I personally think Redfin estimate feature is driving market crazy. Most of the buyers are looking at this estimate and putting an offer on top of this without even comparing comps etc..
Somehow I feel its algorithm is flawed, it always shows estimate above listing price. 900k home gets listed at 1.1m, redfin estimates shows 1.15m. I see that happening multiple homes around me.
A better metric would be what it sold for. Listing agents intentionally set a lower listing price to attract competition in a sellers market Check past sales and Redfin estimate at the time of sale. It’s mostly lower than sale price
"900k home gets listed..." Who decides that it's a 900k home?
Where is the option for “Redfin is doing the right thing, stop whining”.
It makes sense to have it high. They make money if you list your house with them. Why wouldn't they want to show you that could sell your house for a higher value just to get you to try and sell?
What happens when appraisal comes back lower?
Buyers will pay what they want and seller will let their home go for what they want... this just frames and anchors the negotiation. A buyer that sees a lower appraisal will point there and maybe the seller comes down a little until they meet in the middle or don't. Just like any other market. For redfin, might as well get the seller on the off chance there's a buyer.
I always think redfin is lower than zillow
I don’t think so, Zillow shows as 950K in this case
Where’s the option for “list price is deliberately undervalued”
This*
Redfin estimate starts with the list price (sellers usually post at Redfin estimate). As the property gets interest (saves, visits, calls to redfin agents etc), the estimate increases. The culprit is not Redfin, it's the Tesla, Airbnb, Snowflake millionaires, and some 'overseas' money. Just 5-6 overpaid houses are enough to drive up the comps in a neighborhood, and once that happens, it goes into a self-reinforcing loop.
+1. I've seen this happen real time recently. Houses in and around my neighborhood have gone up around $200k in the past 3 months. I saw new listings based on just one or two high price comps and then few ppl over bidding even those increased listing prices. Resulting in prices going up around 70k per month with each home sale.
Houses are worth what people will pay for them. This is true of any asset you can’t duplicate. Art for example is only as valuable as people think it is.
Redfin estimates are comically wrong
In prop trading, there's a well known phenomenon of "creating your own alpha." It basically says that if you think the price of a stock will go up and you were wrong but you buy a bunch of stock anyway, then that causes the stock price to go up and makes your "prediction" right anyway. The same exact thing is going on in the housing market. Every single time a home sells for 100k+ over list, it reinforces the belief that 100k+ over list is normal and prices just keep going up. Then, someone bids 200k over a list and a few sales later, that becomes the new normal. And so on. Buyers in this market are creating their own alpha at this point. Redfin is just trying to keep up.
Redfin estimate tends to also factor in number of people visiting the link and favorites. They also look at comps but it can be off if comp data isnt doesn’t have strong signal Ideally they should also post a confidence percentage in their estimate to put it in context. Zillow does this in a round about way by providing a range Another factor that affects quality of estimate is actually TC they pay to engineers and quality of engineers.
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Lenders don’t use Redfin and Zestimates so unless it’s cash buyer. Cash buyer should be smart to look at comps.