Redfin estimate accuracy | How Redfin calculates home values | Redfin estimate vs. CMA | Redfin estimate vs. appraisal
The Redfin estimator is one of the most accurate home value estimators, with a national median error rate of 2.09% for listed homes and 6.47% for off-market homes.[1] It's more accurate than Zillow, which has a median error rate of 2.4% for listed homes and 7.49% for off-market homes.[2]
Redfin says it uses over 500 data points about the home, the neighborhood, and the market to determine value. But even with this data, its estimates can be off by thousands of dollars.
When should I use a Redfin estimate?
Free online estimators like Redfin are useful when you're considering buying or selling and are in the initial phase of estimating a home's worth. These estimators can be a starting point for setting a list price or determining how much to offer on a home.
To get the most out of these tools, compare Redfin with other estimators like the Zillow Zestimate and the Chase home value estimator.
But don't rely only on online home value estimators when making major financial decisions.
If you're setting a list price, request a free comparative market analysis (CMA) from a local realtor to get the most accurate valuation.
A realtor will make an in-person assessment of your home and consider factors (like recent renovations) that an online estimator doesn't. With a CMA, you can set a competitive listing price and get more money for your home.
» Request a CMA report from an experienced local realtor
How accurate are Redfin estimates?
Redfin claims it has a national median error rate of 2.09% for listed homes and 6.47% for off-market homes.
To put this in perspective, if a home is worth $500,000 and the Redfin estimate is off by 6.47%, that means the estimate is off by about $30,000.
Redfin updates its estimates daily for on-market homes and weekly for off-market properties.
Consider these other factors about Redfin's accuracy rates:
- Redfin's error rates are national rates, which means Redfin's error rates can be significantly higher in areas where it doesn't have as much data. For example, Maine has an off-market error rate of 11.07%. The state has more rural areas and less home sales for Redfin to take into account in its estimates.
- The error rates are also medians. That means for off-market homes, Redfin is within 6.47% of a home's sale price half of the time. The other half of the time, Redfin could be less accurate than 6.47%. An average takes into account large outliers (like a home that’s off by 50%), but a median doesn't.
- Estimates are more accurate for homes with very similar surrounding properties. If your property is unique or in an area with few houses, you may be in the 50% of estimates that isn’t particularly close.
- Estimates are more accurate for homes listed for sale. This is probably because the estimator takes the listing price into account, which was likely determined by a professional agent or appraiser. For homes that aren't listed for sale, the algorithm isn't accurate enough to rely on for setting a list price.
Redfin admits that its home value estimator should serve as a starting point for understanding a home's worth and shouldn't be used in place of an appraisal or a realtor's expert advice. The estimates aren't legally binding.
How does Redfin calculate home values?
Redfin uses an algorithm — or automated valuation model (AVM) — to compute value based on a surface-level understanding of your home.
According to Redfin, its algorithm is based on multiple listing service (MLS) data for recently sold homes in your area. Because Redfin also sell homes as a broker, it has access to a wide variety of data points that it can feed into a machine-learning software. As a result, it can take into account whether your home is on a busy street, has a water view, and more.
The Redfin Estimate uses over 500 data points about a home, its neighborhood, and the market to determine value.
Redfin doesn’t recommend using its estimate as anything more than a starting point. You'll need to work with an experienced local agent to get the most accurate comparative market analysis (CMA).
What happens if you rely on an inaccurate home value?
It's important not to put too much stock in a number that's generated without knowledge of your specific home or situation.
As a home seller, you may misprice your property. This may mean that you try to charge too much. As a result, buyers will focus on other homes and yours may sit for a long time without interest.
On the other hand, you may underprice your home. There may be features about your house — including its location and recent upgrades — that make it worth more. If you underprice it, you’ll be sending a signal that there’s something wrong with the property.
As a buyer, relying too heavily on online estimates can cause you to miss out. You might mistakenly think a home isn’t worth a specific price due to an error in an estimate. On the other hand, you might think it’s worth more and that you’re getting a steal, when in fact you’re paying the proper price — or even too much.
Getting an accurate estimate can also help you make a competitive offer on a home and negotiate the price with the seller.
Get a CMA from a realtor for the most accurate pricing
A comparative market analysis (CMA) is one of the best ways to get an accurate home value estimate. You can usually get one for free from a real estate agent, with no obligation to hire the agent.
Here’s how a CMA compares to an online home value estimator:
| CMA (Comparative Market Analysis) | HVE (Home Value Estimator) | |
|---|---|---|
| Created by | Real estate agent | Algorithm |
| Output | Personalized, detailed analysis | Quick estimate |
| Powered by | Local market expertise, more detailed info on comparable properties | Publicly available data (e.g., recent sales, property characteristics, market trends) |
| Accuracy | Considered more accurate due to professional judgment, local market expertise, and up-to-date info | Generally less accurate because it relies on averages, trends, and potentially outdated info |
| Uses | Pricing a home, negotiating effectively, avoiding overpaying for a home, identifying market trends, making informed decisions | Preliminary research or a rough idea of a property's value; not reliable for significant financial decisions |
Experienced real estate agents are professionals who spend their time understanding the local market in your area and valuing homes based on comparable recent sales. If you want to know the true value of your home based on today’s market, it's worth it to work with someone who can provide an expert, detailed analysis.
Is a Redfin estimate close to an appraisal?
A Redfin estimate isn't as accurate or thorough as a professional appraisal. Appraisals are more reliable for determining the true market value of a property.
Here are some key differences between online home value estimators and appraisals:
- Accuracy: Appraisals are generally more accurate than online estimators because they involve a physical inspection and professional judgment. Home value estimators may not account for your home's specific features or conditions that could significantly affect its value. Online estimators rely heavily on data averages and trends.
- Scope: Online estimators provide quick estimates based on available data, while appraisals involve a detailed examination of the property.
- Purpose: Online estimators are often used for preliminary research or to get a rough idea of a property's value, while appraisals are typically required for mortgage lending or other significant financial transactions.
» MORE: What Is a Home Appraisal, and Do I Need One?
