Should you trust a Zillow Zestimate??

Everyone wants to know the value of their home. Zillow has  done a fantastic job of putting themselves as the trusted place to get an estimate.  But should you?zestimate

The Zillow has this to say about Zestimates.

(note: everything in red is straight from Zillows web site)

The Zestimate® home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions. We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:

  • Getting a comparative market analysis (CMA) from a real estate agent
  • Getting an appraisal from a professional appraiser
  • Visiting the house (whenever possible)=

The Zestimate’s accuracy depends on location and availability of data in an area. Some counties have deeply detailed information on homes such as number of bedrooms, bathrooms and square footage and others do not. The more data available, the more accurate the Zestimate.

Data Coverage and Zestimate Accuracy

Nationally, the Zestimate has a median error rate of 8%, which means half of the Zestimates in an area are closer than the error percentage and half are farther off. For example, in Seattle, Zestimates for half of the homes are within 6.6% of the selling price, and half are off by more than 6.6%.

To improve Zestimate accuracy, we allow homeowners to edit their home facts and then we incorporate this information into our Zestimate calculations.

Be aware that in some areas, we might not be able to produce a Zestimate at all, but we do have some basic information on the homes.

zestimate

This accuracy data chart for this area is pulled right from Zillows web site.  On a $300,000 home, a medium error of 6.90% in our area of Minneapolis / St Paul is $20,700!  Yikes… That is a lot. What about a 20% error rate?  Geez, even just 5% is a big number.

Zillow does the best it can with the information it has but it can’t account for important factors such as location, current market trends, local house inventory, school district, updates, granite counter-tops, poor maintenance, physical obsolescence (appraiser speak for being next to a highway, under power lines, etc), and many other details.

Zestimates give consumers an estimate on what a home might be worth. It is fun to look at, but don’t take the number seriously.

The next most popular quick peek value people look at is the county tax value.  Just like Zillow, the county tax value might be close, or very far out of line. It could be high, it could be low.

The bottom line is simple: For setting a sales price for your home, you need a Real Estate Agent. When looking to see if a home is priced right that you want to buy, you need a Real Estate Agent. When refinancing a home, lenders will send a real appraiser to your home.

If you need a good Real Estate Agent in the Minneapolis, St Paul area, I’ve worked with hundreds over the years, and would be happy to put you in touch with one.


HARP Refinance still helping homeowners

Since the beginning of the real estate bust back in 2007, millions of American’s lost value on their homes.

But with it now being 2015, huge numbers of those same people have regained a significant potion of that value back… Sadly, that doesn’t include everyone.

In 2009, Fannie Mae and Freddie Mac started a mortgage loan program known as HARP (Home Affordable Refinance Program) to help those people refinance into possibly lower interest rates to save money on their home loans.

Millions of people took advantage of the program, yet today, estimates still shows millions of others could, but have not yet refinanced under the HARP program.

HARP Refinance Program in MN, WI, SD

A HARP refinance loan is a great way to get today’s low fixed mortgage rates! 

This program allows more people to qualify under the flexible loan-to-value guidelines. Our clients love the low fixed rates and security of a HARP refinance.

Underwater? No problem!
Lost Value? No problem!
Easier Credit Requirements
Refinance into Lower Mortgage Rates
Save money each month
Fixed Rate Payments for 10, 15, 20, 30-Years

Reduce Your Mortgage Payment

The two biggest requirements is that the current loan must have been done PRIOR to June 1, 2009, and that the loan is either a Fannie Mae or Freddie Mac loan. Who you make your payments to does NOT tell you if the loan is Fannie Me or Freddie Mac. Follow this link to see if Fannie Mae or Freddie Mac own your loan.

Next, understand that you can refinance with ANY lender, just just whomever you make payments to today. Furthermore, you usually get a better deal on the new loan with a new lender than you’d get using your current lender.

HARP loans are available in all 50 States. We are an approved HARP Lender for homes in Minnesota, Wisconsin, and South Dakota!

Apply for your HARP refinance loan today!


2015 Twin Cities home sales continue to strengthen

All signs point to Twin Cities home sales continuing to strengthen

Twin Cities homes sales maintained their strong pace through September, hitting a 10-year high, according to news releases this week from area Realtor associations.

signsThere were 5,114 closed sales last month, a 12 percent increase from last year and the highest level for September since 2005, the Minneapolis Area Association of Realtors said in a news release. Pending sales rose 12.3 percent to 4,635.

Fewer sellers listed their properties, with new listings decreasing 6.9 percent to 6,355. Inventory levels fell 16 percent to 15,928.

With more buyers than sellers, the median price rose 8.3 percent over last year to $222,000.

This supply-demand imbalance means prices have risen for 43 consecutive months, the association said.

Year-to-date prices have risen 6.8 percent on average

Also noted was a continued “product mix shift” back to traditional sales and away from distressed sales such as foreclosures. This also has brought up the median price.

We expect mortgage interest rates to stay below their long-term average for years to come, and around the low 4’s for the immediate future. The trick will be sustaining price gains that motivate enough sellers to list their properties without pricing out today’s buyers — particularly first time home buyers.

The momentum in both closed sales and pending sales certainly bodes well for 4th quarter and for a strong finish to 2015.

  • Anoka County – Up 11.4%
  • Carver County – Up 4.2%
  • Chisago County – Up 8.8%
  • Dakota County – Up 4.1%
  • Hennepin County – Up 7.5%
  • Ramsey County – Up 6.7%
  • Scott County – Up 3.4%
  • Washington County – Up 3.1%
  • Wright County – Up 14.8%
  • 13 County Metro area – up 8.3%


Danger of automated mortgage pre-approval sites

It’s 2015.  I understand the daily advancements on computers, technology, and convenience. Popping up all over are sites that that claim the ability to “allows home shoppers to get pre-approved quickly and easily.” Instant pre-approval sounds cool.

But when it comes to home buying, potential home owners should be extremely wary of trusting any web site offering automated mortgage pre-approval tools.

The Traditional Mortgage Loan Process

The traditional process is you complete a loan application. ffA real live person reviews the information, talks to you about your situation, uses knowledge and expertise to explore all avenues and issues.  Then your file is run through one of the major AUS (automated underwriting system) of Fannie Mae, Freddie Mac, FHA, etc.

This AUS process only takes a few minutes, and the lender is provided with an answer to your loan application.  So if the computer says YES, you are good right?  NO, not even close.  This is just the first step.

The first major issue is simple. Garbage in equals garbage out.

Next, just because the AUS indicates ACCEPT (yes), there are still pages of information and requested items that need to be received and reviewed for accuracy. Common items are W2’s, pay stubs, bank statements, tax returns. Depending on your situation, you may need further items, like bankruptcy papers, divorce decrees, and more.

But it is the little nuances that even trip up less experienced Loan Officers, who unknowingly issue worthless pre-approval letters.

I was recently contacted by a client who had one of these instant pre-approval letters.  They had bought a home, and there application was now being fully underwritten by the lender. Just days before closing, underwriting was denying the file. The buyers big question, is “How can that be?  I was Pre-Approved?”

The issue in this case, was the income number the buyer input into the system was 100% correct. But the buyer was a 1099 contractor, not aW2 employee, who had only been with this company about 6 months. In the mortgage world, short-term contractor income is not allowed as qualifying income.

Did you know this? This is just one example. Could you be running around with an invalid pre-approval letter based off of income not allowed? You you make an offer, give notice on your apartment, and then possibly be homeless?

Your largest financial transaction of your life is too important to trust to just anyone, let alone a computer, without wisdom and input from a licensed, experienced, and professional Loan Officer.

Zillows New Pre-Approval Tool

Zillow recently announced a semi automated tool where potential home buyers enter very basic information. If they like the results, you continue by entering your name, email, and phone number. Your information is then sent immediately to the lenders in Zillows Mortgage Marketplace, who will get your information, pull your credit, and send you a pre-approval letter.

I don’t know about you, but the last thing I want to do is have my information shared with 5, 10, 20 lenders, who all pull my credit, and have my personal information. I don’t want that floating around with a bunch of unknown people.  I also don’t want to be contacted by a bunch of meal time calling aggressive lenders who just paid money for my “hot lead.” And I haven’t even started about potential identity theft.

The Best Move When Getting Mortgage Pre-Approved?

When buying a home, your best move is to always work with a local lender the traditional way. The guy located in your geographic area, with a local reputation to protect. There is nothing anyone on the internet on the other side of the country can offer that you can’t get down the street.  More often than not, it is just the opposite… Especially when it comes to down payment assistance programs for first time buyers. These programs are always only available from the local lender.

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 Joe Metzler is a Senior Mortgage Loan Officer for Minneapolis Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year by the MN Mortgage Association, and was ranked #98 of the Top 100 Loan Officers in the Nation in 2015 by Origination News. He provides Home Mortgage Loans in MN, WI, and SD. He can be reached at (651) 552-3681