Several real estate investors are leaning towards online real estate investment tools such as Zillow. They rely on such tools to find the best investment property. How reliable are Zillow and other property search tools? Read on to find out.
What is Zillow?
Zillow is a real estate website offering its users an end-to-end service related to buying, financing, renting, and selling properties through its affiliates. Its database houses information about over 110 million US homes – whether they are for sale or rent or off market properties, Zestimate home values, and more.
The company launched its first website in February 2006. The real estate website was incorporated as the Zillow Group after acquiring another website, Trulia, in 2014. Today, it oversees a portfolio of consumer- and business-facing brands.
Zillow’s Consumer-Facing Brands
Recently, the company launched Zillow Homes, Inc., a licensed brokerage firm, to assist Zillow Offers with its buy and sell transactions. Its affiliate lender, Zillow Home Loans, offers customers a convenient option to secure financing for their home purchase.
In addition, Zillow’s other brands, affiliates, and subsidiaries include Zillow Premier Agent, Zillow Closing Services, Trulia, and Out East. StreetEasy serves buyers, sellers, and renters in New York City. It is complemented by Naked Apartments, which focuses on apartment rentals within NYC. Another affiliate is HotPads, a platform for the rental market featuring an app with a map-based apartment locator.
Zillow’s Business-Facing Brands
The Zillow Group oversees four business-facing brands, each providing a real estate-related service. The brands enable the platform to operate as a one-stop-shop for real estate needs.
Mortech takes care of mortgage tools that connect lenders with customers. Retsly normalizes MLS data to build applications for the real estate industry. Dotloop migrates document signing, editing, and tracking among multiple parties online. It also serves as a tracking tool, feeding Zillow Premier Agents data on how ads contribute to closed sales. The Bridge Interactive Group produces back-end software to facilitate entering listings into various systems needing access to the information.
The platform provides buyer, sellers, and renters services that span nearly all the activities involved in their real estate transactions. All services focus on the needs of regular home buyers and investors and are free of charge.
For All Customer Categories
Here, we refer to the website’s services that cut across its three customer categories: buyer, renter, and seller.
1. Zillow Premier Agent Program
The platform employs a pool of customer-focused agents in local markets on its team. The agents are tasked to ensure that every customer they are paired with gets the best customer experience possible. They must develop their real estate industry knowledge, provide excellent service quality, and be responsive to clients’ needs. Clients may also consult with Premier Agents on home improvements to increase property values. Since the website does not provide comparative market analysis, Premier Agents must be prepared to develop one when a client requests it.
2. Property Listing
With Zillow Rentals integrating its other property management solutions, landlords and property managers can conveniently list properties for rent. The website provides an updated listing of homes for sale and rent. It connects buyers to sellers who list their properties on the platform.
How to Use
You may use the Property Listing service by typing in a zip code, city, neighborhood, or a specific address. Your search will lead you to a map of your selected location. Streamline your search by selecting one of the following filters:
- Listing status: For sale, for rent, or sold
- Price parameters
- Bedrooms and bathrooms
- Type of listing: Houses, townhouses, multifamily, condos, apartments, manufactured, or lots
- Maximum homeowners association (HOA) fees
- House size in square footage
- Lot size
- Year the house was built
The platform requires more specific details from sellers, including swimming pools, type of view, and more. It will display all properties in the list meeting your selected criterion.
What Information to See
Upon selecting a property from the filtered listing, you will find extensive data about the property, including the following:
- Listing price
- Estimated monthly payments
- A brief property description
- Property features (property type, parking lot size, year built, etc.)
- Price and tax history
- Estimated monthly cost
- Estimated rental value
- Comparisons to neighboring homes
However, the platform does not provide a comparative market analysis.
First-time buyer or not and whatever your reasons for buying, the website provides services that make a home purchase convenient.
1. Zillow Home Loans
Zillow Home Loans offers its customers several options for financing their home purchase. Buyers get mortgage pre-approvals and financing through Zillow Home Loans, the platform’s affiliated lender. They can also explore Zillow’s affiliated online mortgage marketplace to source a mortgage provider with the best rate when they decide to buy or refinance.
2. Zillow Closing Services
The above feature refers to title and escrow services offered by an affiliate.
The platform provides home sellers with the right information to know if now is the best time to put up their Zillow homes for sale. Aside from connecting you to a local Zillow Premier Agent, the website also gives you access to Zestimate.
Zillow’s proprietary tool, Zestimate, provides an estimate of a property’s home value. The platform integrates Multiple Listing Service (MLS), public, and user-submitted data with its homegrown formula, along with other property-related data such as location, market trends, etc. Zillow encourages buyers, sellers, and homeowners to use Zestimate with other data, such as a real estate agent’s comparative market analysis (CMA).
Zestimate focuses only on homes that will be sold for their full value, so it does not cover foreclosures.
Finding the best property can be tiresome for people looking for a rental property as a primary residence. The platform offers something if you are interested in renting a property.
1. Zillow Rentals
The Zillow Rentals tool makes it convenient for renters to find and request to view a rental property, apply for it, and pay rent through a single platform. Zillow takes care of processing applicant’s credit and background checks.
Zillow ensures to update and upgrade major Zestimate algorithms. It also updates Zestimates for all homes several times a week, except when changes in algorithm or an analytical feature are added.
Zestimate’s median error rate comes in at less than 2% for on-market homes and almost 7% for off market properties. The more detailed the information, the more accurate the estimate will be.
Zillow does not offer pricing plans because its services come for free. However, sellers should know how properties for sale are published on the platform.
Sellers may publish their properties for sale on the For Sale by Owner (FSBO) listings on its website. However, the FSBO list is subsumed in the “Other Listings” section, so it is not as visible as those published by agents. According to research, an agent-published property gets more than 500 views for every view an FSBO property receives. Moreover, FSBO listings tend to see longer days on market. They also sell for an average of 6% lower than properties published by a real estate agent. The dollar equivalent of the lower percentage is almost the same as what you would pay an agent for a traditional real estate transaction.
Pros and Cons of Zillow
Let’s recap what the platform offers by listing its benefits and drawbacks.
Zillow offers several benefits to its users, including:
- Free platform. Investors can use the platform for free. They are able to access property search tools and obtain information about specific properties without signing up with Zillow.
- End-to-end service. Its acquired real estate service providers allow the platform to operate as an “almost one-stop-shop” for real estate. One feature that makes it appealing is Zillow Home Loans.
- Convenient and specific property searches. Its search parameters allow its users to perform more specific property searches, making it more convenient to find the best property.
Like any other service, Zillow and its features come with a few drawbacks, including:
- No comparative market analysis capability. Zillow maintains a massive database of properties for sale or rent and end-to-end services but lacks property analysis tools. Instead, the platform directs you to a real estate agent who charges a commission fee.
- Reduced potential for FSBO listings. Zillow allows sellers to publish their property for sale on its website but puts it in the less viewed “Other Sections,” limiting its exposure to potential buyers.
Mashvisor: An Alternative to Zillow
Real estate customers may widely use Zillow, but clearly, it is also found lacking in a couple of areas. An excellent alternative would be Mashvisor.
Mashvisor is a website designed to provide real estate investors with accurate, up-to-date data relevant to their investment decisions. It uses software that provides comprehensive and predictive analytics of investment properties in the US real estate market. The company’s analytics provide insights on future trends and the expected performance of a property based on several factors, including historical and comparative data.
In summary, here’s a list of what Mashvisor offers:
- Property search in specific cities and neighborhoods
- Calculation of key metrics like the cap rate and cash on cash return
- Comparative market analysis
- Assessment of a property’s investment potential
Mashvisor boasts a loaded toolbox that makes a real estate investor’s life convenient. Some of the features are discussed below.
The first thing you will see when you visit Mashvisor’s website is a search bar. Type in the city, neighborhood, or zip code of a location where you’d like to invest, then click Search.
It will lead you to a map of the location you specified and a listing of properties available in that area. When you see the map, you have two choices:
Option 1: Heat Map
You may choose the Heat Map option if you want to pick a specific, lucrative neighborhood first.
You can do so by clicking on the drop-down arrow on the bar labeled Heat Map Data Set to see the data filter options. They are:
- Traditional Cash on Cash Return
- Airbnb Cash on Cash Return
- Airbnb Rental Income
- Traditional Rental Income
- Listing Price
- Airbnb Occupancy Rate
Select one which matches your investment goals. For example, if you are looking to invest in a vacation rental, use Airbnb Occupancy Rate as your filter. A color-coded map will appear to identify high-performing areas based on your filter. They are the green-shaded areas, while the red-shaded areas have the lowest figures. Below is an example of a heatmap with Airbnb Occupancy Rate as the filter.
Suppose you’ve chosen a location area that is expected to be good for Airbnb. Your next step is to look for a specific property that will give you good cash on cash return.
Click on “Property Finder” next to the Search icon on the left side of the top bar of the heatmap. You will be redirected to the Property Finder page. Proceed as described in Option 2.
Option 2: Property Finder
Use the Property Finder tool if you’ve set your mind on a specific neighborhood.
Set the following filters to narrow down your property search:
- Cash on cash (CoC) return
- Cap rate
- Listing Price
- Number of bedrooms and bathrooms
- Year the house was built
- Property size in square feet
- Target traditional rental income or Airbnb Rental income
- Property type (single-family home, townhouse, multifamily, condo/coop, other)
- Type of property (For Sale, Sold, Pending, Foreclosure)
If no listing appears, say for a duplex for sale, it only means that no property matches your criteria. If that is the case, you got two options: tweak your criteria or look for another location.
Mashvisor offers several investment analysis tools, but for now, let’s just focus on two.
Your property search will allow you quickly scan the real estate data of your selected neighborhood. The top bar of the Neighborhood Analytics page shows the following information:
- Mashmeter score
- Median price
- Price per square foot, if available
- Cash on cash return for traditional and Airbnb rentals
- Rental income for traditional and Airbnb rentals
- Number of properties for investment, traditional, and Airbnb
- Airbnb occupancy rate
- Optimal strategy, traditional or Airbnb
- Walk score, if available
Rental Property Calculator
The rental property calculator, also known as the investment property calculator, calculates the following key metrics:
- Rental expenses, which include one-time start-up costs and recurring monthly expenses
- Rental income, including nightly rates
- Occupancy rate
- Cash flow
- Return on investment
The tool provides insights on the two rental strategies so that you can choose between a traditional and Airbnb rental. It also helps you determine if the selling price of the property you intend to buy is reasonable through real estate comps.
Mashvisor’s Knowledge Center comprises published blogs on various real estate-related topics.
Alternatively, you may check Mashvisor’s blogs for city statistics and insights to find a good location. They contain pertinent city information, e.g., what is there to see and what drives its housing market. The blogs will also point you to the best locations in the city to invest in, as it shows the same stats on the neighborhood analytics page.
Mashvisor publishes other types of blogs, including reviews of real estate investment tools and investment guides for beginners.
Real Estate News and Analytics
With the intent of keeping you updated on what’s happening in real estate, Mashvisor dedicates one section of its Knowledge Center to the latest news in the housing market. It will help you with your investment decisions through its news features on real estate laws, the latest real estate forecasts, price or interest rate increases, and more.
Mashvisor Pricing Plans
Depending on their need, investors can choose among three pricing plans. All plans come with a 7-day free trial.
The Lite plan is ideal for analyzing the rental income and return on investment of individual properties based on actual rental comps. It will cost you $17.99 per month and provides you with the following information:
- Long-term and short-term rental rate
- Projected rental return on investment
- Investment opportunity scores, allowing you to pick the best investment property
The Standard Plan allows you to discover the most lucrative cities, neighborhoods, and properties based on your target profit and customized projected expenses. The plan’s cost is $49.99 monthly. On top of the features provided by the Lite Plan, the Standard Plan allows you to:
- Locate the most profitable markets and properties
- Compare long-term and short-term rental rates of similar properties
- Export 20 searches to Excel each month
If you’re a full-time investor or a real estate agent needing to do bulk research on properties and manage clients, the Professional Plan is best for you. It allows you to analyze large datasets and use multifamily and foreclosure filters in your property searches. At $74.99 per month, you get to enjoy all the features offered by the Standard Plan and also do the following:
- Multifamily and foreclosure property search
- Client management with Real Estate Agent and Property Manager CRM
Additionally, you can increase the number of searches you can export to Excel to 60 per month and get property PDFs.
Pros and Cons of Mashvisor
Now, we summarize the advantages and disadvantages of using Mashvisor.
- Nationwide data analysis. Mashvisor uses data from reliable sources like Airbnb, MLS, and other property listing sites, ensuring the data used for analysis are accurate and up-to-date. When processed with Mashvisor’s algorithm, the data yields recommended properties based on financial and behavioral patterns.
- Comprehensive investment property analysis. How to find comps in my area is one concern investors often come across. Mashvisor provides a comparative analysis of similar properties within the neighborhood that matches your criteria. The analysis intends to help you select the most suitable property for your investment goal. An investor may also get help on whether to use the property for traditional or Airbnb rental by comparing key metrics.
- Structured Pricing Plan. The pricing plans are designed so that there is one plan to suit every investor’s need, whether you are a novice or savvy investor or a real estate agent doing research for your clients.
- A wealth of real estate information. Aside from the data and stats that Mashvisor tools offer, the website features a knowledge center for investors and agents. The blogs are very useful references for anyone interested in real estate. Real estate news is featured as well.
Users will only find one significant drawback to using Mashvisor.
- No free plan. Although each plan comes with a 7-day free trial, some users, especially newbie investors, may not be able to afford the monthly rate.
Zillow is a widely-used real estate website that offers seamless end-to-end real estate services. Its acquisition of consumer-facing and business-facing brands enable the platform to build a one-stop-shop platform for real estate buyers, sellers, renters, and investors.
Apart from its features and services, Zillow’s biggest appeal is that the platform is free to use. However, a closer look indicates that the free service is disadvantageous to sellers. Unless sellers pay a real estate agent to do the listing for them, their property won’t be given enough exposure among buyers.
Another drawback is the lack of comparative market analysis in its service roster. Instead, Zillow points buyers to work with real estate agents for the market analysis.
Mashvisor emerges as a better alternative to Zillow with the former’s comprehensive real estate analysis. Its wide range of tools enables investors to evaluate properties for profitability and return on investment before purchasing. Yes, Mashvisor’s services and tools do not come for free. But if you are a serious investor, you would prefer to pay a premium for comprehensive, accurate, and up-to-date real estate investment data.