Want to know what a home is worth? You might want to skip Zillow

Today's consumers are savvy, and that is true for those looking to wade into the real estate market. Many are very well educated about what they'll be dealing with before they begin their journey in buying or selling a home. Access to information online is very much a part of that. 

One popular website, Zillow, has become an integral part of the dialogue when people are talking real estate, and with 73 million unique visitors in 2014 alone, that shouldn't come as a surprise. Being able to find active listings and information on homes that are not in the market is easy: you simply plug in the address or location and crucial information like the number of bedrooms and bathrooms, property taxes amounts — not to mention photographs and a "Zestimate" pop up.

(A Zestimate, according to Zillow.com, is Zillow's "estimated market value, computed using a proprietary formula".)

That said, it's not uncommon for me to hear (and I know that my colleagues can attest to this) folks refer to the Zestimate when talking price on a property, no matter if they are looking to purchase or sell. 

It is often distressing.

Flickr photo by Delwin Steven Campbell

Why?

Because Zestimates are not accurate.

And in an article in the LA Times, Zillow CEO Spencer Rascoff noted that nationally, Zestimates have a "median error rate" of roughly 8%.

8%? Think that doesn't seem like a lot? Consider this: on a $300,000 home, that's a $24,000 discrepancy. And that's not even considering the localized median error rates. It seems that those surpass the national median.

Some agents have done their own research into how far off the mark that Zestimates are in the local market. In markets in Virginia and California, some Zestimates were overestimated while others were well below the selling price — the latter 70% of the time. Another 25% of the Zestimate were higher than the contract price. 

According to Zillow.com, the median error rate for Michigan is 8.1%, and 6.1% for Washtenaw County, 7% for Livingston and an even higher 10.5% for Wayne County.

It's pretty easy to see how buyers and sellers might not see eye to eye when it comes to pricing. Since real estate by it's very nature is local, no matter where you live (or are looking to move) your best bet is to connect with a Realtor who can give you an accurate snapshot with regard to the information on your property or those that you're interested in. 

Chris Glahn is a licensed Realtor in the state of Michigan with RE/MAX Platinum Ann Arbor. He can be reached at 734-730-3403.