About 10 days ago Zillow released an interesting addition to their software, they now offer a Zestimate on the amount of rents a property will fetch. For specifics see Zillow’s Official Blog Post about it. If you have been following the blog for a while you may remember a previous post on how I feel about Zillow’s Property Value accuracy.
Since I have a small sample size of raw data I figured I would compare 20 of my rentals, actual rent to Zillow’s estimated rent.
As you can see some results seem to be pretty close, and others have a huge gap. Pricing rentals is more of an art then a science. Tenants do not do “appraisals” before they rent a house and some situations will cause price gaps (eg: if a tenant has been in a property for 10+ years, it is safe to say they are probably paying under market rent).
Like in property values, Zillow does a bad job of estimating the rent on some of the funky properties:
What they could do to improve the service?
In conclusion, this will probably be another value I take into account when doing my pricing procedure (see my blog post on, How I Price My Rentals). The values they provide seem to be lower then actual market value, 14/20 of the properties Zillow provided a lower value. None of these fancy services beat actually driving the neighborhoods and doing a little old fashion hard-work.