Zestimates and Rent-o-meter and the OKC rental market

[Rhett Tullis]

*Disclaimer -- this is only based on my personal experience in my small corner of the okc market*

I get asked daily about rental rates in the OKC metro and what a property should be listed for.  I constantly have folks quoting either prices they see on zestimates, rent-o-meter or what their neighbors have their house LISTED for when they try to set the price for what they shoudl get.  Below are the issues I see with each of these in the OKC market.  Remember these thoughts do not apply to any other market.

MLS - only approx 10% of the current rentals on the market in okc are actually listed on the MLS and a high percentage of those listed are in the "higher end" for okc. ($1200 and up per month). If one bases their rental rate on the MLS is will certainly be skewed a bit. There is clearly not enough data on the MLS to make a clear assesment of what rents should be.

Rento-O-Meter - Below is a quote from their site on where they get their data.  I would greatly question the accuracy of this site as well.  While they may be doing alot of surveys or tenants and cold calling I have never had any verification of this in my time here in okc and have never, ever received a call from them on the pricing of our rentals.  (the only folks to every do this with us is section 8 housing programs and the tinker air force base housing folks.) . I am greatly perplexed at where they may be getting this info from and how they arrive at this pricing.  I often find their prices to be off at times by quite a bit.  

"Rentometer collects rental listing data and rent data from a variety of sources including: bulk syndicated data, our proprietary rental data survey, and user generated input and listings of rental data. We're always researching and looking for new data sources and are in the process of developing several additional sources that will come on line over the next few months."

Zestimates - This is much like rentometer but at least they have some more resources to pull from.  Zillow as above has never contacted us about rental pricing or rates at any time.  It is possible they are doing some surveying that I am not privy to.  It could also be that they are basing their numbers on the pricing that houses are listed at but this is misleading as well.  Just because a house is listed for $1500 does not mean that is an accurate price.  If it has been on the market for 60, 80 or 100 days it is most likely a better indicator of what a house SHOULD NOT rent for.  They may be basing this off the price of a property when it is "pulled" off the market.  While this may be helpful I would say that in about 30% to 40% of our listings there is some negotiation and price changing that goes on after a property is pulled that changes the actual price it rents for.  

My philosophy on pricing - It is best in the okc market to look at several things.  First you should look at what has leased recently in the area.  If you do not have enough of an inventory to know this I recommend talking to several PM's in the city and getting their feeling on pricing.  Don't ask them what they "think" it should rent for instead ask them what they "have" rented homes for in the area in the past 3-6 months.  The second thing is to check out ACTIVE listings on zillow.  If you see homes in the area listed for the price you want to ask but they have been on the market for an extended period of time this could either be an indicator of an issue with those properties but more than likely it is an indicator that they are listed for more than the market will accept and you will want to list under that price.  If there are many listings in the area that have only been on the market a short period this could be an indicator of a large influx of new rentals in the area or it may indicate that there is a good chance of getting the price you are hunting for.  I also prefer to be aggressive on pricing.  I recommend that the price be dropped by $25 to $50 every 15 days.  Remember the rental market is different than the sales market.  Your "customers" change every 15-30 days.  They do not generally care if you have changed the price because they have often not even looked for a rental before the week they are calling you.  I have also found that the OKC rental market is robust and active.  If you are not getting showings almost every other day then you have one of several issues , price is wrong, issues with area (look at the price again) or condition issues with the property (which at times can be addressed with pricing as well).  

Sorry for so wordy but just been thinking about this a bit.  I might come back and edit this later but just a few things to think on as you look forward to a weekend of getting your houses rented out.