Boston condos: Limitations of Zillow and Redfin’s Value Estimations
There’s been a lot of advice out there recently about which tools downtown Boston condo buyers, home sellers, or homeowners intending to refinance should use. Many people are choosing to make use of home estimate websites like Zillow or Redfin to conduct their research. So, I thought I’d take a brief look at how these two stacks up against one another.
Before we jump off into comparison, it is always preferential to seek the advice of a Boston real estate agent over the algorithmic estimates of Boston condominium values. You knew I had to add that in.
Boston Real Estate Zillow Estimates
Some of my Boston real estate blog readers may not be aware that the name “Zillow” was chosen as the company’s brand to reflect the “zillions” of date points the service makes use of. This matrix of data is what powers Zestimates, via algorithmically generated estimates of home values based on this huge pool of data. This Zillow feature is very popular with buyers and sellers for getting a general idea of a home’s market value. That said, the problem with Zestimates is that there are limited because of the relatively few data points that are fed into the algorithm. One Boston real estate broker put it this way:
“It’s easy to get caught up in Zillow’s automated home value estimates—Zestimates—when starting your (real or hypothetical) home search. But Zestimates don’t often reflect what a home is actually worth, nor what it’ll sell for in the end.”
The Zillow service efforts predicting monthly costs for buyers by estimating things like mortgage payments, taxes, insurance, and so on. But, as useful as this may seem, most experts suggest potential buyers and sellers consult an appraiser rather than lend too much credence to the Zillow service. One of the biggest problems with Zetimates is that the data used to create the values is often dated. And any algorithm is only as good as the data fed into it. According to the latest data from daily updated Zillow data, Zestimates have a 1.9% margin of error for homes on the market and 7.5% for ones that aren’t.
Finally, part of the problem is not Zillow’s fault. By allowing user provided data, the system is automatically subject to data errors. It should be pointed out here, that Zillow refers to its Zestimates as a starting point to determine home values. This means users should not consider these estimates as true appraisals. Readers should refer to this Investopedia report to learn more. Many rating sites put Zillow at the top where overal utility is concerned.
Boston Real Estate and Redfin Estimates
This service is a real estate brokerage offering online tools like Zetimates to Boston downtown condo buyers and sellers. The system at Redfin works in much the same way as Zillow’s offering, only Redfin updates its date throughout the day, which lowers the margin of error a bit. The system is hooked to the MLS, and it is updated every five minutes according to Redfin.
This system is rated the most accurate by many experts, and the current data suggest Redfin’s estimates have a current median error rate of 1.71% for homes on the market and 5.76% for those off-market. Redfin also has an easy-to-navigate app, and the service shows recent home sales and median values in adjacent areas. Redfin was the first to introduce a map search feature, which makes them a pioneer of sorts. Unlike Zillow, Redfin is a true brokerage site that recommends its own agents.
Finally, it should be noted that Redfin’s accuracy leadership only slightly edges out Zillow and some other competitors. And their lead can change at any moment depending on several factors.
Boston Real Estate and the Bottom Line
At the end of the day, either of these estimate tools should only be used as a guideline. Both Zillow and Redfin have advantages, depending on user needs and preferences. Likewise, both systems have major disadvantages that if not taken into consideration, could cost thousands of dollars when the ink is dry on the sales contract. Both Zillow and Redfin use their own proprietary formulas, and they weigh their data in different ways too.
Like I said earlier, there still is no substitute for a downtown Boston real estate broker or appraiser to provide you with the most accurate information. By the way, did you know I’m a Boston real estate broker?
In today’s blog post I’m going to talk about the limitations of the online home search site Zillow. The following reasons are why you are better off hiring a Boston real estate agent than using a computer for your real estate needs:
- Only utilizes past information: Zillow often uses outdated data to provide estimations of Boston condo home values. It plugs taxes records, square footage, zip codes, and what properties have sold for into an algorithm that gives a “Zestimate.” The problem is all the information that isn’t utilized – an agent has the ability to look at current inventory levels, absorption rates, and other metrics that are highlight primary for determining home value. Additionally, agents have the ability to observe current trends and formulate a general idea of what the future may hold.
- Doesn’t give a personalized estimate: There are many other things the algorithm isn’t capable of accounting for. If your Boston condo has great views or numerous expensive upgrades, there is no way for Zillow to work that into its calculation. It doesn’t make sense that your updated Boston condo should have a similar estimate as your neighbor’s, who haven’t put any money into their condominium.
- Inaccurate listing inventory: We’ve had many clients who were super excited about listings they found on Zillow – but, after they contact us and ask to see them, are disappointed to find that those homes sold months ago. This can be incredibly frustrating and can make the home search process a sour experience. The reason is that Zillow doesn’t get a direct feed from the MLS, the site that Realtors use. It scrapes information off the internet and populates the website with it; as homes enter or leave the market, Zillow doesn’t always keep up. In fact, it’s been estimated that up to 35% of its listings are inaccurate!
What we’re trying to get at is simple: Zillow is many times inaccurate. Whether you’re looking to buy a Boston condominium or see how much yours is worth, you should hire an agent. We are professionals that have an unmatched amount of experience finding and pricing homes. If you have any questions about real estate in your particular area, or would like accurate information about current San Diego market conditions, please give us a call.
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Updated: Boston Real Estate 2021