We use cookies to enhance your browsing experience and deliver our services. By continuing to visit this site, you agree to our use of cookies.More info
Eric Marcus Chicago HomesEric Marcus Chicago Homes
Call Us:

773-732-9898

    Contact Us
    Follow us
    The Team

    About Us

    • Meet the Team
    • Success Stories
    • Buyer & Seller Tips
    • Contact Us

    Our Services

    • Seller Services
    • Free Home Valuation
    • Successful Seller Clients
    • Buyer Services
    • Search for Homes
    • Mortgage Calculator
    • Download Our Home Buyer Guide
    Eric Marcus Chicago Homes

    1525 W. Belmont Avenue, Chicago, IL 60657

    • 773-732-9898
    • [email protected]

    What You Need to Know About Those Online Home Value Estimates

    It’s something every homeowner does when they decide to sell:  Obsessively check the estimated home value of their...

    • Eric Marcus
    • June 17th, 2020
    • 5 min read
    Featured Image

    It’s something every homeowner does when they decide to sell:

     Obsessively check the estimated home value of their property on the websites of the big real estate “brands.” Opendoor, Zillow and Redfin have made it easy to give an idea of what to expect when offers come in — and a peek at what the homes of your neighbors, friends, and family are worth, too. However, like any tool or service that hints at certainty for things that are uncertain, the projected answer might not quite match your reality. In fact, the estimates might not even match from brand to brand.

    That’s because these valuations primarily rely on algorithms to arrive at a number. These algorithms calculate a range of data points that affect value. Sounds simple, right? Well, that’s exactly where it gets complicated.

    Understanding What Goes Into an Algorithm

    Every brand’s algorithm is different. There are hundreds (maybe even thousands) of different data points that influence the price of a home: Interior/exterior features, the age of the home, the square footage, and the location, just to name a few. 

    Even if each brand included the same data points, the algorithm would weigh them differently. After all, some factors are just more important to a home’s price. Stainless steel appliances won’t affect value as much as square footage. Yet square footage might not matter as much as the neighborhood. 

    Both of these elements of an algorithm come into play with comparable sales, a critical part of any home evaluation. In order to find the prices of recently sold homes that are similar to yours, the algorithm needs to find the properties that fit the bill, then evaluate those properties against yours. 

    While algorithms are kept secret for a reason, the big brands have been somewhat open about some parts of their processes. Here’s what you need to know:

    How Zillow Calculates Home Values

    A Zillow “Zestimate®” is perhaps the most well-known of the big brands. Though it’s noted that this value isn’t to be considered a replacement for a market analysis, this figure is what many people think of when they’re talking home values. 

    Calculations depend on publicly available information, like past sales, mortgage records, tax assessments, and building documents. The formula doesn’t consider the “intangibles,” upgrades, or even new appliances. While you have the ability to update info about your home and correct inaccuracies, only information deemed significant will change the value.

    If your area doesn’t include a lot of information in public records, or if your region doesn’t have a lot of transactions to analyze, it’s harder for the algorithm to arrive at a value. 

    Accuracy can also differ depending on the market. A comparison of top metro areas by Zillow shows that the home value was within 5% of the final sales price 62.7% to 92.8% of the time.

    Due to these factors, Zillow is pretty open about how their figures should be considered as a “starting point."

    How Redfin Calculates Home Values

    The “Redfin Estimate” of your home draws on data found in multiple listing services to arrive at a value for your home. Redfin mentions that more than 500 data points are considered, including market and neighborhood info, whether the home has water views or if its located on a busy street. 

    Machine-learning software crunches the numbers frequently: The values are updated daily for homes on the market, and weekly for those off the market. Unlike Zillow, you can’t update any info about your home that could potentially impact the value.

    Though Redfin says that their online home value estimates are the most accurate, the service still says that it’s a starting point.

    How Opendoor Calculates Home Values

    First, Opendoor is upfront about the goal of their calculations: To buy your home. Instead of thinking of it as a home value, it’s really an offer. 

    Opendoor does utilize a data model to come up with a number, the process starts with what you tell them about your home’s condition, features, and updates. There are options for submitting photos of your home in order to back up what you’ve told them, but it’s really about what you can tell them. 

    Using this information, Opendoor runs their data models on comparable homes that recently sold and local market trends. The algorithms that involve local data were reviewed by pricing teams who have some knowledge of the area. Opendoor also says the algorithms consider the difference in the time of year between comparable home sales.

    Though Opendoor will follow up with an in-person condition assessment, it’s worth reiterating that their initial estimate seems to be based on a homeowner’s word. If you’re looking to this service just to get an idea of what your home could sell for, be aware that the offer is only as good as the information you give.

    The Takeaway: Computers Can’t Beat Expertise

    While these online estimates can give you a general idea of your home’s value, your Realtor can consider the nuances that algorithms can’t. Whether it’s a recent update to your home or new trends with buyers in your area, a Realtor can consider the whole picture when creating a pricing strategy. For the most exact figure regarding value, a professional home appraisal can clear up any lingering doubts. 

    We Can Help You Understand the Numbers

    When you're preparing to sell your home, you need an accurate home valuation. Click below and we'll get to work.

    Start Here

    Author Photo
    About the author

    Eric Marcus

    773-732-9898
    I was born in South Bend, Indiana where my family owned and operated a small business for over 50 years. Every member of my family has been licensed to practice real estate, and my dad owns a real estate company in Indiana. After graduating with honors from Indiana University in 1991, I earned my CPA and worked for a big six accounting firm in Chicago. Combining my experience and entrepreneurial spirit, I started my own successful accounting business that I ran for 3 years. Next, I embarked on a career as a soybean trader at the Chicago Board of Trade, followed by a successful run as a stock options market maker at the Chicago Board of Options Exchange. I began my real estate career in 2003 as broker/owner of ESM Realty. My team has helped more than 600 clients buy and sell condominiums, townhouses, single family homes, multi-unit residential, and commercial properties. For 14 straight years, we were recognized by Chicago Association of Realtors as Top Producers. Our extensive marketing program includes premium placement on hundreds of websites, morechicagohomes.com and state of the art Facebook advertising. My team works tirelessly to make each client feel like they are our only client! We strive for the highest level of performance every day so that we exceed your highest expectations. Our business is 75%+ referral-based and we want you to not only be our client but our biggest raving fan. In December 2020, I brought my team to Keller Williams ONEChicago with branches in Lincoln Park, Lakeview and O'Hare. To set up a consultation or if you have any questions, please contact me at 773-732-9898.

    Similar posts like this

    Lifestyle

    Little Summer Habits That Make Home Feel Like a Retreat

    Read more

    The Secret Life of a Listing: What Happens Before You Ever Go Live

    Getting a home ready to sell is a lot like producing a reality show. Here’s your backstage pass to what we do before you...
    Read more

    You Found the One. Here’s How to Win It.

    So you’ve toured a dozen homes, scrolled through hundreds more, and finally… you found it. The one. Now comes the real c...
    Read more
    Eric Marcus Chicago Homes

    Your Real Friend in Chicago Real Estate

    Keller Williams ONEChicago

    1525 W. Belmont Avenue, Chicago, IL 60657

    Keller Williams ONEChicago

    1525 W. Belmont Avenue, Chicago, IL 60657

    773-732-9898
    [email protected]

    Footer Links

    • Meet the Team
    • Client Success Stories
    • Read Our Blog
    • Contact Us
    • Seller Services
    • Get Your Home's Value
    • Buyer Services
    • Search Homes for Sale
    Join Our Email List:

    *We respect your inbox. We only send interesting and relevant emails.

    Keller Williams ONEChicago © 2025

    Privacy Policy
    Powered by