Amazon Realty & Mortgage Co. Fact or Fiction?
The phrase 'Digital Disruption' has far reaching meanings, and implications. If you ask the CEO of my current company, Anthony Hsieh, the man behind the founding of LoansDirect.com & HomeLoanCenter.com, as well as the former CEO of LendingTree.com, he would say "Today is an ideal time for financial services to evolve through digital disruption". So then, could a dominant force in internet innovation, Amazon.com jump into financial services to leverage its massive infrastructure, customer base and brand name? Recently, there has been some hints that the answer could be yes.
While you may have been perusing the vast stock of frivolous and useful products alike on Amazon.com during their annual 'Prime Day' on the 11th of this month, some people took note of an unusual feature on the site under the section that lets you hire a local worker. They saw this screen:
This, obviously is unexplored territory for Amazon, and if true would them in the middle of the intense 'war' being waged by the National Association of Realtors and Redfin/Zillow/Online listing sites that bypass agents. While this is controversial, it is not a stretch to think that Amazon, already with millions of users that visit the site religiously, could persuade some percentage (5%? 10%? more?) to check in with them before they sell their home. This in of itself could change a major shakeup in the real estate industry.
Thinking one step further, something Amazon's braintrust is always doing, one could see the way for Amazon to get involved in the mortgage lending business once they are in the business of buying & selling homes. This could be the endgame should the reality venture go well.
I would like to be the first person to point out that this is not an easy road to go down, and that it would almost certainly take them years just to get the mortgage process correct. This is not to say Amazon are slow learners, or that they couldn't execute, it is simply the reality of starting a mortgage company. It is not easy to hire 5,000 to 10,000 employees, inspire them, get them all collaborating and pulling in the same direction as well as develop proprietary technology to compete with the likes of, say, LoanDepot.
Building a mortgage company from scratch is a tall order, so I would be more interested to see what happens with the reality side. Perhaps they would like to create a more centralized community of realtors to battle back against the Zillows of the world. I would bet on the side of more accessibility to customers using Amazon as a 'delivery method' via their app, website, marketing and emails. The downside: Compressed fees or a commission paid to Amazon most likely. The benefits: Greater user accessibility, ease of 'shopping around' and user experience.
What do you all think? Leave some comments and I will be sure to respond!
-Information/Graphic used from HousingWire.com's Brena Swanson's report on July 12, 2017. Link here
-Quote from Anthony Hsieh via Forbes.com. Link Here
About:
Andrew Leonardis is an Account Executive with LoanDepot Wholesale focusing on Broker and Correspondent lending, but is also an experienced Loan Officer. Andrew studies, follows and researches economic, financial and mortgage market related topics. Please reach out with any questions/comments on the article, or with any mortgage related scenarios to [email protected] or 609.254.4976