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We replaced rental brokers with software and filled 200 vacant apartments

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Re: We replaced rental brokers with software and filled 200 vacant apartments

#481

Post by AceJohnny2 »

e1g wrote: post #129
benmanns wrote: post #111

We used this pre-COVID to get out of a Brooklyn lease and had a fantastic experience (back when it was Flip Instant). Flip basically charged 1 month rent and guaranteed a fill or they'd pay the rest (6 months) of my lease. Compared to our landlord who wanted 1.75x rent, up to 2.75x rent if not filled immediately, after significant negotiation. Hiring a broker myself would have likely cost 1x rent or more anyways with…

The landlord is under no obligation to accept anyone this service finds, so this startup guarantees an outcome they cannot control. It might be a way to build awareness and goodwill, but they are burning VC capital to offer a service that is either fundamentally unsustainable or mispriced.

This is no more complicated or evil a business model than insurance, where you make money in aggregate despite some individual outliers.

Re: We replaced rental brokers with software and filled 200 vacant apartments

#482

Post by listenallyall »

spyspy wrote: post #46
cde-v wrote: post #6

Would love something like this to kill (or at least severely maim) the broker industry in NYC. 0 value added at the cost of 10-15% of yearly rent.

What's worse is they also employ high pressure sales tactics to get tenants to settle asap. Young professionals and students moving to the city for the first time are their bread and butter, along with people who decided to end their current lease and have 30 short days to find a new spot. While searching for my current apartment, I was month-to-month on my previous NYC lease and was therefore 1) not a complete noob…

Not sure why you are surprised or annoyed by this. It doesn't matter what you sell, aren't you going to avoid the self-described "super picky" customer? Salespeople work on volume, a customer like you is a time suck with limited probability of resulting in a sale. You're welcome to be as selective as you like, but certainly don't expect salespeople to want to deal with you.

Re: We replaced rental brokers with software and filled 200 vacant apartments

#483

Post by caddemon »

988747 wrote: post #403
munificent wrote: post #288

Earlier quoted context omitted.

> so it's obvious from who's pocket the fee will come from. Yes. The problem is that the one whose pocket the money comes from is not the one who selects the broker . Thus the person with the financial incentive to make that choice wisely is not the one making the choice. This is why it's a principle-agent problem.

My point is that landlords still do realize that "more money for the broker == less money for me", even if this money is not coming directly from their pocket. So they still have incentive to choose a cheap one.

I'm honestly not sure to what extent that is true. I definitely don't think it is 1 to 1. Apartments are advertised at $X rent per month. The broker fee is just an extra month of rent due at signing, it is not reflected in the main list price.

The majority of apartments in certain cities charge this fee, so if you care to find one that doesn't you'd have to look for advertisements explicitly mentioning "no agent/broker fee". Maybe it's just my circle, but even the people I know that will look in less desirable locations for cheaper rent do not bother to look for this. It's also not far off from various psychological tricks seen in business - consumers do not behave rationally.

I'd argue it's even a bit worse than other sticker price bait and switch situations, because how many people know to look for this? Mostly only people that have signed a lease in one of these cities before, which for a place with a lot of transplants and subletting can be a surprisingly small number.

At some point I wouldn't even call it irrational to ignore the fee. Once you've decided on a place and receive the rental app to fill out, are you really going to turn back because you found out about the agent fee? Especially as time runs out to find a place and you realize more than half of them do the exact same thing?

I honestly wouldn't be surprised if some landlords have come to an agreement with the agent they use to get a bit of a kickback from the broker fee, unbeknownst to the buyer.

Re: We replaced rental brokers with software and filled 200 vacant apartments

#484

Post by vineyardmike »

TeMPOraL wrote: post #266
sudopluto wrote: post #198

Earlier quoted context omitted.

i don't care if a tech company extracts a fee, as 1) the process will likely be much better then texting a broker: virtual apartment layouts, ability to see profiles for roommates, no bait and switch of "that unit just got taken buuuuuuuuuuuttttt i have this crappy one that is still available just for you!" 2) the fee they charge will be less than brokers. no way would someone handover a month's rent to some company…

> virtual apartment layouts I wish to see that. It'll be 10 more years before the implementation won't be total garbage. > ability to see profiles for roommates Privacy concerns may prevent that. If not, it's a prime candidate for a paywall. > no bait and switch of "that unit just got taken buuuuuuuuuuuttttt i have this crappy one that is still available just for you! You're joking, right? On-line services literally…

>> virtual apartment layouts

>I wish to see that. It'll be 10 more years before the implementation won't be total garbage.

It exists today. I used it for all my apartments since 2018. Its great (enough). Mattermost is the biggest one i've seen. They even have a (mediocre) VR app. Its sufficiently good enough for the purpose. You can even (somewhat precisely) measure the apartment (great for furniture/etc).

Re: We replaced rental brokers with software and filled 200 vacant apartments

#485

Post by listenallyall »

edoceo wrote: post #11
mushufasa wrote: post #10

Earlier quoted context omitted.

0 value added for the tenant, but brokers typically serve the landlord.

Software serves both parties with a win. Faster for LL, cheaper for Tenant.

Is it though? Airbnb is essentially a rental broker, it charges a high fee, and still hasn't turned an annual profit. Plus the landlords add on "cleaning fees" and more that the tenant must agree to pay.

Re: We replaced rental brokers with software and filled 200 vacant apartments

#486

Post by TheRealPomax »

kennywinker wrote: post #156
TheRealPomax wrote: post #82

Earlier quoted context omitted.

No, in the case of NYT brokers, software would solve the problem of NYC brokers, by putting them out of a job. If you're from Germany, you have nothing to compare these people to, they run a racket that would be illegal there to begin with. They're nothing like the kind of rental agencies in Germany, they are individuals who basically figured out how to scalp entire buildings worth of apartments.

Op suggested regulation. I.e. making certain practices illegal. You responded: > they run a racket that would be illegal there to begin with. Perhaps making it illegal in nyc as well, as op suggested, is the solution? Rather than letting a tech company replace the scalpers with a scalping monopoly

And how realistic, exactly, do you think getting regulation pushed through in NYC is, exactly? Unless there is true citizen outrage (and there will never be, given what market we're talking about), you're going to need lobbied buy-in from currently sitting politicians and their successors. So if you're lucky, maybe you'll get something tentative in 2040.

In the mean time: software can solve this problem now. Now sounds good.

Re: We replaced rental brokers with software and filled 200 vacant apartments

#487

Post by crazygringo »

TeMPOraL wrote: post #441
crazygringo wrote: post #424

Earlier quoted context omitted.

It doesn't matter if they're trying to go for a monopoly play here. Competitors would arise and there wouldn't be any inherent monopoly dynamics left. So of course the percentage will be cut. That's how competition works.

It's a two-sided market, it's gonna be winner-takes-all.

You mean the way Lyft went out of business because Uber took it all, and then Uber raised their prices 5x?

Re: We replaced rental brokers with software and filled 200 vacant apartments

#488

Post by caddemon »

listenallyall wrote: post #482
spyspy wrote: post #46

Earlier quoted context omitted.

What's worse is they also employ high pressure sales tactics to get tenants to settle asap. Young professionals and students moving to the city for the first time are their bread and butter, along with people who decided to end their current lease and have 30 short days to find a new spot. While searching for my current apartment, I was month-to-month on my previous NYC lease and was therefore 1) not a complete noob…

Not sure why you are surprised or annoyed by this. It doesn't matter what you sell, aren't you going to avoid the self-described "super picky" customer? Salespeople work on volume, a customer like you is a time suck with limited probability of resulting in a sale. You're welcome to be as selective as you like, but certainly don't expect salespeople to want to deal with you.

"Customer" is an interesting word choice for someone who receives literally 0 value from the agent. Especially now with the internet, but even before with school/work connections, the majority of students/transplants will find their own apartment. They then have to pay the broker fee to whatever agent their chosen landlord has decided to use, in exchange for being a middleman with paperwork.

Many of the prospective tenants do not even find out about this until it is time to officially apply! Since there is usually a deadline to find an apartment, and most apartments will have (proportionally) the same exact fee, the "customer" is really a captive.

Ironically, the person you are replying to tried to actually be a customer with the agent, but since these people have no need to sell apartments (they will sell themselves in NYC and Boston), you're right - why bother? The real key is to become buddies with a few landlords, that's where to spend time.

Re: We replaced rental brokers with software and filled 200 vacant apartments

#489

Post by SilverRed »

standardUser wrote: post #108

Apartment hunting is the most inefficient "purchasing" decision I have ever had to make, and the one most likely to end up with a severely sub-optimal outcome. There's some good ideas here that would at least facilitate efficiently viewing more apartments. But there's still so much extremely basic information that potential renters either cannot get about a unit or have to jump through hoops to get. Noise issues, pes…

The property management company often doesn't even know. It took me a week to find out which car park number was mine which took building management to tell the property manager.

There is no way the management companies know anything about noise levels or neighbors. Larger buildings tend to have reviews online but outside of that its a gamble.

Re: We replaced rental brokers with software and filled 200 vacant apartments

#490

Post by 6f8986c3 »

coding123 wrote: post #479
benmanns wrote: post #111

We used this pre-COVID to get out of a Brooklyn lease and had a fantastic experience (back when it was Flip Instant). Flip basically charged 1 month rent and guaranteed a fill or they'd pay the rest (6 months) of my lease. Compared to our landlord who wanted 1.75x rent, up to 2.75x rent if not filled immediately, after significant negotiation. Hiring a broker myself would have likely cost 1x rent or more anyways with…

All states should operate like Oregon that stipulates the maximum lease break fee of 1.5 months. I think that's totally fair considering it's been a landlords market for the past 20 years. There's no reason in any state to keep someone on the hook for potentially 12 months when that landlord can just tell someone "hey we're still advertising it but we haven't found anyone yet". By the way, if any of you find yourself…

As with most things: it’s complicated.

When you sign a lease agreement, you get a guarantee that your rent will not go up during the term of that agreement.

So, if you sign a lease for $1000 a month on Monday, and on Tuesday the market rent for that area spikes to $10,000 a month, you’re locked in with a lower rate.

If I were a landlord in Oregon, given the above law, I would just only rent month to month. Breaking a lease becomes easy, but you also lose the pricing guarantee.

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