Branching out from home valuation "Zestimates," Zillow.com is now generating estimated monthly rents for about 90 million homes or apartments — whether they’re actually available for rent or not.
Like the automated home valuations that helped Zillow become one of the most popular real estate sites on the Internet, "Rent Zestimates" depend in part on the physical attributes of homes gleaned from public records, such as the number of bedrooms and square footage.
To generate its home valuation Zestimates, Zillow plugs data on nearby closed sales into a formula that generates automated property valuations. Rent Zestimates, meanwhile, use both current and historical rental listings data, the company said.
Because nearly three-quarters of renters do not negotiate their rent, rental listings are a "close proxy" for final rent price, the company says.
Zillow says Rent Zestimates will help renters determine a fair rental price and negotiate before signing a lease, and that landlords will also find them to be "a valuable tool."
So-called "accidental landlords" — homeowners who hadn’t planned on renting out their homes — represent one out of four homeowners who intend to move in the next three years, Zillow said.
"Buyers and renters are not exclusive categories — many people are considering both options when shopping for a new home," said Zillow CEO Spencer Rascoff in a statement. "Similarly, many would-be sellers in today’s housing market are considering whether to become landlords rather than sell at a loss."
As is the case with its automated property valuations, Zillow will publish Rent Zestimates only when it has enough information about a home’s attributes and market data to make a calculation that the company deems sufficiently accurate.
Zillow.com listed approximately 3.7 million U.S. homes for sale as of Wednesday afternoon, and 289,000 homes and apartments for rent.
Zillow rates its Zestimates as only "fair" or "good" in half of the nation’s top 30 markets. The seven markets judged as "fair" were Atlanta, Cincinnati, Dallas-Forth Worth, Detroit, Houston, Tampa, and Kansas City, Mo.
The site will not provide Zestimates for nearly half of homes in the Kansas City market, for example, and the median error of estimates for properties that it does provide was 15.4 percent, according to Zillow’s most recent analysis.
Zillow says it will provide Rent Zestimates for about 70 percent of all U.S. homes and apartments.
"While there are no large geographical holes in our Rent Zestimate coverage, we only publish Rent Zestimates if we have enough data to calculate them with a sufficient degree of accuracy," the company said.
For duplexes, triplexes and other multi-unit properties, Zillow will publish a Rent Zestimate for individual units if it has the units in its database and enough data to calculate them with a sufficient degree of accuracy.
When visitors to the site pull up details about a property that’s not for rent, they will typically see a Zestimate — the estimated market value of the house — followed by the estimated rent the property would command.
Under the Rent Zestimate, an estimated monthly mortgage payment that’s based on a sales price at the estimated value and a 20 percent down payment is presented.
If a visitor pulls up a property that’s actually for rent, they’ll see the asking rent first, followed by Zillow’s "Rent Zestimate" — which may be lower or higher than the asking rent. The Zestimate of the property’s market value is presented lower on the page, and no estimated monthly mortgage payment is provided.