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. 

Tips for qualifying for a mortgage in 2011

This entry is a follow up from a post last month about what is holding you back from buying or selling. It included a poll and the results were interesting: the overwhelming reason that people are not purchasing? They can not obtain financing.

We are going to take a closer look this month to find out what exactly you will need to get a mortgage to purchase a home in 2011.

This entry will be part of a series of pieces I will be doing over the next month with Doug Welch of Allied Mortgage here in Michigan. The series will include a few areas of getting financing secured in today's market, but for now, we'll start at the beginning - understanding what lenders require.

flickr photo courtesy of nikcname

A seasoned professional with over a decade in the mortgage industry, Welch specializes in Conventional, FHA, and Rural Development Loans.Working from start to finish on every loan transaction, his niche has always been assisting first-time buyers, move-up buyers, and those looking to buy their dream home.

 Here, Welch offers some guidelines to consider:

Obtaining a Mortgage in 2011


Obtaining a mortgage is definitely harder today than it used to be in years past. However, there are still many options available to help borrowers purchase their first home and/or dream home. Here is some advice on how to obtain a mortgage in 2011:

Save for a Down Payment


Saving for a down payment is the key factor to obtaining a mortgage in most cases. All FHA Mortgages will require a 3.5% down payment and Conventional loans need 5%, and in most cases a 10% down payment. However, the Rural Development Loan Program does not require a down payment. This program is property address specific for eligibility, and there are also household income limits to qualify.

Increase Your Credit Scores


Lenders are much stricter when it comes to credit scores these days. In most cases they require at least a 620 credit score for FHA and USDA Loans, and much higher for a Conventional Loan, just to qualify. To qualify for the best mortgage rates, a 680 is required for FHA and USDA, and a 740 is required for a Conventional Loan.


Manage Your Debt


Lenders are also looking at debt-to-income ratios, and the amount of debt an individual carries. They will want to see that your monthly debt payments, including the new mortgage payment, taxes and insurance, are less than half of your monthly income. However, it is also not good to have zero debt, as most lenders do require two to three open trade lines (i.e. credit card, car loan) with at least a two year history.


The best thing a potential home buyer can do prior to searching for a home is to find a true mortgage professional to pre-qualify them for a mortgage. This will allow the consumer to know what their options are prior to searching for a home. The home buyer will want to know the programs that are available to them, down payment options, and terms of the loan. If the home buyer does not qualify, due to any reason such as credit issues or a debt ratio issue, a good loan officer will advise them how to qualify in the future.


Welch sums up by saying, that it is a fact that lenders are definitely tougher than they were in the past. However, I believe that the new lender requirements will allow most people, who have the ability to repay a mortgage, to qualify for a mortgage if they meet the above qualifications. And with the help of a mortgage professional, there are plenty of options available to potential borrowers to make it possible to purchase their first home and/or dream home.

Doug welcomes your contact via e-mail if you're still unclear about qualification guidelines.

The bottom line is, if you have the opportunity to purchase a home this year, the timing could never be better as long as you're able and qualified to obtain a mortgage before interest rates head back up.

 

Chris Glahn is a licensed Realtor serving the Ann Arbor area as part of the Keller Williams Ann Arbor Market Center, where he acts on behalf of his clientele in the purchase or sale of their home. He also assists clients in leasing. He welcomes your contact via e-mail or by calling 734-730-3403.

Are you a homeowner who needs to know your options?

flickr photo courtesy of Beatrice Murch

I routinely talk with people who are looking for answers for a real estate situation they are facing.Whether they are needing to refinance, needing to short sale their home or facing a foreclosure. Many people only think they have one choice or no choices at all when it comes to these situations. The answer is they have several options available and one that should get them where they need to be. I came across a great website by Fannie Mae that explains in detail almost all of the options out there and contact information for counselors who may be able to point you in the right direction. Click the link below for the website.

http://www.knowyouroptions.com/