to a single pricing engine to power a combined mortgage lead generation platform, extending the reach to Trulia's lead-gen customers.

Rajesh Bhat is CEO of Roostify, a provider of automated mortgage transaction technology that benefits lenders, real estate professionals and home buyers.

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