When we talk to prospective clients, and sometimes even current clients at lease renewal time, we sometimes gets questions about rent estimates that the person has seen online, usually on a web site such as Zillow.
While these estimates are certainly interesting for things like tracking rent trends, they are not very reliable for determining actual fair market rents of a specific house. Analysts have found that estimates on Zillow for example are frequently off by 20-30%. We’ve seen cases where it is even worse, particularly for houses in rural areas, or for multi-unit properties.
To get a real fair market rent for a given property, it is necessary to do what’s called a comparative market analysis (CMA). Real estate agents learn how to prepare an accurate CMA when they get their real estate salesperson license, and perfecting the art takes years of experience, because it’s hardly an exact science. Every property is different, even in a “cookie cutter house” neighborhood, and knowing how each of those differences affects the fair market rent (or sale price, for that matter) of a given house takes years of experience. Computer algorithms are helpful, and we even use a company called Rentometer to prepare quick estimates of rent, but the final number that we arrive at is based on our experienced agent’s judgment and knowledge of the local market.
So while we certainly wouldn’t discourage you from looking at these online estimates, we would discourage you from thinking that they’re anything more than a broad ballpark estimate. If the rent we’re charging is either higher or lower than what you see on Zillow, trust us when we say that there’s a reason for it.