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The Redfin Estimate, an automated home-valuation tool, has undergone a significant update, making it substantially more accurate for both listed and off-market properties. For homeowners and buyers, this translates to a more reliable starting point for determining a home's value. The latest algorithm refinement has resulted in a median error rate of just 1.80% for on-market homes and 6.28% for off-market homes, representing a major improvement in precision.
This article explains what these new error rates mean for you and how to effectively use the Redfin Estimate as part of your real estate decision-making process.
As of October 21st, the updated Redfin Estimate demonstrates a median error rate of 1.80% for homes listed for sale and 6.28% for homes not currently on the market. The median error rate is a key metric used to assess the accuracy of automated valuation models (AVMs). It means that for half of all home sales, the Redfin Estimate will be within 1.80% of the final sale price for an active listing. For example, if a home sells for $500,000, the Redfin Estimate would be within $9,000 of that price half the time. This update has made the tool 9.7% more accurate for on-market homes and 7.8% more accurate for off-market homes compared to its previous version.
The Redfin Estimate is designed to be a powerful, data-driven starting point. When viewing a home on Redfin.com, you can find the estimate at the top of the listing. By scrolling to the "Redfin Estimate" section, you can review recently sold comparable homes (or "comps"), which are properties similar in size, location, and features. Analyzing these comps helps you understand the local market and contextualize the automated value. It is crucial to remember that an AVM cannot account for a home's unique condition or interior upgrades, which is why it should be one part of your research.
Based on our experience assessment, automated estimates should not be the sole basis for pricing a home. While the Redfin Estimate provides an excellent foundation, it lacks the nuance of a live assessment. A local real estate agent can offer comparative market analysis (CMA), which incorporates firsthand knowledge of neighborhood trends and the specific condition of a property. The most effective strategy is to use the Redfin Estimate to inform your initial research and then start a conversation with an agent who can provide a personalized valuation.
The logical next step is to consult with a real estate professional. Redfin recommends using the estimate to begin a discussion with agents who are experts in their local markets. These agents have often toured comparable homes and can provide critical context the algorithm may miss. There is no obligation to work with a Redfin agent to access the estimate, which is free for anyone to use. You can also sign up for monthly updates to track changes in a property's estimated value over time.
In summary, the updated Redfin Estimate offers a more accurate and valuable tool for gauging home values. However, its greatest utility is realized when used as a conversation starter with a local real estate expert who can perform a detailed, in-person evaluation.
