Landlords can't pass costs to tenants. The rental market is completely supply inelastic. Landlords are already charging the maximum renters are willing to pay.

Do you mean at this moment in time because of Covid, or in general?

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?

Demand has been increasing by 5-10% a year in highly desirable areas. Obviously different people are willing to pay different amounts, but everyone wants to pay as little as possible. As more people want to move in the least wealthy are pushed out and prices increase. After all, rental price is the highest price landlords can take in order to rent out all their units.

Landlords derive their revenue from rent. That’s it. And they aren’t in the business of losing money. So one way or another it comes out of the renters pocket.

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.

So the market clearing price is $1084 but the landlord rents it out for $1000? Why is he leaving the other $84 on the table when dealing with non-broker applicants?

I think brokers are still in the property game because landlords typically aren't sufficiently informed to know that they can avoid paying a broker, or can shop around for a cheaper one.

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.

Yes, but the landlord can find cheaper brokers, or do it themselves to save money. There's now an efficient market.

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.

Either way the renter is paying the cost and the landlord is losing a chunk of the spread.

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.

EXACTLY! How is this lost on so many people? The buyer is the only source of funds, so any cash paid to the broker effectively came from the buyer.

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 the cost passed on to the renter? yes.

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.

It is interesting. One important difference is if the broker knows they have to pay the broker they are probably more likely to due their best to keep a tenant if they have to deal with it. The landlord also wants to make as much money while having a marketable rent - so its not like they don't care if they have to raise rent to cover expenses.

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.