Please answer my dumb questions about Zillow/Redfin estimates

[Anonymous]

How does Zillow/Redfin come up with my home estimate? They obviously don't know the renovations I've made to my house since purchasing it -- so could my house potentially be worth more than their estimate? In your experience, how accurate are the estimates anyway?

[Anonymous]

In my area they're pretty good. Why wouldn't they price in your renovations? They know people renovate houses. It's in the algorithm.

[Anonymous]

I don’t think either site reveals their algorithm but estimated are based on sq footage and the sales of houses nearby. Recent sales price also seems to factor in (the houses in my neighborhood that haven’t sold in 30 years have estimated that are very obviously too low).

Most of a house’s value is in its lot and size, rather than finishes (this is why appraisers for insurance can just drive by) but a great renovation could excite buyers and raise the price.

[Anonymous]

Zillow alwayd has my house priced 500K higher than Redfin. I don't know why there is such a big difference but I'm sure someone knows the reason. Is either one accurate?

[Anonymous]

Anonymous wrote:In my area they're pretty good. Why wouldn't they price in your renovations? They know people renovate houses. It's in the algorithm.

They don’t magically “know” this. You have to claim your home and then let them know. Idiot.

[Anonymous]

Anonymous wrote:How does Zillow/Redfin come up with my home estimate? They obviously don't know the renovations I've made to my house since purchasing it -- so could my house potentially be worth more than their estimate? In your experience, how accurate are the estimates anyway?

On the flip side, they also don't know if your neighbor's house is a complete teardown (which kind of sucks for me because my neighbor's house probably will sell at a "discount" as it is a complete teardown...but I assume a builder will buy it so hopefully it then adds a really nice comp when it is flipped).

Their algorithm just looks at comps in the neighborhood and how large they house may be and applies to those metrics to your house.

[Anonymous]

Anonymous wrote:In my area they're pretty good. Why wouldn't they price in your renovations? They know people renovate houses. It's in the algorithm.

Zillow doesn't know the details of any renovation. If the house hasn't been listed Zillow isn't going to know that someone added a bathroom for example.

[Anonymous]

You can adjust the estimate as an owner on their website if you are interested.
You can also see which houses they use for their comparable properties.

[Anonymous]

Renovations rarely change the price of a house more that $50,000 to $100,000

Kitchens and baths give most value.

Zillow is usually high

[Anonymous]

I don’t think there’s any reason to use those estimates for more than squinting at the trend line as a neighborhood-level indicator. Which is useful!

But if for some reason you want/need a more specific estimate of your own home’s value, I think there are better methods.

[Anonymous]

Renovations inside the home are never worth what owners think they're worth. Do not make the mistake of overestimating the value of your home reno.

I live in an expensive neighborhood and I have an old, small house. The extensive renovations we did when we bought the home were just for our own happiness. We knew that going into them, and decorated exactly how we liked, without regard to anyone else The house will be torn down by the next owners, because the land is what's expensive here. Wealthy buyers want to maximize their space and won't blink at the expense of bulldozing and rebuilding. Our tiny lot of 0.17 acres is worth more than a million. The house is negligible.

So know your location, OP.

[Anonymous]

Adding it doesn’t pick up on certain geo-specific nuances eg if you’re in Arlington it doesn’t differentiate between N and S for comps although N usually has a min $150-200K premium over the same house in S.

[Anonymous]

Anonymous wrote:

Anonymous wrote:In my area they're pretty good. Why wouldn't they price in your renovations? They know people renovate houses. It's in the algorithm.

They don’t magically “know” this. You have to claim your home and then let them know. Idiot.

Correct: it's not magic, it's math and statistics. And as others have noted, you putting in a $60k bathroom with your preciously-sourced tile isn't going to move the needle like you think.

[Anonymous]

Do they look at property taxes? We renovated (additions to the house as well as some interior improvements, including an additional bathroom) and our property taxes went up.

Both our Zillow and Redfin estimates are now ~$250-300k higher than they were a year ago, and the difference between our house and nearby houses is significantly more than it was a year ago. But the entry has the square footage and number of bathrooms from when we bought the house.

And we didn't update the entry or claim the house.

[Anonymous]

Anonymous wrote:Do they look at property taxes? We renovated (additions to the house as well as some interior improvements, including an additional bathroom) and our property taxes went up.

Both our Zillow and Redfin estimates are now ~$250-300k higher than they were a year ago, and the difference between our house and nearby houses is significantly more than it was a year ago. But the entry has the square footage and number of bathrooms from when we bought the house.

And we didn't update the entry or claim the house.

Did you get permits for your renovation?