Does Zillow accurately reflect rentals and rental prices?

35 Replies

I'm just getting into the business of real estate investing and I'm just curious what your thoughts are on this topic. Are the rental prices on Zillow a good gauge of how I should price my rentals? Are the properties listed on Zillow properties that have yet to be successfully rented? Is there more out there to compare than what can be found on Zillow?

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Yes...and no. Realtors don't like it because it isn't the MLS. However, you should never, EVER, use the Zestimate for anything other than lining a birdcage...as long as the bird wasn't looking to move.

You can also use Rentometer.com, which gives me a super quick rundown around the property you're looking at, and includes the comps it looked at to provide this assessment. I keep making new accounts using different emails to get 5 free rental assessments, but you can also pay to keep this tool. 

Originally posted by @Andrew Powers :

@Joe Villeneuve @Lien Vuong Thanks for the responses. I will definitely lean more on the MLS than Zillow when making calculations.

Use Rentometer.com but realize that is typically only advertised rentals, not "all" rentals. My properties never hit Rentometer since I never have to advertise on the MLS or other means to rent mine.

@Andrew Powers

Zillow is an estimate only. They use a mathematical algorithm to calculate the property value and rental amount. You need run your own comps for each. Comparable number of bedrooms, baths, square footage, neighborhood, age of property, etc. I use Redfin, Zillow, Trulia, Realtor.com. If you have access to the MLS that works best. Rental numbers I use Zillow, rentometer, apartments.com, etc. I use the same criteria as sale comps for comparables. I don't use the MLS for rentals as most don't use the MLS at least in my area.

Good Luck.

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@Andrew Powers

I would not use the Zillow estimate on rentals but look at the active rentals in your market. A lack of rentals is good but you want to see what tenants are comparing to. I never use MLS for residential comps. Nobody uses them and no realtor wants to use them. Zillow and Facebook is way more relevant for residential rental comps. Commercial is a whole other ball game.

As an appraiser, I would say rental and sale/list data are two very different animals. List prices are seller desires. Sale prices reflect a meeting of the minds, but only between 2 parties, which is an inadequate quantity of data. Rental list prices on the other hand, tend to reflect the landlord desire and the final rental price, because it is not customary to negotiate rental prices. I have no comment on the Zillow rental estimate, except that their Zestimate property value is not reliable, so I would never bother to believe their rental estimate would be either - who knows. I love using Craigslist and any other rental platform where landlords post their listings with the rental price. Cross-reference these with other comparable offerings and you should be able to reliably determine rents without using a do-it-all-for-me platform like Zillow. All do-it-all-for-me platforms are limited by the programmer and source data and, most importantly, the fact they are programs in the first place.

Depends on who you ask. Realtors hate Zillow because it threatens them. In my market Zillow is the main source for marketing houses for rent. When I want to price my property, I use Zillow listings to determine current market price. I don't use Zestimates. I am talking active listings of similar properties. Of course look at the listing history to see how long it was listed and if there were price drops. Zillow is a powerful tool that I use regularly, so although people love to hate on them, I find the service extremely useful in my business.

Zillow now has applications, tenant screening and rent collection services. Zillow is even buying houses in some markets. So as much as people love to hate, it is naive to deny their growing power in real estate.

Originally posted by @John Teachout:

In my opinion, the rental zestimates are a lot closer than their property values.

Absolutely true. In my market their home prices are based on a groundhog seeing its shadow. Rents are generally within range, but the ranges are pretty wide and leave a lot of room for interpretation. Kind of like me saying "There's a chance it will be either sunny or rainy today". 

Apparently not.  If they list 30,000 postings most are negotiated to a different value. Likely if there are interests from multiple bidders the realized rent is what was posted. Some are redundant a few have been on the market several years.

@Andrew Powers Absolutely Not. Zillow uses algorithms to calculate the zests are and rent estimates based on public information about the property such as location, sq ft, bedrooms and bathrooms. Then spits out zestimate. Their process does not account for property upgrades so it is vastly off then an actual appraiser giving you the price.

Zestimate...no, but you can use Zillow to to search recently sold homes to determine value and you can look at what is listed on the rental market, how long the property has been active and how much they are asking for rent to help gauge rent value.