Big news! Redfin today launched the Redfin Estimate, developed to be the most accurate estimate of your home’s value. The Redfin Estimate has the industry’s lowest published median error rate: within 1.96% of the final sale price for homes on the market, and within 6.23% for all other homes.
To find the Redfin Estimate for your home, just search for your address from any page of Redfin’s site.
Having 100% access to the Multiple Listing Services (MLSs) used by brokers to list homes for sale is why the Redfin Estimate is so accurate. Other real estate sites license some MLS data, but only brokers who share our own listing data get full MLS access: this tells us how many cars can fit in each home’s garage, whether the basement or attic is unfinished, if a home’s on a busy street or along the water, or if it has a view. Such details make a big difference when deciding whether two homes are comparable to one another or merely near one another.
Cloud Power is More Power
The other major reason the Redfin Estimate is more accurate is the plummeting cost of cloud computing, which lets us periodically draw on far more processing power than we could ever afford to own. If you’re near an Oregon data center and see the lights flicker, that’s Redfin, comparing each of 40 million homes to a unique set of more than a thousand comparable sales. Over several passes, Redfin identifies the sales most relevant to you.
Valuing Homes is Different When You’re a Broker
What took us so long? We spent years refining the Redfin Estimate because our customers hold us to a higher standard as a broker than as a website. Whether we’re representing buyers or sellers, we can’t be flip about putting a price tag on your place because we might just have to sell it.
We Show Our Work
This is why we show for each Redfin Estimate the comparable sales we used to generate that Estimate.
It’s also why we’re willing to drive over to your house for a walk through the property, followed by a complete pricing analysis, using the Redfin Estimate as a starting point. If you want us to list your home, you can get our commitment to sell the place for the price we came up with. As with other questions in real estate, we believe the best answer is a holistic one, combining technologies like the Redfin Estimate with our own local agents.
We Know Our Limits
But it’s not just homeowners who hold us to a higher standard; it’s other brokers, too. It wasn’t until last year that the National Association of Realtors changed its rules to permit brokers to use MLS data for generating home valuations automatically.
And unlike other sites, we’ve also been careful to account for requests from listing agents to stop displaying a Redfin Estimate while the home is for sale, which have already been made for 17% of today’s listings. When a home’s owner gives us pictures of her kitchen to display on the Internet, the least we can do is let that owner decide whether a Redfin Estimate can be displayed next to her listing price.
This caution is part of a larger, hard-won understanding that the home is a private place, and that our efforts to make buying and selling homes more transparent has to benefit buyers and sellers alike, not just our own cause or our own business.
A Major New Strategic Front
We already know from early tests that this Estimate will in fact be enormously valuable to buyers and sellers, and open a major new strategic front for Redfin, which has always focused our public site on authoritative listing search for home-buyers, even as more of our customers are sellers. Until now, we haven’t published much data to talk about with would-be sellers, let alone with everyone else who owns a home.
It’s high time brokers joined this broader conversation about home values, for the 98% of homes that aren’t currently for sale. Whether it’s online or in person, providing guidance on what a home is worth is part of our service to the public, and to our own customers. Redfin may be the first national broker to offer a home-value estimate, but we won’t be the last.
The Redfin Estimate is available in 274 counties and 35 markets, via the web and in our iPhone and iPad application; the Android release is scheduled for later this month. We expect to launch the Redfin Estimate in every market Redfin serves, loading past years’ MLS data for markets we’ve only recently entered, and adjusting our algorithm to address each market’s local differences.
We’ll update our accuracy measurements every week based on how close the Redfin Estimate is to final sales prices over the last 120 days. For determining the accuracy of our off-market Estimates, this entails comparing what an Estimate would be if we never knew the underlying home was for sale, without any of the data that makes Estimates for active-listings more accurate.