Introducing the Redfin Estimate

December 3, 2015 11 Comments »
Introducing the Redfin Estimate

Watch about Zillow…your Zestimate now has company.

Today, Redfin announced the availability of the so-called “Redfin Estimate,” which is the online real estate brokerage’s answer to the Zestimate.

Similar to the Zestimate, the Redfin Estimate is an automated home-value estimate that is displayed on home listing pages throughout Redfin.

When viewing homes on Redfin, it will be listed next to the last-sold price for homes not on the market and below the list price for those currently on the market.

Redfin Estimate Has Lowest Error Rate

Redfin Estimate

Redfin claims its new home value estimate has the lowest published error rate of any of its competitors because it’s driven by more data.

That error rate is 1.96% for homes that are currently for sale and 6.23% for off-market homes.

In other words, the Redfin Estimate will be within 1.96% of the actual sales price half of the time for a listed home and within 6.23% of the eventual sales price of non-listed homes.

It’s more accurate for homes that are listed because more data is available on such homes.

And while it might be the lowest, it can still be way off, as their own error rates above clearly show.

The Redfin Estimate factors in more than 500 data points about the property, the neighborhood, and the real estate market to come up with the end result.

Additionally, because Redfin has 100% access to Multiple Listing Services (MLSs), it can dig a little deeper into the property and determine things like if the property is located on a busy street, or if it has a water view.

This, combined with “today’s best cloud technology,” gives users a better home estimate, though still no substitute for a proper home appraisal.

Redfin Estimate Shows You Comps

comps

While the estimates are still fishy at best, based on my own searches, they do provide the comps used to come up with the estimate, which is nice.

At the top of any property page on Redfin that contains a Redfin Estimate (more than 40 million homes in 35 markets), you can click on the newly added Redfin Estimate tab.

It will take you to a page dedicated to the property’s estimated value that displays six comparable properties that sold nearby recently.

This will give you real insight into how they actually come up with your home’s value. However, I’ve seen some outliers in the comps so it’s still powered by a machine susceptible to making mistakes.

In other words, take the estimates with a grain of salt as you would other automated estimates. If you have concerns about their estimate, there’s also a link to a feedback form below the comps.

The comps are apparently chosen using a blend of proximity, similarity, and how recently they sold.

Redfin Estimates are updated daily for homes that are currently listed for sale, and weekly for off-market properties.

Changes will likely be more frequent in fast-paced markets where new comp sales are generated more quickly.

Don’t See a Redfin Estimate?

coverage map

In some cases, you may not see a Redfin Estimate on the property page. This could be due to limited data for the property in question, or if the city itself isn’t covered.

For example, if not enough similar properties sold next to yours in the past year, an estimate might not be generated.

Perhaps more interesting is the fact that Redfin agents can remove Redfin Estimates for properties on the market at the owner’s request.

So if an owner doesn’t want the public to see it, maybe it’s lower than they’d like, they can opt out of displaying valuations for the home.

The agent simply deselects the “Allow Automated Valuations” option within the Multiple Listing Service.

The Redfin Estimate recently went live in Dallas, Detroit, and Minneapolis.

Is It Accurate?

accuracy

Now the million-dollar question. Is the Redfin Estimate accurate?

While they say they have the lowest published error rate, they also admit that, “there will always be estimates for individual homes that are not accurate.”

I took the new tool for a spin and compared it to Zestimates for the same properties.

What I found in my initial testing was that the Redfin Estimate was sometimes higher and sometimes lower than Zillow’s Zestimate.

And often by a significant amount; we’re talking more than $100,000 on a sub-million dollar home. In fact, I couldn’t find any properties that had similar estimated values between the two websites.

If anything, this might just lead to more confusion from both prospective home buyers and home sellers. But what can you do.

My guess is sellers will point to whichever estimate is higher, while buyers will point out the lower estimate. Fun times ensue.

Update: An updated version of the Redfin Estimate released on October 2st, 2016 is apparently 9.7% more accurate for on-market homes and 7.8% more accurate for off-market homes compared to the original version.

Homes for sale will be within 1.8% of their expected sales price half of the time, while off-market homes will be within 6.28% of the sales price (if listed) half the time.

11 Comments

  1. Barbara January 4, 2016 at 7:43 pm -

    Redfin is so far off on my house it’s ridiculous. I have a small house in Bremerton, WA. at 2906 Alder St.
    I plan to sell FSBO next month. I paid 89,900 in ’09 (bank-owned); did a bunch of work — the house looks great. Agents have suggested 140K., and HELOC I applied for came up with 143K in the desktop appraisal. Redfin has me at 64K. It makes me want to cry. I hope no one pays attention to that. I won’t be on the MLS, so I won’t be on Redfin, but if someone is doing their research, they may look me up on there. I contacted them, and they said that it’s computer generated and cannot be adjusted. It’s a very, very strong seller’s market here, so I’m not too worried, but it still makes me mad.
    Thanks for letting me vent!

  2. Colin Robertson January 6, 2016 at 7:53 pm -

    Barbara,

    It shouldn’t matter…Zestimates never have so I don’t see why this one would matter. In my opinion, it’s more of a fun toy at the moment.

  3. Abdellatif Rayan June 25, 2016 at 10:35 am -

    Redfin website posted an estimate which is way off the mark. It is around & 100 K lower than estimates of other agencies of the same industry. As the owner of this property, I am really concern that the estimate might lead to hurting my investment. I have contacted the real estate agent by phone, email and text messages but got no answer.
    Any suggestions please about how to have redfin correct their wrong doing?

  4. Colin Robertson June 25, 2016 at 1:14 pm -

    I think you can e-mail them about it if you feel it’s inaccurate, and if you sell, you can have the real estate agent hide the Redfin estimate too.

  5. Abdellatif Rayan June 25, 2016 at 8:38 pm -

    I have emailed them, called them and text them multiple times to no avail.

  6. Colin Robertson June 26, 2016 at 12:48 pm -

    Try Twitter?

  7. Sara S. September 21, 2016 at 11:49 am -

    I am happy to read that I am not the only one experiencing these issues with redfin. I just purchased a co-op and the redfin estimate was 5K above asking, once I closed and property was marked “sold” the price dropped 8K+ in just 3 weeks.
    I called redfin several times and just got rude responses. Now I am just worried about my investment even though my appraisal came in at the price I paid.

  8. Craig A November 10, 2016 at 3:57 pm -

    My guess is that Redfin low balls home estimates to get homeowners angry enough to email them, capturing the email, then using them to build a database of home addresses + emails + last recorded sale data to sell to realtors or others interested. aka Scam

  9. Mandy S December 30, 2016 at 11:45 am -

    I purchased my home through Redfin 3 years ago. Since then, their estimator algorithms have never, ever worked correctly. First they compared my house to those in an active adult community (I live in a single-family, residential house) and now their estimate includes 5 comparable size and type houses and one house that is 2/3rds the size of my house and out of the neighborhood. The 5 similar houses average $376K (normal for area) and that outlier is estimated at $305K which brought the estimate of my house down to $340K. All the other houses in my neighborhood (77 other houses) have correct estimates but I guess since I’m the lucky one who bought with them, I have the incorrect estimate. Hopefully when it comes time to sell, I can have an agent remove their estimate and I definitely won’t be selling through them since their “improved” estimator is even worse than the last one.

  10. Colin Robertson January 3, 2017 at 9:39 am -

    Mandy,

    If you think there’s a legitimate error you can contact them and see that it gets resolved. But as you said, it probably won’t matter because the listing agent can hide it.

  11. My View January 16, 2017 at 10:01 am -

    Voilà, I am happy to participate in our discussion regarding the so-called new Agent Redfin new CMA tool:

    – Bottom line: It is one of the worst real estate tools on real estate market!
    – Take my home at CA 92532 for real time example: Redfin estimate 285K vs. 360K Zestimate vs. current market price 375K!
    – Around 25 houses with same elevation, same footage (2486sf)… in same track got estimated price around 259K from Zillow and my house is always got higher estimated price due to it’s location, former model house with many upgraded items…

    – A good Redfin comp(!):
    35318 Trailside Dr Lake Elsinore, CA 92532 Redfin estimate $443,814; my house (same footage, same elevation, same track, bigger lot, former model house, many upgrades..) got Redfin estimate of $284,671 which is -160K lower compared to the house with same footage mentioned before (444k redfin estimate!)????

    – The worst thing is Redfin does not “allow” owners taking off Redfin junk estimated value from their web site! Who gives Redfin the authority to control individual rights of home ownership?

    – I think about contact Redfin agent but they may say this is “computer-generated data” issue. As an IT architect working in software fields for over 25 years I figure out one thing: Computer only does what human being want it to do; in this case “garbage in, garbage out!”

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