Advancements in technology have made home buyers and sellers more prepared than ever. Redfin and Zillow estimates are only two of those advancements. Both platforms offer great valuation tools, but it is easy to find yourself debating whether to use Redfin or Zillow estimates. Of course you want an accurate valuation that will benefit you, but which site can come closest to that?
A Redfin estimate is a calculated estimation of your home’s value on the market. Redfin uses many resources to calculate their estimates. With access to the MLS, Redfin is able to input all available data on a listing into their calculation, along with data on recently sold properties in the same area. The collection of this data allows for a fairly good estimate of the property value to be made.
Redfin states that their median error rate is 1.77%. Meaning that for every home that sells on the market, their estimate will be within 1.77% of the selling price half of the time. For homes off the market, their median error rate is about 6.64%. Redfin says this is largely due to the fact that when a home is off the market there is less information available on it.
A Zestimate is also a home valuation, but it is produced by Zillow. Zillow creates a Zestimate by using public and user submitted data. Therefore, the Zestimate is largely dependent on what kind of information the platform has access to. This information can also be easily added to and updated by the user. New information will be calculated into the Zestimate within 24 hours.
Zillow released that their current median error is around 5%. For example, for half the homes in Seattle, the Zestimate will be within 5% of the selling price. As for the other half, the Zestimate will be off by more than 5% of the selling price. Zillow does not categorize properties into homes on and off the market when determining median error rate. Meaning that their overall median error rate for all properties is around 5%. With a majority of the properties on their site being off the market, the Zestimate is easily able to compete with Redfin’s estimate.
Why are the Estimates Different?
When comparing Redfin vs. Zillow estimates, there are many differences between how each platform creates their estimate. Potentially one of the most impactful differences, is the fact that Redfin takes a list price into their calculation. This seemingly makes the Redfin estimate more accurate, because it is likely that the list price and final sale price will be relatively similar.
Margin of Error
As stated previously, Redfin estimates their median error rate is 1.77% for homes being sold on the market, and about 6.64% for homes being sold off the market. Zillow’s median error rate for all properties is about 5%. Although a new announcement from Zillow is about to change the game. The company has recently claimed that their median error rate will be dropping to 4%. If the company is able to achieve a 4% median error rate on all 110 million homes that are on their site, it could put them ahead of Redfin.
Why is the Median Error Rate Different?
There are a few differences in the platforms that contribute to the difference in median error rate. One of the most influential being that Zillow does not differentiate between an on and off market median error rate. Another impactful difference is the fact that Zillow has about 110 million homes on its platform, whereas Redfin has around 70 million homes. The more homes the system has to evaluate, the more chances that is could get an evaluation wrong. Thus, increasing Zillow’s median error rate.
Redfin vs. Zillow Estimates
When debating Redfin vs. Zillow estimates, it is important to keep in mind that their estimates are in fact just estimates. Neither platform makes a promise that your home will even sell close to their estimated price. Redfin and Zillow estimates are simply just tools to use in the home buying or selling process.
Currently, the two platforms often come neck and neck when accuracy is questioned. Therefore, it is best to compare each platform’s estimate for your home, and then consult with a real estate agent. Redfin and Zillow are helpful tools but don’t just stop there. Consulting with an agent is your best bet when trying to decide what your home should sell for, or what you should realistically pay for a home.