304 North Cardinal St.
Dorchester Center, MA 02124
304 North Cardinal St.
Dorchester Center, MA 02124
Wondering if you should stick to Zillow to get accurate estimates of property prices or opt for something else?
Redfin is more accurate than Zillow when it comes to calculating the price of a property based on location, sales history, size, listing price, etc. Redfin has an accuracy of 74%, compared to Zillow’s 67%. This is especially true for off-market homes, where Redfin is more accurate than Zillow within 20% of the sales price (84% accuracy for Redfin vs 82% accuracy for Zillow), within 10% of the sales price (61% accuracy for both) and within 5% of the sales price (36% accuracy for both).
In this article, I look at how both models function and analyze the results they deliver for listed and off-market homes.
The nearest competitor to Zillow in the online home value estimators market is Redfin, and as of last year also, it proved more accurate.
Both estimators use user-submitted and public data to develop their formula, so the accuracy for both drops for off-market homes. But if your goal is predicting the sales price accurately, Redfin proves more accurate at 74%.
Redfin states that its estimates are accurate to within 5% of the sales price when it comes to listed homes. In comparison, Zillow’s estimates are 67% accurate when calculating the sales price of listed homes.
Although it used to be more accurate even 2 years back, the accuracy dropped from 82% to 67% between 2021 and 2022.
That said, both home value estimators are more reliable for general estimates rather than precise results. We have shortlisted three factors why Redfin and Zillow estimates vary –
Zillow predicts the prices of properties using the following factors –
The formula it uses ensures it can automatically predict the price of homes depending on public and user-submitted data. And this is how accurate Zillow is, considering the sales price –
I have a detailed article on he accuracy of the Zillow Mortgage Estimate here.
Redfin states its estimates are accurate and feature a median error rate of only 2.6%. This allows it to calculate the individual price of a home on the market, and the more it tries to deliver the exact value, the error level increases. You can see how the accuracy varies from the following list –
Moreover, Redfin has this feature whereby users are notified about a “hot home” likely to sell out soon. It uses approximately 500 factors, such as price, neighborhood, property type, sales history, how quickly similar homes have been bought, etc. Also, when people visit a particular property, or it receives more interest, it becomes a hot home.
But Redfin further points out it doesn’t intend to replace professional real estate agents and only provides an estimate.
For off-market homes, the accuracy for both Redfin and Zillow falls drastically. In Zillow’s case, we have seen the accuracy vary as per the below data –
For Redfin, the accuracy changes as follows when we keep the parameters the same –
Redfin and Zillow use different models, and that’s why the results vary. Although both companies have kept their formulas under tight security, they have provided hints about how the estimates are made. Redfin says it relies on similar properties being sold in the area in the past year.
While estimating a home’s sales price within 20%, both algorithms are 98% accurate, which drops considerably within 5% of the sales price. Moreover, the home value offered by both differs from one location to another. But more often than not, the estimates don’t vary drastically for any particular home.
If this does happen, it means one of them is using an outdated data set. You can edit the facts, but for that, you will have to be the owner of the property.
Before choosing Redfin over Zillow, or vice-versa it would be best to go over the following factors.
For Redfin and Zillow to be accurate, users must report additions and renovations in the property. But even then, it’s impossible to quantify the quality of the updates. And this is even more problematic in a hot market where properties can fetch way more than they are worth. Hence, getting accurate estimates is easier said than done.
Zillow covers more homes than Redfin, offering estimates for more than 104 million in 50 states. In contrast, Redfin covers 92 million homes in 43 states, but most of the properties aren’t listed on the market in both cases. But what worked in Zillow’s favor till 2021 was that it used data from a vast geographical area, such as an entire country.
The media error rates for Redfin are 0.6% more accurate than that for Zillow. However, Redfin publicly updates its error margins and accuracy more frequently than Zillow. In most cases, Redfin updates its data weekly, while Zillow does so less often.
There isn’t much difference between the two, but on balance, Redfin is slightly better when you want to know what is more accurate than Zillow. I have seen the accuracy percentage of both models falling in 2022, but it was less drastic for Redfin, which fell by 4%, while Zillow dropped by 15%.
And as you have learned, the performance of these models for off-market homes is quite poor, with an accuracy rate of 2 out of 5 homes. This is significant for homeowners who believe artificial intelligence can outperform a real estate agent, thereby serving as a wake-up call.
Overall, Zillow has a median error rate of 3.2%, while Redfin’s error rate is 2.6%, giving it the edge.