Most homeowners these days are familiar with Zillow and Redfin and the estimated value they place on their home using their algorithms. But can they really be trusted? The answer to that question is complicated. Sometimes they can be trusted and oftentimes they cannot be trusted.
First, for those unfamiliar, what is a Zestimate and Redfin Estimate?
What is a Zestimate?
“The Zestimate home valuation model is Zillow’s estimate of a home’s market value. A Zestimate incorporates public, MLS and user-submitted data into Zillow’s proprietary formula, also taking into account home facts, location and market trends. It is not an appraisal and can’t be used in place of an appraisal.” – Zillow
The nationwide median error rate for the Zestimate for off market homes has a median error rate of 7.49%. The Zestimate’s accuracy depends on the availability of data in the home’s area and the accuracy of the subject home’s information.
For example, the Zestimate relies heavily on the home’s square footage, bedrooms, and bathrooms and uses that data and aggregate data of similar homes in the surrounding area to estimate its value. Sounds very accurate right? Well, the problem is when you own a home you can claim the home on Zillow and modify the home’s information. Therefore, you can modify the square footage, beds, and baths which will throw off the Zestimate.
The biggest factor to watch out for is square footage. Especially in areas with basements! There could be a rancher with 1,000 sq ft above grade, and 1,000 sq ft below grade (basement) listed as $2,000 sq ft on Zillow. That means the Zestimate of this home is being calculated using homes in its surrounding area that are 2,000 sq ft all above grade. However, below grade square footage is not as valuable as above grade square footage. It’s important to make sure your home’s information is updated correctly to receive the most accurate Zestimate possible.
Other factors that could throw off a Zestimate is the condition of your home. Have you done any recent renovations or is it in need of major repairs?
What is a Redfin Estimate?
“The Redfin Estimate is a calculation of the market value of an individual home.”
The Redfin Estimate has a nationwide median error rate of 6.32% for off market homes. The Redfin Estimate is historically slightly more accurate than the Zillow Zestimate. We have noticed this to be the case because home information is generally more accurate than the information on Zillow. We have noticed less basement square footage counted as above grade square footage on Redfin than Zillow. For example, if your 3 Bed, 2 Bath, 1000 sq ft rancher with 1000 sq ft finished basement in Glen Burnie is listed on Zillow as 2,000 sq ft, it may have a Zestimate of 475k. However, if its above grade square footage is listed correctly as 1,000 sq ft on redfin, the Redfin Estimate may be 375k. That is a huge difference!
In summary, be sure to take in all these factors when analyzing Zestimates and Redfin Estimate because they can often be very misleading.