Redfin has refined the Redfin Estimate, the company’s property automated valuation model, it was announced.
The adjustment, announced Friday, improves Redfin Estimate’s accuracy for off-market homes by 70 basis points and improves the overall accuracy of the tool by five basis points, according to the company.
For off-market homes the company claims the median error rate improved to 5.6 percent, meaning half of all Redfin Estimates fall within 5.6 percent of the eventual sales price. The error rate for both on-market and off-market homes dropped to 1.57 percent nationally and Redfin regularly updates the error rate regionally on its website.
“Everyone wants to know what their home is worth, which is why the Redfin Estimate drives so many homeowners to visit our site and start a conversation with a Redfin agent,” Redfin Chief Technology Officer Bridget Frey said in a statement.
“In real estate, every tenth of a percentage point matters and can represent hundreds or thousands of dollars in a home’s value,” Frey added. “Agents know that a smart, data-driven pricing strategy is often the difference between a home that sells quickly with multiple offers and one that sits on the market.”
Frey explained that the accuracy of the Redfin estimate speaks to the company’s advantage as a brokerage that uses employed agents, who can work alongside engineers and provide human insights to help train the company’s machine learning algorithms.
The improvement of the tool is also a boon to RedfinNow, the company’s direct-to-consumer homebuying and selling business.
“The new release not only improves the accuracy of the estimate, it includes back-office tools that show the confidence of the estimate and project the future sales price, so we can better assess the risk and opportunity of buying a particular home,” Quinn Hawkins, head of RedfinNow, said in a statement.
“With continued advancements in AI and machine learning, we can envision a future where the Redfin Estimate becomes a live offer for a subset of properties,” he added.
The Redfin Estimate also expanded to five new markets: Connecticut; Boise, Idaho; Des Moines, Iowa; Spokane, Washington; and Chattanooga, Tennessee. It can also now provide estimates for land, mobile homes and multi-family buildings.
Last year, the tool came under fire from some corners of the industry who believed it contributed to rising home prices.
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