Zillow rent rate & appreciation projection reliable?

11 Replies

Hi everyone!  Was wondering if the rent estimate Zillow puts at the bottom of the sale listing is reliable/realistic vs Rentometer?  I notice that Rentometer's average and/or median is higher most of the time compared to Zillow.  Also, zillow also has a blurb that usually says that a property has appreciated x% this year and this area is projected to appreciate x% next year.  Is their prediction usually correct?

Thanks!

NOOOOO!!! Lol....... Neither one of those sites are terribly accurate. They might give you an idea, and maybe help you with some trends, but TRUE estimates require a human touch. The rent prices are slightly more accurate but the home prices and appreciation numbers are gross. I'm a realtor and recently attended a class by the Salt Lake Board of Realtors. We worked through the MLS and Cloud CMA and in the properties we looked at Zillow was almost %10 off on average, that's $36,000 off for the median home price in SLC right now. Zillow was even worse for homes in Utah County. Could you imagine using a Zestimate to sell your house and losing over $30,000?

My advice: Depends on why you want the rent prices, but the market is usually accurate in realtime dictating rent prices. You can look on places like Zillow and Rent.com to see what's available and how long it's been available to see what rents actually are (as opposed to a computer algorithm predicting prices). You might have an outlier here or there, but what you see is what you get. If you are looking to invest then the absolute best source will be property management companies. They have their finger directly on the pulse of the rental market and they will tell you exactly how much any given property will rent for.

Originally posted by @Trent Stone :

NOOOOO!!! Lol....... Neither one of those sites are terribly accurate. They might give you an idea, and maybe help you with some trends, but TRUE estimates require a human touch. The rent prices are slightly more accurate but the home prices and appreciation numbers are gross. I'm a realtor and recently attended a class by the Salt Lake Board of Realtors. We worked through the MLS and Cloud CMA and in the properties we looked at Zillow was almost %10 off on average, that's $36,000 off for the median home price in SLC right now. Zillow was even worse for homes in Utah County. Could you imagine using a Zestimate to sell your house and losing over $30,000?

My advice: Depends on why you want the rent prices, but the market is usually accurate in realtime dictating rent prices. You can look on places like Zillow and Rent.com to see what's available and how long it's been available to see what rents actually are (as opposed to a computer algorithm predicting prices). You might have an outlier here or there, but what you see is what you get. If you are looking to invest then the absolute best source will be property management companies. They have their finger directly on the pulse of the rental market and they will tell you exactly how much any given property will rent for.

If I find a property for sale is a market I'm interested in I use all the tools available. I use zillow rent, rent.com, rentometer, Facebook, Craigslist. 

I use all those sites and come up with the average between all the sites and when deciding on purchase of a property I always go on the lower end to cover me. If I can make the number and cash flow work on the lower end and then when it comes time to rent it after a rehab, that's just more money I can put in my pocket at the end of the month and thus making my COC and cash flow better.

@Justin K. of course at the end of the day all that matters is if the numbers work, but for determining the most accurate value, nothing is going to beat a CMA from the MLS for home prices and nobody will know the rent market better than a reputable property management company. Those are just the facts. Also, the fact that you can get an agent to run you a CMA for free and property management companies to share market data for free, I really don't see why you wouldn't want to utilize those resources.

@Diane Tycangco

Zillow numbers can be fun to look, or to maybe pretend what the value of your property is, but I wouldn’t use it for anything else. You can look at Zillow listings for rent and see what the asking price is for similar properties. And Facebook marketplace in the same manner. Or even call places for rent and ask how much they’re asking. Real numbers beat Zillow’s “zestimates” every time.

Originally posted by @Trent Stone :

@Justin K. of course at the end of the day all that matters is if the numbers work, but for determining the most accurate value, nothing is going to beat a CMA from the MLS for home prices and nobody will know the rent market better than a reputable property management company. Those are just the facts. Also, the fact that you can get an agent to run you a CMA for free and property management companies to share market data for free, I really don't see why you wouldn't want to utilize those resources.

I never said don't use a property management company to possibly get numbers or use the MLS but also take into consideration this....

If I would have went off the property management advice in the area I am investing at, I would not have purchased my properties because they would not cash flow. I studied the availability of properties and on average how long they were listed before they were occupied. 

I also bought a property based on a very comprehensive MLS report. Upon refinancing it was 10% off but luckily 10% here is about $9-10k.

The rental rate she gave me is $200 above what Rentometer says.  She might just be telling me that to make me buy it. Either way, it is cashflowing. Tenants want to stay.