When it comes time to sell your house, you have one burning question: What is my home worth?
In recent years, a proliferation of online resources has emerged to provide you with an answer before you ever actually consult a human. But while homeowners have access to more information than they could have dreamed of a decade ago, that doesn't mean you can expect a computer or smartphone to deliver the final word on your home's value – though they can give you some helpful hints.
You may be punching your address into an online estimate tool or getting a detailed report from an appraiser or real estate agent, but the results can be different every time.
The variation in the data is a good reminder that any estimate of home value, whether provided by a human or a computer, is just that – an estimate. Computers and humans may disagree, for example, about which recently sold homes are truly comparable and how significantly recent updates add value to a property. Plus, when it comes time to do the deal, the negotiation skills of buyers and sellers (or their agents) may come into play.
"Opinions of value, there are a lot of them," says Stan Humphries, chief analytics officer for Zillow, which pioneered the practice of estimating and publishing home values in 2006. "If you were to sell the same house 100 different times with different buyers and sellers, it would close at a different price."
That means if you are looking at estimates for your home's value, you have to consider what kind of data went into that estimate. If your home is unique compared with others in the neighborhood, for example, the choice of "comps," or comparable homes, would be a challenge to find. Your estimate may also be less accurate than if you live in a neighborhood where all the homes are similar. If there have been lots of recent home sales in your area, there is going to be more data to work with and therefore you'll get a more accurate estimate.
"The more the house is an outlier, the more difficult it is for anyone to price it, whether it's a human or a computer," says Glenn Kelman, CEO of Redfin, which recently launched its own automated estimate tool. "The hardest things we had to deal with was which homes are comparable and which aren't."
All the online tools take advantage of publicly available data, which they then run through computer models to derive estimates of value. Exactly which data is used is proprietary, as are the formulas used to crunch it, but among the data sources are public records and the multiple listing services used by real estate agents. Exactly what data is available also affects the accuracy of the estimate, and that amount of data varies by municipality and sometimes by home.
Zillow allows consumers who register for a free account to correct or add data about their homes and also use the Price This Home tool, which lets consumers receive a private estimate where they control which comps are used. Redfin shows the comps and public records data about the home that was used, and you can email if you believe the information is inaccurate.
Zillow covers about 100 million homes across 7.5 million statistical and machine learning models that examine hundreds of data points on individual homes. The national median error rate for home values is 4.3 percent, which means half of all Zestimates are within 4.3 percent of the value. That's partly because the type and accuracy of data varies, but also because home values are easier to estimate in areas with more sales and those with a larger volume of homes. "You're dealing with less data than you'd like to have," Humphries says of some areas. For example, some counties in the U.S. don't list square footage in public records, while others may not mention additional structures on a property.
Humphries points out that real estate agents doing comparative market analysis have an error rate of 5.5 to 6 percent, and it's rare that a home sells for the exact asking price. "No one's error rate is zero. They're all opinions of value," Humphries says.
Within the last year, Zillow has also started the Zillow Prize, a machine-learning competition for participants around the world to help improve the algorithm that determines Zestimates, and continue its growing accuracy over time. The winning team will receive a $1 million grand prize.
Kelman says Redfin's estimates have a median error rate of 1.71 percent for homes on the market and 6.31 percent for homes not on the market, but the service so far covers only about 72.5 million homes in 85 major metro areas, which are often easier to value than homes in less dense areas. Homeowners can also take advantage of the Owner Estimate tool, which uses the same technology as Redfin Estimate but allows you to provide more information about your home that may affect the value, such as a recent addition of a master suite, new in-ground swimming pool or a finished basement, and select which comparable sales are most similar to your home.
We also found some calculators that provide estimates at several bank sites, with information drawn from databases used by appraisers. ForSaleByOwner.com has its own tool, called Pricing Scout.
The representatives of all the companies stress that their numbers are merely estimates, based on the available data plus a number of assumptions about comparable sales. While all the services throw out a number for the home's estimated value, most provide a range of values, which sometimes gets overlooked by consumers who focus on the number in big type.
"We think of our estimate as the beginning of a conversation, not the end," Kelman says. "Many times the asking price of a home is the result of a fairly tense conversation between the owner of the home and the agent who is trying to sell it."
For homeowners looking for more actionable information about their home value, they may want to consider the growing market of iBuyers and instant offers available, which valuate a home with more information than an automatic online tool might and provide a quick cash offer, either from the company itself or a connected investor interested in the property. Zillow Offers is one such tool, as is Redfin Now, OpenDoor and OfferPad.
Keep in mind with a quick-offer service, however, that the goal is not to purely provide you with market value, but to offer a quick sale, often at a discounted price to what you would receive if you listed the property on the market. The offers will take more into consideration than an online value estimate, and many of these services will also provide you with an appraised value of the property, but the offer also takes the investor’s ability to profit into consideration.
Here are seven online tools you can use to help you estimate the value of your home:
Zillow: This is the pioneer of the home value estimating tool, and the company continues to refine how it arrives at its Zestimates.
Redfin: This tool shows you photos and listing information for the exact comps used to arrive at the value of your home.
eppraisal.com: This site uses data from public records and lists homes sold recently nearby.
Bank of America: This tool shows comparable neighboring sales on a map. It provides only a range of values, not a single number.
Chase: This tool allows you to change the information about the house to arrive at a more precise estimate, plus provides information on recently sold homes and neighborhood trends. You can also use it to estimate the value of improvements you're considering.
realtor.com: The My Home tool allows you to track a variety of information about your property, including the home value, displayed to you as a graph to see its progress over time.
ForSaleByOwner.com: This site's Pricing Scout tool gives you the average of a regression analysis and a comparative market analysis to estimate the worth of your home. It also shows recent sales of comparable properties on a map. You have to register to use it.
We tested homes we know in Miami, Boston, Los Angeles and Kansas City, Missouri, plus a random home in Seattle, using the available home value estimators. Not all the online tools had the same data for the same home.
A recently renovated three-bedroom, three-bath home in a trendy historic urban neighborhood in Miami where homes vary considerably in size, age and condition:
Bank of America: $173,960 to $536,082
A four-bedroom, four-bath home in a Victorian home in the Roxbury neighborhood in Boston:
Bank of America: $5501,971 to $665,466
A three-bedroom, two-bath home in a trendy neighborhood of 1930s bungalows in Los Angeles:
Bank of America: $722,459 to $863,368
A three-bedroom, four-bath home with a water view in Seattle:
Bank of America: $812,666 to $991,851
A three-bedroom, three-bath house on a double lot in Kansas City, Missouri, where the houses vary in size and condition:
Redfin: Not available
Bank of America: $111,921 to $142,282
Updated on Nov. 1, 2018: This story was originally published on Dec. 15, 2015, and has been updated with new information.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at email@example.com.