When you decide to sell your home, the first thing you’re going to want to do is figure out how much it’s worth so you know how much money you’ll be able to make at closing. This post will examine two of the most popular home value estimators (Redfin and Zillow Zestimate) and will crown one as the reigning accuracy champion.
First, let’s take a look at the margin of error for each tool:
The margin of error for a home value estimator tells you how inaccurate your estimate may be. A high margin of error, say 10%, means your home’s actual value could be as much as 10% higher or lower than the tool’s estimated value. To contrast, a low margin of error, say 1%, means your home value estimate will be within 1% of it’s actual value. The lower the margin of error associated with a home value tool is, the more confidence you can have that the figures you get from that tool are accurate.
At Redfin, the average margin of error for listed homes is quite low, at 1.8%. However, that percentage varies by market. For example, in California, the margin of error is even lower, at only 1.52%. To contrast, Redfin’s margin of error for off-market homes is 6.23%. Why the difference? Redfin has more information about for sale homes than they do for off-market homes, and the more data you have, the more accurate your numbers are going to be. For example, if an off-market home had major renovations but if Redfin doesn’t know that, the home estimate is going to come in too low.
To contrast Zillow’s national margin of error is 4.5%, which is significantly higher than Redfin’s margin for listed homes and a bit lower than Redfin’s margin for off-market homes. This number varies for major metros. For example, in San Diego, California – Zillow’s margin of error is 5%.
The primary reason for the difference in margins between Redfin and Zillow stems from how Zillow handles their data. Zillow considers all data for listed and unlisted properties in their Zestimates, whereas Redfin separates these two categories. Zillow also tends to consider less detail overall in their estimate than Redfin does. For example, Redfin considers things like impressive views or busy streets – Zillow doesn’t.
Overall, Redfin’s Home Value Estimator is better than Zillow’s Zestimate – Here’s Why:
While Zillow and Redfin are both excellent sources of information when it comes to identifying the potential market value of a home, Redfin is simply more accurate than Zillow. The way Redfin organizes data gives you a much clearer picture of home values based on the current market conditions, whereas Zillow tends to include more outdated and innacurate data in their estimates.
After testing both platforms many times, our real estate team at HomeBay has opted to use Redfin exclusively to help us determine home values. Just as Redfin reported, we’ve found it to be within 2% accuracy for California homes. That impressively low margin of error is smaller than the one you would find with a human appraiser!
When you decide to sell a house, it’s important to know what your property is worth and to price your home at or under its fair market value. Doing so will allow you to spark competition among buyers and drive your price up. By using the most accurate home value tools, you can determine what price point is going to allow you to be competitive in your local market.
Now, head to Redfin and find out what your home is worth! Have questions about home valuation tools or pricing your home? Ask us! We’re happy to help.