Thoughts on House Sigma’s Price Estimator

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Let me start by saying, this is not an anti house sigma post! We find the website and app very user-friendly – more so than anything that the Toronto Real Estate Board has rolled out over the years.  Just by signing up with a username and password, you have access to lots of great data including previous sale history and sold data. Pretty awesome.

One area where it falls short, in my opinion, is the algorithm used to predict the sale price of properties. If this tool was more accurate, it would be extremely useful. Especially in Toronto where the list price is usually way below what the final sale price is for a property.  Speaking anecdotally, I find it typically undervalues properties. This does a disservice to buyers who think they can win the property on offer night.

Currently, the algorithm cannot detect the subtle nuances that a human can. How does a renovation affect the value of the property? What about staging? New windows? Sure – use the estimate as a starting point for value but don’t place too much weight on the number. Discuss value with your realtor and always remember that even if you’re in a bidding war, the most important thing is looking internally to where you see the value. Don’t think about what your competitors are bidding, think about what price you’d be comfortable winning the property and what price you’d be comfortable walking away.