Annapolis, MD · Member since 2016 · 8 posts · 1 vote
Do any investors use Zillow as a tool to find deals? I am a very strong believer in that if you want to find a good deal you have to look where everyone else is not looking and it seems that every average Joe looking to buy a home uses this site. Zillow is very popular and offers a great user friendly interface and tools but I am not sure that it is so great for investors. Also, how accurate is the "Zestimate" tool when estimating a properties value?
Please give me your feedback and any experience you have using this.
Here's my take. I would never use Zillow to estimate a property value, particularly if there are few sales around you. It's just too unpredictable.
Now here's the one exception in which I look to Zillow as a secondary source, and that's for rents. Zillow, Hot Pads, and all the others are the primary way that I market my SFR rentals, and every time I list a rental there is a "Zestimate" rent next to it in the advertisement. I've come to believe (anecdotally) that this Zestimate sets an anchor of sorts for most tenants, and you cannot be too far in terms of asking rent without significantly reducing your pool of tenants. Just an observation.
Although I am still a new investor, I do not believe in the "Zestimate" tool. For me to get a better understanding of an area I look at the following:
What have homes sold for recently.
What are homes with similar # of rooms and size renting for now in the area.
Call a local agent (I do all my investing out of town) and ask questions.
I always speak in length to my PM and Agent prior to making an offer on a home.
Zillow always seems to be behind in updating their information on homes that are for sale. Their estimate of home values are always high (at least from my research) and the rent estimate is all over the map. I do use the site to view how many rentals there are in a particular area in order to avoid a saturated areas. And I do view their recently sold function when considering making an offer on a property.
Just my opinion. I'm only 3 doors (SFH) into this, but this is my process. But I completely agree that looking at all sites and using all the tools at your disposal will help in the process.
couldn't agree more on not using Zestimate. I have seen Zestimate values at 10% of asking price (Z 650k Asking price 6 million), and I have to put a lot more weight on the person/realtor that has gone through the property, seen property condition/upgrades, and done comps vs extrapolating from sales in a radius.
It's difficult to fully accept the Zillow Zestimate as 100% accurate. I merely use it a simple marker based on other factors & do not rely entirely to it
@Josh Martin Zillow is at best good for back of napkin directional roundabout values. Outside of MLS I use Redfin most often but for some that's not an option. Looks like for you in CA and MD you're good. The reason the estimates are so off on Zillow comes down to a matter of data completeness, and the algorithms used to select the right combinations of proximity, date sold, features, financing method, etc.