As real estate professionals we all have our complaints about the information people receive from online sources such as Zillow. In fact, Zillow's own CEO recently admitted that the average margin of error on their "Zestimates" is somewhere around 8%. To put that into numbers for you let's take a house with a real value of $300,000. Zillow's AVERAGE margin of error will place that Zestimate somewhere between $276,000 and $324,000. Obviously this is not an insignifcant difference. On the high side an agent may have trouble convincing a seller that there house is really worth $300k because "Zillow says it's $324k" and on the low end a buyer might look at the zestimate and think a home is overpriced and move on.
A lesser discussed aspect of the Zillow Monster is the "estimated monthly payment" shown below:
It's not until you click on the calculator icon next to the EST. Mortgage that it shows that this is based on a 20% down payment and taxes and insurance are not included. The average first time home buyer doesn't automatically understand this. I spoke to one today that wasnted to keep her payment in a specific range. She was looking at Zillow and thought that the home she could buy for that range would be somewhere in the $200,000 range. She also didn't have 20% to put down so she was a little stunned to learn that when taxes, insurance, and MI were all considered the home she could get in the range she wanted was around $110,000. She was nice and very understanding once I explained it to her, I've spoken to some that weren't.
So if you're looking at purchasing your first home Zillow is really the worst possible place to start, and other sites like it for that matter. The first step is to contact a mortgage professional to see how much financing you can truly qualify for. Once that's been established contact your real estate agent to begin the search for you. They have the best, most accurate, and most up to date information. The same can't be said for the online search sites.
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