If you're getting ready to sell, chances are you've already plugged your address into Opendoor, Zillow or Redfin to see what your home might be worth. These tools give you a ballpark idea of what offers could look like and make it easy to compare your home with others in the neighborhood.
The catch is that they present a sense of precision about something that's inherently uncertain, so the number you see may not reflect what really happens when you sell. On top of that, the three sites often give different figures for the same home. All of them depend heavily on algorithms, so it helps to understand how those work.
What Goes Into the Algorithm
A home value algorithm can pull from hundreds or even thousands of data points: interior and exterior features, the age of the home, its square footage, its location and more. Each company weights those factors differently. For example, your appliances generally count for less than your square footage, and square footage generally counts for less than your neighborhood.
Comparable sales are at the core of the process. The algorithm looks for similar homes that sold recently and measures your property against them. The companies keep their exact formulas private, but each has shared some general information about its approach.
How Opendoor Arrives at a Number
Opendoor's estimate is different from the others because the company actually wants to buy your home, so the figure functions as an offer. It starts with information you provide about your home's condition, features and updates, and you can add photos if you'd like.
From there, Opendoor's models review recent comparable sales and local trends. Pricing teams who know the area check the algorithm's results, and the company says it adjusts for seasonal differences between comparable sales. An in-person condition check happens later, but the first estimate relies mostly on what you report. In other words, the offer is only as accurate as the details you supply.
How Zillow Arrives at a Number
The Zestimate® is the most widely recognized of the three, and for many people it's become shorthand for home value. Zillow itself says it isn't a substitute for a market analysis.
The Zestimate is built on public data such as past sales, mortgage records, tax assessments and building documents. It doesn't factor in intangibles, upgrades or new appliances. You can update your home's details and correct errors, but only major changes will move the number. It's also harder to produce an accurate estimate in places where public records are thin or there aren't many sales.
Accuracy varies from market to market. When Zillow compared top metro areas, its estimate came within 5% of the final sale price anywhere from 62.7% to 92.8% of the time. Zillow describes its figures as a starting point.
How Redfin Arrives at a Number
The Redfin Estimate uses data from the multiple listing service. Redfin says it weighs more than 500 data points, including market and neighborhood conditions, whether a home has water views and whether it sits on a busy road. Machine-learning software refreshes the value every day for homes that are listed for sale and every week for homes that aren't.
Unlike Zillow, Redfin doesn't let homeowners edit details that might change the estimate. Redfin says its estimates are the most accurate, but it also calls them a starting point.
Why Expertise Still Wins
Online estimates are useful for getting a general sense of value, but that's where their usefulness ends. A Realtor can take into account the things an algorithm misses, like your recent updates and what local buyers are looking for right now, and turn that into a smart pricing strategy. For the most precise number, a professional appraisal is the gold standard.
Let Me Help You Make Sense of the Numbers
Before you list, you need a valuation you can trust. If you'd like to know what your home is really worth in today's market, reach out and I'll put together a detailed home valuation for you.