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Jim Klinge
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Posted by on Apr 13, 2018 in Jim's Take on the Market, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 10 comments | Print Print

Redfin Estimates Based on List Price

It took a glaring mistake by a listing agent to expose it, but it makes what Redfin does all the more obvious.

This listing was inputted this morning with three extra zeros attached, and she didn’t notice for a couple of hours. Maybe because the listing agent hasn’t sold anything since 2016?

In the meantime, Redfin calibrated their estimate of value and 5-year history based not on a fancy algorithm or superior knowledge – nope, they just take the list price and bump it up or down a couple of points.

House Hunters is fake, zestimates are a joke, and ethics sound great until a realtor can double their pay by tilting the table.

The industry is just here to make money off you.

Get Good Help!!

10 Comments

  1. And worse, they revised their previous 5 years worth of estimates. Revisionist history. Yeah, we said it was worth $400 million last year. Bs. Lies.




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  2. Bs. Lies.

    Yep, craft ways to feed them what they want to hear and hope to end up as the sexy option in the end.

    It would be nice if consumers cared enough to thoroughly investigate, but they just want to click on something.




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  3. It is a little unfair to lump in Zillow Zestimates with this example from Redfin.

    With Zestimates, Zillow is now providing a list of which houses they claim are used for their price estimate. In the case of this house, there are 3 categories. “Comparable homes” with 10 sales from the past six months or so, “local tax assessments” with 8 houses listed, and “local sales prices” with again 10 houses listed. Each category has it’s own price estimate and an explanation of how the calculation is done. For California with Prop 13, for example, you can often disregard “local tax assessments” as it is based on selling price vs. 2017 property tax, which is more a function of how long the previous owners owned the house.

    At any rate, it is a pretty digestable set of data, apparently automatically generated, and at least equally useful to the carefully curated set of 4 comparables I have received in the past when asking an agent for a list of comparable sales to justify their asking price. So for consumers who care to dig, there is useful data to be found on Zillow. I do agree just looking at the Zestimate is not useful, since their algorithm does include irrelevant comparables, for example comps from Palm Springs when looking at Idyllwild, even though one location is desert, one is mountains, and they are about an hour away by car, but only 10 miles as the crow flies.




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  4. It is a little unfair to lump in Zillow Zestimates with this example from Redfin……it is a pretty digestable set of data, apparently automatically generated, and at least equally useful to the carefully curated set of 4 comparables I have received in the past when asking an agent for a list of comparable sales to justify their asking price.

    1. I noted on my latest listing that Zillow changed their value by $17,000 within an hour of listing input. It’s like a batter looking back at the catcher’s signals before the pitch comes – you shouldn’t do that. Put your value out there and stand by it.

    2. Zillow also says that their zestimate has gone up $49,483 in the last 30 days, but no mention of their $17,000 adjustment downward.

    3. They also have this at the bottom (the two zip codes are in North Dakota): ‘The 5 bedroom single family home at 2161 Twain Ave in CARLSBAD is comparable and priced for sale at $1,275,000. Another comparable condo, 5080 Ciardi Ct recently sold for $875,000 on 08/24/2017. Amber Valley and Bennett are nearby neighborhoods. Nearby ZIP codes include 58125 and 58106. Additionally this property neighbors other cities such as Kindred, Mapleton, and Casselton.’

    4. I appreciate that they show their math now, but that doesn’t mean they got the price right – your Idyllwild example is a good one.

    5. People don’t dig any more. They want to click and go.

    If you’re making a point that realtors aren’t any better, I’ll live with that, but me and Zillow look at the same comps and come up with different values.




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  5. Thanks Jim for the reply. My point was supposed to be that Zillow shows (some) of the data that goes into their Zestimate and as a consumer I find that level of detail useful. I think my post got too long and the point got diluted. I also totally agree that most buyers and sellers probably don’t even see the extra data or have a good way to interpret it.

    Your points have given me some interesting things to think about regarding machine learning and automatic valuation of real estate, or other assets for that matter. So again, thank you.




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  6. Does anyone really take Zestimates seriously?




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  7. I have been tracking my property on redfin and zillow at the first of the month for several months just to see how bad it is. Last month my property was 267,000 on Redfin. Three houses got listed on my block in 10 days (280K for 797 sqft, 325K for 1300 sqft, 315K for major fixer at 1500 sqft). All of a sudden my estimate on Redfin says my home is now worth 280K and the page says last month is was worth 279K, uhh, sorry redfin, I wrote it down every month and it was worth 267K, but nice try. 277K the month before it says not, sorry redfin, wrote that down to it was 269K in March.

    Then there is Zillow. The houses listed that I mentioned earlier the one for 315K now has a +21,000 in the last 30 days up to a zestimate of 315K miraculously! The 325K one is up +26,300 in the last 30 days to 303K Zestimate. I have emailed zillow about these kind of things, going back over a year ago and they told me they don’t let listings dictate their zestimates and then went on to explain that it’s a complicated, and secretive formula that they use! Yes, sure, Zillow, whatever you say!




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  8. Here is Redfin’s explanation back to my the historical price data changes with the home and isn’t really a price “history.”

    Hello,

    Because the Redfin Estimate uses an algorithm and looks at many data points to calculate a value, we’re not able to go into the details or the reasons for changes in value over time for an individual home.

    It’s an Estimate, a mathematical algorithm it’s designed to fluctuate based on new data, and the market changes.

    Please know, we do not keep historical data for the Esitme, the graph is not a plot of what we previously reported as your Redfin Estimate. It’s our best guess, based on our latest data and algorithms, about what your home was worth in the past.

    The reason for this is because we’re always working to make The Redfin Estimate algorithm as accurate as possible. We want to share this information with you so you get the best possible look at how your home’s value has changed over time.

    Sometimes we get better information about a home, more data on your local real estate market, or we refine our model to make it more accurate. All of these changes can affect both your current Redfin Estimate as well as past values.

    Warm regards,
    REDFIN Customer Support




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  9. Yeah, then Redfin need to hire some good mathematical experts if the algorithm is an absolute nonsense.

    We listed our house and Redfin estimate was 15K less than that. Then we reduced the rice again and Redfin reduced the estimate again and it keeps going. WOW, hats off to the “algorithm”.

    So what kind of a mathematical calculation is that if you do not even know how to calculate an estimate? You guys just depend of what the owner puts in as the list price and blindly calculate the estimate. There is no Math behind it, there are no comparables or market research or any kind of analysis applied.




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