We have been keeping an eye on a house on Redfin that seems too expensive.
First listed for $500,000. Estimate from Redfin: 494k.
Three weeks after listing, the price was reduced to 450k.
Redfin estimates decrease to 435k in less than a day.
Does anyone know anything about this? Are all of the estimations BS?
Indeed. They are produced by a computer and account for the sale price. To obtain accurate statistics, ask your agent to pull real comps.
A house close to me that is listed for over twice its real value is an example of what I mean. Zillow and Realtor have adjusted their estimations to more closely resemble the list price. There is no possible chance that it is worth that much.
I fail to see why, absent a sale or a real comp that sells for that amount, they would consider a list price to be a reliable data point.
@Amelia I don’t understand why they would treat a list price as a valid data point until there’s a sale or an actual comparable sale.
However, the list price does offer valuable insight into the property’s worth, particularly when set by a realtor who is knowledgeable about comparable sales in the area. Although this strategy can fail when a house is listed at an unrealistic price, as in your example, it is often balanced out by instances where a list price reflects significant updates or remodels by recent owners. In such cases, initial estimates may be low, but platforms like Redfin can update their estimates to improve accuracy based on the new list price.
@Ariana Granted, it’s a “valid data point” in hindsight, but what’s really shocking is that it appears to account for almost 90% of the zestimate.
I had foolishly believed that these approximations were more plausible, albeit cursory, algorithmic evaluations grounded in all available data. No, that’s only an estimate of what the list might contain; if a current list price exists, that’s the price.
Redfin estimates are a starting point, not a guarantee. It’s smart to do your research and consider a home inspection before making any offers!
Ask your realtor for a market analysis. Even if you don’t need it, make them get it for you. If they can’t do it for your area, they’re one of the unqualified realtors who got into the market over the last couple of years without actually understanding their field and you’ll know that it’s time to get a new realtor.
Redfin and Zillow are unaware of the specifics of a given house. A home’s worth will be based on when it was last sold as well as the appreciation of neighboring properties during that period if it hasn’t sold in a long time. Once the house is advertised, their algorithms take it for granted that the local, licensed Realtor has expertise they do not and has priced it correctly. Consequently, the algorithm is allocating around 90% of the property’s value to the appraisal made by the expert who just put it up for sale.
Yes. They’re computer generated, and they take the sale price into consideration. Ask your agent to pull real comps to get actual data.