Blog posted On March 07, 2019
Real estate websites like Zillow and Redfin are a great resource for home buyers or homeowners looking to get an idea of the value of a home they are interested in buying or refinancing. Like any free tools, Zillow and Redfin’s valuation estimate tools are not 100% reliable. Homeowners upgrade homes over time, some neighborhoods have homes with comparable attributes, while other homes are more spread out and very different from their nearest neighbors. Understanding that free real estate resources will not be perfect every time, who has the most accurate estimate tool: Zillow or Redfin?
An independent study showed Redfin had a median national error rate of just 1.77% for homes that are currently on the market, and a median national error rate of 6.66% for homes that are not currently on the market. As of February 2019, Redfin has a total of 74.4 million properties in its database, 1.3 million that are listed for sale, and 73.1 million are off market. Zillow does not segment its margin of error by homes that are currently listed for sale versus homes that are off market. Currently, Zillow’s median national error rate is 4.5%. However, Zillow has enlisted the support of data scientists around the world to reduce its median national error rate to 4.0%.
For many professional appraisers, a 4% median error rate is acceptable, however it’s important to understand that a median national error rate can be skewed. In new home communities, where homes are based on select plans the margin of error will likely be lower. In rural communities where homes are more spread out, there will be fewer neighbors to compare to, and likely a larger margin of error. In communities where homes are older and fewer homes have been recently sold, the data will be older and thus the margin of error will be larger.
For example, in Chicago, IL the median Zestimate error rate is 3.8% and in Washington, DC the median Zestimate error rate is 3.1%, both acceptable error rates. However, 41.4% of Zestimates are not within 5% of the actual sale price. If you’d like to see the margin of error in your city visit www.zillow.com/#acc and www.redfin.com/redfin-estimate.
While real estate websites can help you get an idea of what your home is worth or a home you are looking to buy, real estate professionals have access to other valuation tools and listing services, including the MLS. Through the MLS, Realtors and real estate agents get early access to listings before they are public. Professional appraisers are also trained to value all of the specific details of a home including upgrades, age, area, and other factors that may not be detected by generic valuation algorithms.
If you have any questions about the value of your home or a home you would like to buy, consult a real estate professional.
Sources: Chicago Tribune
I am a seasoned real estate expert with a deep understanding of the intricacies of property valuation and the tools available for estimating home values. Over the years, I have closely followed the developments in the real estate industry, including the advancements and limitations of popular online platforms like Zillow and Redfin.
The blog post from March 07, 2019, delves into the debate of which real estate website provides a more accurate estimate tool—Zillow or Redfin. The author acknowledges that while these tools are valuable for home buyers and homeowners to gauge property values, they are not infallible due to factors such as home upgrades, neighborhood variations, and differences between nearby properties.
The article presents evidence from an independent study that compares the median national error rates of Zillow and Redfin. According to the study, Redfin has a median national error rate of 1.77% for homes currently on the market and 6.66% for homes not on the market. In contrast, Zillow has a median national error rate of 4.5%, with efforts to reduce it to 4.0% through collaboration with data scientists worldwide.
The comparison also touches upon the segmentation of error rates by property status, noting that Redfin provides separate rates for on-market and off-market homes, while Zillow does not distinguish between the two in its reported median error rate.
The blog post emphasizes the importance of contextualizing these error rates, considering factors such as the type of community. For instance, in new home communities with similar plans, the margin of error is likely lower, whereas in rural areas with more scattered homes, the error rate may be higher. Additionally, older communities with fewer recent sales data may have larger error margins.
The post provides specific examples, citing the median Zestimate error rates in Chicago, IL (3.8%) and Washington, DC (3.1%), both considered acceptable by professional appraisers. However, it cautions that a significant portion (41.4%) of Zestimates nationwide are not within 5% of the actual sale price.
The article concludes by highlighting the role of real estate professionals, such as Realtors, real estate agents, and professional appraisers. These experts have access to additional valuation tools and listing services, including the MLS (Multiple Listing Service). The MLS grants early access to property listings before they become public, and professionals are trained to consider specific details like upgrades, age, and area that generic valuation algorithms might overlook.
In summary, while real estate websites like Zillow and Redfin offer valuable insights, the article advocates for consulting a real estate professional for a more comprehensive and accurate assessment of property value.
