This post is inspired by a client question I received recently: “Why does Redfin show one valuation for my house and Zillow’s Zestimate something else?” This client will be listing their house in Los Altos Hills, CA later this year and is starting to do their due diligence to better understand the market, ultimately a smart approach and a smart question.
Same house, different values let’s discuss!
Automated Valuation Models or AVMs. An AVM is a proprietary algorithm used to estimate home values. AVMs crunch publicly available data such as:
- Recent sales of comparable homes (comps)
- Tax assessments
- Square footage and lot size
- Location-based trends
Each platform has its own unique formula for weighing these factors, which is why Redfin’s estimate may be different from Zillow’s. Additionally, their databases may not always have the exact same information which causes further differences in valuation.
Let me take this a level deeper and highlight the key differences between Redfin and Zillow’s AVMs.
- Data Sources & Frequency of Updates
- Redfin pulls data primarily from MLS (Multiple Listing Service) feeds, which are updated frequently and offer relatively accurate sales data.
- Zillow relies more on tax records and publicly available data, which may not be as current or detailed.
- Using my client’s findings as an example, both platforms had the same square footage and lot size but one had their house listed with 5 bedrooms and the other reflected 6 bedrooms.
- Algorithmic Approach
- Redfin’s AVM tends to weigh recent sales more heavily, sometimes resulting in values that are closer to market reality in active markets.
- Zillow’s Zestimate incorporates more long-term historical data and user-submitted details, leading to broader swings in accuracy.
- It’s important to note, you can not set a listing price on your property months out – I mean you can (dream big!), but it won’t be accurate when the listing goes live. The housing market is deeply impacted by consumer sentiment and overall financial markets which can quickly move and shift.
- User-Submitted Adjustments
- Zillow allows homeowners to claim and update their home’s information, such as adding details about renovations. However, these updates are not always verified.
- Redfin’s estimates are less influenced by user input, making them potentially more consistent but less customizable.
Data, nor an algorithm can tell you how a house smells! All this to say, AVM’s don’t have the final say here, below are some areas where AVMs fall short and what agents (like myself!) take into consideration when valuing a property:
- Unique Features & Upgrades – AVMs don’t fully account for high-end renovations, custom finishes, or other unique characteristics that affect home value.
- If you are considering making improvements to maximize your selling price, please speak with your agent so you don’t overshoot and put money into the house that you ultimately won’t get back. Yes, it is possible to over upgrade your house!
- Neighborhood Micro-Trends – Your local agent understands hyper-local trends, such as whether certain streets are more desirable and / or something in particular has boosted property demand, let say a new corporate business coming in that will drive relocations.
- Buyer Demand & Market Conditions – AVMs don’t factor in current market conditions, such as bidding wars, current inventory, seasonal demand shifts, or economic trends.
- Home Condition – A well-maintained home with professional staging will likely sell for more than an identical, poorly maintained one—something an AVM can’t measure.
- Curb appeal is another consideration. A house with character and charm usually has the upper hand.
- Negotiation Power – Pricing strategy is about more than just setting a number; an agent can help position your property for maximum offers and negotiate the best terms.
Redfin and Zillow’s AVMs provide a useful starting point, but they are not a replacement for an expert evaluation or what I consider critical, a pricing strategy. A pricing strategy will be (and should be!) tailored to your property, current market conditions and your selling goals, and this work can only be done with your trusted real estate agent.
A smart move? Contacting me to discuss your property and your selling goals!
Smart Moves. Bold Moves. Real Estate Moves.
Opinions and views are my own. The content in this post is for informational purposes only. Do not rely on this information for financial and/ or legal advice or to make any decisions about your financial and/or legal situation. Seek professional counsel for your specific needs.