The Test
Many of you are probably familiar with Zillow and its “zestimate” valuations. But if you’re looking for a guess as to what a house is worth, there are quite a few online tools out there where you can enter an address and get a number spit out. I thought it would be fun to try out a bunch of them and see how much (dis) agreement there is among all the sources.
Valuing real estate is more difficult in some neighborhoods than others. If you live in a stereotypical suburban neighborhood built 10 years ago housing valuation will be a little bit easier since the stock is mostly the same and there are plenty of comparables. As luck would have it, I live in a great neighborhood for putting these things to the test. It’s a gentrifying neighborhood with both tiny single family tear-downs as well as large, expensive new houses. There are a bunch of condos as well. The diversity of stock, both in terms of size, age, and finish will tend to throw off valuation algorithms.
I’m going to use my house as a test subject since I keep up with the real estate market in my neighborhood and I have a pretty good idea about what my house would sell for. Since I don’t like to give out too much personal financial information, I’m going to convert my estimate to an even $200,000, which is close to the price of a median home in the U.S. I’ll normalize all the other estimates accordingly so that you can get a sense of the scale of variation.
The test subjects are: the aforementioned Zillow, ReMax, Redfin, TIAA Direct, Fifth Third, Chase, and Bank of America. To their credit, none of these sites require any personal information from you other than the address so you don’t have to worry about being hounded by realtors and loan brokers.
The Results
So here’s what we get when we plug my address into all those sites:
I recently added on to my house. Zillow knew this. Chase and Fifth Third did not but have a feature that lets you adjust square footage, bathrooms, and bedrooms. The rest of them all had the old data.
Bank of America actually gave a range ($119K to $247K) rather than the value you see, which is just the midpoint of that range. I know it seems like a big range, but like I said my neighborhood is an outlier in terms of housing stock variation so a range like that is defensible for an algorithm. I would expect lower variation for other neighborhoods.
The only estimate which came in above mine was Zillow’s, and I think that’s a function of them using newer data. They may be weighing newer sales more heavily as well (some of the comps in these things go back years).
Anybody else have opinions about the accuracy of these valuations?
I’m also trying to sort all of these out. Would you add the estimate from realtor.com? Thanks!
realtor.com’s estimate comes in at $156k.
Zillow is always high on my home – about 10-20% higher than comparable recent sales. Seems consistently high when I look at other properties too – probably good marketing to tell people their homes are worth more than they think.
Hmmm, you might be on to something there.
One of the free FAKO score sites used to use an estimator that was ridiculously low for my area. They were consistently coming in at less than the cost to build our home back in 1999. Even in the trough of values, we got an appraisal for $50K above that.
Today, Zillow ranges from about $60K below the actual market value to about $10K below. Realtor.com? about $5K above. We live in a mixed neighborhood, with houses built in the 50’s, 60’s, 70’s 80’s and late 90’s. Some have small lots, some have very large, for a first tier suburb (ours is .59 acre).
The best comps are not in this immediate area, but another part of the suburb, where a subdivision was built around the time that 3 of the four houses on our cul de sac were built.
All that said, we still have not regained the value that was appraised for a second mortgage back in 2006. Patience, patience.
Well the prices on my house are all over the map depending on the site. Several gave ranges that were crazy wide (like $400K variable). Zillow was the highest (though lower than BoA’s top of the range). Re/Max the lowest. Not sure what to say other than in aggregate they aren’t very useful.
Same as MSER here too
Was wondering if you could check moveup.com as well. I am on the team that develops the valuation algorithm and any feedback would be great!
We’ve been testing our valuations nationwide and are trying to keep improving them compared to the sites you have mentioned.
Thanks in advance!
I didn’t test any that require me to enter my name, email, and phone number.
Thanks for the reply, I understand. We do default to a range and then allow adjustments for use of nearby sold comparables, additions (by sqft adjustments), market condition, interior, exterior, amenities, location, lot size and age of home.
Just FYI, I know values change all the time but it looks like we came up with a normalized result of $189,551 as of today. We will keep modifying for more accuracy.
Great post!
I gave initials, an unused but valid email, and lied about my phone number. And am very glad I did. Your software placed my house about a mile away from where it is, and dropped 1000 square feet from its actual size.
I think that your software needs quite a bit of work.
Thanks for the feedback mickisue! It looks like it couldn’t find the exact detail of the address you entered (which is why it didn’t have the correct sqft or other details), so I’ll have the team look into why and get it fixed. I appreciate the feedback.
Thanks once again. We have found the data issue and it has been corrected. Your home should now pull correctly mickisue!
Thanks again for the feedback.
FWIW, you are about 100K low on the value. In fact, you are below the value found by a professional appraiser during the trough of the real estate market in 2011.
So….I think you need to work on your algorithm!