Internet Real Estate giant, Zillow recently launched its Rent Zesimates with estimated rent prices for 98 million homes. Along with rent prices, Zillow offers a low and high estimate, or range for which each property might rent for. Zillow’s goal is to arm prospective renters with more data and to give landlords a starting point in figuring out how much rent they should be asking for. The key phrase here is, “starting point.”
In computing the data, Zillow uses public record information, as well as information from hundreds of thousands of rental listings on Zillow. However, residential leases are not usually recorded, so access to signed lease amounts are not available to Zillow. Therefore, the Rent Zestimates are using only active ads in estimating the rent price. No consideration is made for actual signed lease amounts. Hence, your starting point. Some other factors which affect pricing are lease terms, property amenities, upgrades and negotiating skills.
All things considered, it still sounds fun, so I checked on a few of my rental properties… Property “A” Is leased at $1100 per month. It’s Rent Zestimate is $986 with a range of $868 to $1200. Property “B” is leased at $1200 per month. It’s Rent Zestimate is $1384 with a range of $955 to $2200. The wider the range is, the less data Zillow has for that particular area, which jives with properties A and B. “A” is in a college area with lots of rental properties available, while “B” is a condo located within a gated community in a more expensive neighborhood where there are not many rental properties.
So, are Rent Zestimates a friend or foe? To the Prospective Renter the Zestimates are extra info which potentially could be used to negotiate a better deal…but I doubt it. To the “Accidental” or Independent Landlord, Rent Zestimates certainly are a starting point, but could lead to frustration if additional homework is not done on the particular market. My verdict is that Rent Zestimates are a “Frienemy” to all. They could be considered a moped…potentially dangerous but lots of fun just so long as no one knows you’re on one!
Best advice; seek a little guidance from a realtor or property manager in your area. As always, if you need help, I can put you in contact with the best of the best for your real estate needs!
I think it is wise to be cautious about Zillow. Although, it may give you a ball park estimate of home or rental prices it doesn’t replace the insight that you would gain from an experienced Realtor or Property Manager.
Perfectly stated, Josh. Only a Realtor or property manager who specializes in your individual market and neighborhood will have the current facts and trends in rental rates.