It's like in Canada where tenants can hire a broker for "free" to find a rental. However the broker just collects 1 month rent from the landlord. Do you think the landlord just absorbs the cost? No, the quoted rent was just 8.4% higher when the broker mentioned he was a broker.
Because in general, there have been easy-to-find examples in the past couple decades of rents going up 5-10% every year for folks in certain places with aggressive landlords. Were they willing to pay 5-10% more suddenly in year n+1, or were they charged less than the maximum they would've been willing to pay in year n?
Its like when a broker sells a house and says the seller pays the fee. In reality the buyer is the only source of money in the deal so they are effectively paying the fee.
Brokers have done a good job of telling landlords that if they don't use a broker, or use a cheap one, that they'll get bad tenants and that'll cost them a lot in the long term. Good broker = good tenants = worth getting 8.4% less, because you'll lose more than 8.4% when a bad tenant burns the place down....
I'm unconvinced that the above is true, but it's certainly the message brokers (fairly successfully) give landlords.
When the burden is paid by the renter, there's no efficient market because renter has no choice in the broker and the owner doesn't care.
It’s no different than the ridiculous notion that “the seller pays broker’s commission”. It’s baked into the price and the buyer is still paying it, otherwise a home would cost X% less.
The National Association of Realtors is a huge political lobby that works to perpetuate the racket.
Compass started as Urban Compass and wanted to distrupt the racket! But eventually decide to join in on it and become a VC backed brokerage with better “technology”.
No one has yet been able to educate consumers on the insane mismatch between value and price among RE brokers.
is it still better to do that? yes. Because i can now compare the cost of rental, fees included on a comparison site, instead of looking at the place i want and finding it out it has a hidden charge.
this is why they changed the law in the uk so the landlord has to pick, becasue it means they will be incentivised to put it into the rent, and this way its STILL better for the renter because now they are able to compare the full costs.
I still think having this on a platform where a company is making a flat $250 fee (or whatever) is extremely scalable for the company and would benefit both the landlord and tenants.
In other cities property managers do the same thing, but they skim off the top of the rent checks and provide more services.
But really all the middlemen in housing are awful.
At least in California, the broker’s fee is an expense of the landlord that is not directly passed on to the tenant moving in. If the cost is passed on, it’s hidden in the cost of rent.
Also, the landlord can claw back part of the fee if the tenant moves out before one year. So, it makes more sense as a landlord expense.
Both are parasitic entities that cause more harm to end users than benefits. The problem is that they control the information flow and supported by governments, hence we cannot eliminate them completely but can try to keep them at the bay using technology we can control
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 who's only interaction with you is via chatbot
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i have nothing against brokers. but if these companies innovate and force the brokers to actually provide value again in the internet age, then that's a win for everyone.
In Boston, I would've thought there's no way that someone would pay thousands of dollars of a broker fee for merely unlocking the door so you can see the place for literally a few minutes (and who expects you to bring your checkbook and write a deposit within 5 minutes, because they've scheduled another person to show up 5 minutes later)... but that's the setup, and many people have to play along with that.
You wouldn't think you'd pay 30% cut off the top to an app store, for the privilege of being in app search results, and also to be at the mercy of whatever backstabbing it might do to you in the future (e.g., when they decide to compete with your service, or a partner of theirs does), but that's the setup, and many people have to play along with that.
The difference isn't between brokers / tech companies, it's between a new market entrant (who is trying to convey a user-friendly atmosphere to attract userss/good press) vs an ossified market where brokers have no incentive to cater to renters, despite the fact that they're ostensibly working for them, since they're chosen exclusively by landlords.
Five years later, there's nothing preventing the tech companies from working in exactly the same way—the reality is that any company that's chosen exclusively by the landlord and not accountable to the tenants is going to face exactly the same set of incentives, since supply-side shortages dominate the urban housing market.
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 live by that. They've perfected it, refined it to the level of art. Only the best US used car salesmen can get close to pulling shenanigans the large on-line hotel and vacation booking services pull.
> the fee they charge will be less than brokers.
The fee will be whatever they say it will be. The more centralized the market will get - and this is what happens when things get handled by tech companies - the higher the fees are likely to be.
> no way would someone handover a month's rent to some company who's only interaction with you is via chatbot
People will pay if the service is good enough, for the same reason they pay brokers today. Many have more money than free time in their lives; one month's rent isn't much if it cuts out most of the bullshit that's involved in finding a place to rent.
>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).
They render a lot of value to the landlord, however. Taking nice photos, dealing with unqualified applicants, showing the property, etc.
This kind of lazy snark comment degrades this community.
It'd be different if said comment was deleted/removed but users downvoting it for not being conducive to conversation and calling it out as needless and low value isn't impeding the free speech by any means.
Free speech != speech free from criticism.
In fact it is your lazy finger wagging comment that degrades this community.
Consider that perhaps Caretaker is taking customers from brokers because they actually provide a better and/or cheaper service. Maybe the positive comments aren't a short term buzz but instead good reviews of a good product.
My comments describe the typical playbook for VC funded companies going into a market place with a well hated incumbent.
The cheaper services that Caretaker currently provide are subsidized by private capital and only will provide a positive return for that private capital once they have a dominant position in the market at which point they have the power dynamic to raise prices.
My comments look to the longer term future and take a quick look at whats getting replaced. There is no supposition that the broker solution is better - more that the Caretaker solution has a predictable playbook in which we will see if the long term solution is indeed better.
The value that was accrued across broker (As hated as they may be) provide some jobs, the value in caretaker accrues across some staff but mostly rolls up to the investors - providing it is a successful outcome.
edit: fb marketplace might get the brokers first, most of my friends found their places via landlords posting there