When you type in a home’s street address to obtain an online valuation from the two biggest players in the field — Zillow’s Zestimate or Redfin’s Estimate tools — how good is what you get?
Accuracy matters a lot in this arena because many buyers and sellers use the online estimates to price their homes or make purchase offers, literally handing sellers or buyers the estimates as part of their bargaining strategy. This is despite both companies’ warnings that these are not appraisals, only algorithm-based computer estimates. They are starting points, not holy writ.
So which company’s estimate is the more accurate?
For two years, Redfin has claimed that it produces estimates that are superior, based on the results of an independent study. When it values homes that are on the market, Redfin says its median national error rate is just 1.77 percent. That is, the selling price, compared with the estimate, is within that margin of error half the time. On houses that are not for sale, Redfin’s median error rate is 6.66 percent. Redfin has a total of 74.4 million properties in its valuation database — 1.3 million on the market and listed for sale, 73.1 million off the market.
Before using either tool, it’s a good idea to go their Web pages and check how far off their estimates tend to be where you live. You can find them at Zillow.com/#acc and Redfin.com/redfin-estimate.
And focus on the key term “median.” In Chicago, the median Zestimate error rate is an impressive looking 3.8 percent; but 41.4 percent of Zestimates are not within 5 percent of the actual sale price. That’s sobering. In the District, the median error rate is 3.1 percent. But fully a third of Zestimates aren’t within 5 percent of being accurate.
Disclaimer: for information and entertainment purposes only
Green Real Estate Appraiser 