Estimating a home’s value with online tools can feel as unpredictable as guessing next week's weather. Even with data-crunching algorithms, the results can vary wildly depending on the tool used. Zillow, Redfin, and Chase – three of the biggest names in home valuations – often show values that differ so much it might seem like they’re pricing completely different homes.
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These estimators pull from public records, sales data, and user inputs, but the final figures can leave buyers and sellers in limbo.
Take one home in Chicago's Horner Park neighborhood, for example. This cozy three-bedroom, three-and-a-half-bath house was built in 1915 and last sold for $750,000 in 2017 after a major renovation. This has made It worth considerably more. At least, that’s the consensus. But how much more? That depends on where you look.
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These estimators rely on a mix of public data and user submissions. The numbers they spit out can vary greatly, leaving home sellers and buyers scratching their heads. The most crucial part of selling a home – figuring out its worth – ends up in the air.
According to Zillow's “Zestimate,” the home is worth $1,002,900 as of mid-July. That's a whopping 40% increase from what the current owners paid. On the other hand, Redfin lists the value a bit lower at $942,976. But Chase? Their estimate is significantly more modest, putting the value at $881,800. That's a noticeable difference when considering such high stakes.
Realtor.com adds another layer to the puzzle. While it places the home's value at $877,300, one of its data partners, Collateral Analytics, throws a wrench into things with an estimated $681,431.
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Much of that depends on how each site uses the data. According to the real estate website Home Bay, multiple pricing models are at play, but most are cloaked in secrecy. “Specifics for those models are kept under lock, key, and nondisclosure agreements, so no one except for Zillow and Redfin employees understands exactly how they work,” said Home Bay.
It’s given that most of these tools are based on data taken from local property records, tax databases, and even user-generated data. The problem is not all this information is always up to date or exact.
Recent renovations or adjustments to a house may not be reflected in the public record and thus misvalued. Some use AI-driven algorithms to keep up, whereas others might still be using models from a while back that don’t account for recent shifts in the market.
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Interestingly, it is not mere confusion either. Some Chicago homeowners were so fed up in 2017 that they took Zillow to court, claiming its estimates were too low. The case was thrown out, but the frustration remains a sore spot for many homeowners.
Realtors advise taking those estimates with a grain of salt. They recommend calling in professionals familiar with the market since they give more realistic appraisals. While online tools can save time, they cannot be relied upon to give the price of a house.
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