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Personal Finance
Zillow vs Redfin: Can you trust either to know your home’s true value?
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Zillow vs Redfin: Can you trust either to know your home’s true value?

Zillow vs Redfin: Can you trust either to know your home’s true value?

Zillow vs Redfin: Can you trust either to know your home’s true value?

Can you trust Zillow or Redfin to know your home's value?

One of the first things you’ll want to determine if you’re buying or selling a home is its true value.

Two of the more popular online resources for analyzing home values are Zillow and Redfin, both Seattle-based companies.

If you are a buyer or seller interested in using these sites’ valuation tools, you may be wondering: Whose estimates are more accurate? And can I trust either one to know the true value of a home?

In this article, we’ll look at Zillow and Redfin to identify similarities and differences between the sites and the services they offer, the accuracy of their home valuation tools and what money expert Clark Howard thinks about them.

Zillow vs. Redfin: Which home value site is more accurate?

The estimated market values for homes analyzed by Zillow and Redfin are tallied by metrics compiled by real people, as well as computer analytics. Most important thing to know is that neither Zillow nor Redfin home estimates are  official appraisals.

In both cases, the estimates really starting points for how much a home is worth.

Are Zillow’s home estimates accurate?

Zillow’s estimates — or “Zestimates” — cover around 100 million homes in the United States. The site uses proprietary formula to determine home values, including:

  • Special features
  • Location
  • Market conditions

As far as accuracy is concerned, Zillow says its estimates have a median error rate of 5%, which they say “means half of the home values in the area are closer than the error percentage.”

“For example, in Seattle, Zestimate values for half of the homes are within 5% of the selling price, and half are off by more than 5%.”

Because so many factors can affect a home’s value, Zillow encourages users to find their own homes on the site and update their home facts. Redfin also has this feature.

It stands to reason that if a new school has opened in the area or you’ve remodeled and added a bedroom or two, this could drastically change your home’s value.

How accurate are Redfin home estimates?

The “Redfin Estimate” is the site’s calculation of a home’s market value. Redfin, which updates its numbers daily for on-market homes, claims that it has “the most accurate online home-value estimate.”

The site uses the following data to determine home values:

  • Full access to multiple listing services (MLSs)
  • Comps on recently sold homes
  • Special features

The median error rate of the Redfin Estimate is 1.77% for homes on the market, the company says. Here’s what Redfin has to say about that:

“This means that when a home that is currently on the market sells, the Redfin Estimate will be within 1.77% of the sales price half of the time.”

Zillow vs. Redfin comparison

Home value sites Zillow Redfin
Median error rate for home values 5% 1.77%*
Relationship with real estate agents partners employs
Number of homes being analyzed across U.S. 100 million 65 million

*For homes not for sale, Redfin’s median error rate is 6.55%. Redfin says the reason for this is because there is more data available on homes that are for sale.

As you can see, there are some differences between the two companies. Namely, while Zillow partners with local brokerages and agents in select markets, Redfin has real estate “lead agents” that work directly under the brand.

Zillow vs. Redfin: Let’s compare the same home on each site

Just for fun, let’s look at the same home and see how Zillow and Redfin estimates its value:

As an example, we’ll start with a very famous home that we know is not for sale: 1600 Pennsylvania Avenue in Washington. D.C.

Can you trust Zillow or Redfin to know your home's value?

The Zillow estimate of the White House is:

$423,167,047

Home features listed: 16 beds35 baths55,000 square feet

The Redfin estimate of the White House is:

$33,648,915 (33 million)

Home features listed: 35 bathrooms, 55,000 square feet at $612/square feet.

As you can see, that’s a pretty wide disparity. Both Zillow and Redfin have algorithms that weigh different factors. The same could be true with your home. One site may show a home value that is wildly out of sync with the other.

Zillow vs. Redfin: Clark’s view

That disparity is something that money expert Clark Howard discussed in a recent podcast, where he said that consumers should do a head-to-head with Zillow and Redfin.

“If you live in a very high-end home — no chance,” he says, referring to how the sites probably won’t give you similar estimates. “But for the great middle of the market, which involves probably three-quarters of homes in the country, these things can be a useful tool.”

To illustrate Clark’s point, we compared a more modest home for sale in Marietta, Georgia, a suburb of Atlanta.

The home is listed for $245,000.

Can you trust Zillow or Redfin to know your home's value?

The Zillow estimate of this Georgia home is:

$184,948 (Zestimate range: $176,000 – $205,000)

Home features listed: 5 beds baths square feet.

The Redfin estimate of the Georgia Home is:

$255,794

Home features listed: 5 beds baths square feet.

Conclusion

Both Zillow and Redfin are great tools for home buyers and sellers, but their estimates are just that: estimates.  The best way to know a home’s market value is to talk to a real estate agent you trust, supplement the information you learn from Zillow and Redfin and do your own research.

Here are more Clark.com articles you might enjoy:

The post Zillow vs Redfin: Can you trust either to know your home’s true value? appeared first on Clark Howard.

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