Like most things newfangled, the problem seems to be first hitting the young renters of Seattle’s University District. But judging by other cities in the West Coast archipelago of tech economy driven urban boomtowns, the early effects of the new revenue models are probably already rippling through Capitol Hill’s rental market.
Thursday morning, Seattle City Council member Teresa Mosqueda’s Housing, Health, Energy, and Workers’ Rights Committee will be discussing a new trend threatening to add to the city’s affordability crisis: landlords using online services for “rent bidding.”
According to the session set to be presented Thursday, the ASUW Student Senate is calling for a moratorium on “Rent Bidding Services.” One report on the Rentberry service quoted the company’s founder taking credit for raising rents 5% above listing prices in the already ultra-expensive San Francisco and San Jose markets.
CHS could find only one Rentberry listing on Capitol Hill — a “cozy Capitol Hill home” listed at a starting rent of $7,500 per month. How does the service work? Here’s the marketing pitch:
Tired of secretive bids? Rentberry is the only platform that provides a transparent rental auction with the ability to submit custom offers. See the current highest proposal and the number of people who applied for the property, so you can make an informed decision.
What could the city council do about the new services? Check out Seattle’s plans to regulate the Airbnb-driven short-term rental market here. Meanwhile, this 12th Ave building stands alone thanks to a very special exception in the rules.
The full presentation document from Thursday’s planned briefing on rent bidding services is below.
Why shouldn’t a property owner be able to offer their property to the market and obtain the highest price people are willing to pay to rent it for long term occupancy? These rent auctions are really just another form of marketing, and offer the opportunity to expose the vacant rental unit to prospective renters who establish the rental rate through their participation in the auction. Are we also prepared to prohibit other forms of marketing which may have the effect of raising individual rents for available units by broadening market appeal?
What’s good for landlords is not necessarily good for society as a whole. Rental bidding is not good for society. Why should society suffer so that landlords can squeeze a little more profit out of renters?
Landlords are asking for more regulation if they decide to attempt this in Washington. But hey, this is America, where short term ROI are more important than anything else…damn the consequences!
As if we have to ask for more regulation….
Regulations are typically in response to behavior detrimental to the greater good of society. This seems like one of those cases.
No doubt the city would like to implement a rental tax as well after they have finished gouging tourists at $14 / night with their new tax. Still waiting to understand why this isn’t a % of nightly cost like hotels.
As a method of matching tenants with the properties they like the most, this is a pretty great system. Imagine you visit 3 apartments for rent that are in the same price range, but you like 1 of them lot more than the other 2. Maybe it has bike storage, a place for a desk, or it’s in a location that’s particularly convenient for you. Some factor makes it much more appealing to you – and a better fit for you – than other equivalently-priced properties.
If a bidding system allows you to translate those preferences into a higher bid, that seems ideal. The alternative (ie, now) is entirely binary (I want this place or I don’t), so it incorporates very little of how much a given prospective tenant actually wants or will benefit from a given property. An auction-style system can’t do worse than random.
I’m surprised this wasn’t created long ago. It makes a lot of sense.
I can’t understand how this would work with the Seattle first in line ordinance – it doesn’t seem to incorporate the idea that the first would be the one paying the most. Anyone ?
Perhaps no applications are accepted until the bidding is over. I think it renders the ordinance irrelevant as to apartments participating in the auction.
I might be alone, but I actually discounted rent on my unit for a well qualified candidate – might cost me $1000 over a year but the reduction in hassle and risk is worth it. Would be more valuable to have a renter rating system to make it easier to weed out the bad apples…
Hmmm… could that be the whole point?
Yup, finding an apartment just turned into Game of Thrones. That’s the old Seattle “warm and fuzzy”, all right.