In the age of the internet, technology has allowed home buyers and sellers to become more savvy than ever. Online tools and home value estimators have become a first stop on the journey to buy or sell a home. And while there are multiple platforms to choose from, two stand out as digital leaders in the world of real estate. But even despite their popularity, one must wonder: is Zillow or Redfin more accurate?
We know you have questions. Just how accurate is Redfin? Is Zillow more reliable? Why are Zillow and Redfin estimates so different? Or are they even different at all?
If you’re in the market to buy or sell real estate, this article is for you – learn everything you need to know about Redfin vs. Zillow estimates before you start evaluating properties on your own.
What is the Redfin Estimate?
The Redfin estimate is a determined calculation of a home’s individual value in the market. Redfin states their estimates are very accurate, with a median error rate of just 1.77%. With full access to the MLS, Redfin uses the data they can get on a home, as well as data based on recently-sold properties in the area to determine a fairly precise valuation. Redfin is careful to note their estimates are just a place to start and cannot take the place of an actual appraisal or the judgement of a professional real estate agent. But they also state that their online home-value estimator is the most accurate out there.
What is the Zestimate?
The Zestimate is Zillow’s answer to Redfin’s estimate. Offering their own version of an online home valuation platform, they estimate market values for about 110 million homes all over the country. Zillow’s algorithm can automatically compute values that are based on both public-submitted as well as user-submitted data points for each property. The true accuracy of a Zestimate will vary based on a number of factors, including property location and how much and what data is available. Zillow states their median error rate is just 5%, and they are quick to combat inaccuracy issues by allowing homeowners to update and edit home facts on their own, which may be reflected immediately. Zillow refreshes Zestimates for every home in its database daily.
Why are Zillow and Redfin Estimates So Different?
Zillow and Redfin estimates are different for a number of reasons, but perhaps the biggest one is that Redfin accounts for list price on a property when coming up with their estimate. List price will obviously influence sale price, therefore making the estimate not only different than Zillow’s Zestimate, but also perhaps also making it seemingly more accurate. It stands to reason that a list price will likely be relatively close to a sale price.
Number of Estimates
Redfin provides home value estimates for more than 74.4 million homes (1.3 million are on-the-market properties, and 73.1 million are off-the-market). By contrast, Zillow provides estimates for more than 110 million homes all across the United States. Zillow does not distinguish how many of its 110 million properties are on-the-market vs. off-the-market, although an overwhelming number are off.
Redfin is less likely to provide home value estimates for real estate appraised at more than $2 million. Zillow has appraised a larger number of expensive homes.
Margin of Error
Each company has an estimate of their own accuracy: Redfin claims their estimates for active homes on the market have a current median error rate of just 1.77%, and off-market homes are within 6.64%. accurate. Zillow claims its estimates have an error of not greater than 7.9% on any home. However, they recently dropped a bombshell, claiming their median error rate will be dropping to 4% or below very soon. Given that they don’t break out their error rate per on- and off-market properties, an overall 4% rate on 110 million homes could very well put them in the lead.
Why the difference?
Zillow doesn’t provide different accuracy metrics for on-market vs. off-market homes like Redfin does. That means their margin of error has to be higher so it can account for actively listed homes as well as properties that haven’t been sold in years.
Because of the smaller number of listings available, Redfin can look at more details than Zillow. For example, Redfin may consider that a home with a stunning view may have a better value, and Zillow may not take this little tidbit into consideration at all.
Zillow provides estimates for more homes than Redfin does. The more homes the system looks at, the more difficult it is for the pricing algorithm to calculate all the detailed variables that impact value in different parts of the country. For example, in some parts of the country, a home without a basement is no big deal. In other locations, a basement is a must-have and not having one will negatively impact the home’s value.
Is Zillow or Redfin More Accurate?
Zillow’s accuracy is dependent on many factors including the data the system has on any given property. Redfin’s accuracy is based on an algorithm that takes into account hundreds of data points. Both platforms are relatively accurate, but as with most things, the more information you have, the better. Using both tools, in addition to the advice of a professional like an appraiser, is your best bet.
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