It somehow made the phrase "Everything that can be automated is automated." less... I don't know... scary I guess. I can't put my finger on it, but giving all this up to some algorithms seems wrong/worrisome for some reason, but seeing exactly how it was done made it less so.
Sadly, our experience shows that 'the algorithm' becomes very centralized (because of the network effect), and suddenly this new middleman starts extracting fees comparable to the previous middlemen.
Please see: ticket sales: Ticketmaster, Stubhub, etc.
In theory, these make sense and reduce anti-consumer inefficiency like scalping that individual venues are not equipped to deal with. In practice, they extract fees. It's not that they are bad, per se, just that if the opportunity exists, someone with a spreadsheet will spot it, likely with the best intentions but no eye to the overall impact.
EDIT: To be clear, I think these services are a net good. Stubhub allows me to get sports tickets at a reduced price if someone can't go to the game. Ticketmaster stops people from spamming the system to gobble up tickets, it's just that these industries are now going to want a fee for that and we end up back where we started. I'm sure at one time brokers were helpful as well (a landlord free way to compare properties).
The author's extreme user empathy, attention to detail, and willingness to do whatever it takes to reach a standard makes this a comforting read. You know it's going to end without disappointment, because he does whatever it takes to get good results for all stakeholders.
Some of this software is pretty terrible. I don't remember what for but the new CRM software at my apartment required that I fill some form that I couldn't find so I went down stairs to the office and the person working for the land lord didn't know either.
Yeah it's pretty atrocious. They're so useless. It's such a feel-bad experience working with them, knowing they're not helping at all, and knowing you have to pay them thousands of dollars if you want the apartment - for nothing.
What's worse is when they try to pretend like you're actually getting value for the crazy fee they charge.
"Now, I'm you're broker so if there are any problems throughout the lease, feel free to contact me. This isn't just a one time thing!"
We literally emailed/called him two weeks later and he ghosted us.
When we were moving out of our apartment when our lease was up, he was around showing another unit, introduced himself, asked us how long we lived there, etc
It's good that there's no surprise fees, but they're still being paid. It's like anything, the value is just hidden in the price of the product now, rent in this case.
If the landlord pays a fee equal to a percentage of the rent you will be paying them if you rent there. If they are pervasively popular in your market you wont have much choice but to pay them as well.
That's not how anything works. The money doesn't just come from nowhere, or from the landlord's profits. It is accounted for as an increase to rent. That's what I meant by "surprise fees", you're still paying them, they're just not a surprise anymore. Maybe the increased transparency in the market will push out brokers that aren't adding value, but that's more of a hope.
It's not a hope, it's reality in other countries, like the UK.
We banned letting agent fees charged to the tenant. Miraculously, landlords didn't find paying £250 for a contract renewal value for money.
Rents continue to go up and down, but now tenants know they are spending money on their flat or house, rather than paying inflated fees to a letting agent/broker.
This is correct in almost all cases (outside of highly commoditized goods) and it's crazy how people don't understand it. It's why the price of McDonalds doesn't increase when minimum wage does. McDonalds is already charging as much as they can for a Big Mac (where stores averages a 40% margin). Increasing minimum wage means that margin goes down a bit, not that prices increase. If they could increase prices they already would have.
> Thinking that labor costs do not impact product costs is grossly ignorant.
No one is arguing that labor cost doesn't impact product cost, but the fact is that in general it doesn't impact product price.
Or to put it the other way: can you imagine a business not increasing product price as much as they can, regardless of the product cost, as long as the supply is matched?
If they can increase the price, why would they wait for cost to rise before doing so?
The outcome is that business/landlord already charge as much as they can, and increased cost doesn't change the product price, since they already chareg as much as they can.
You seem to be missing the fundmental problem here
Sure not all prices are infinitely elastic, but if Labor costs out strip the ability to prices to absorb them that do not mean the business simply magically makes them go away, no that business goes bankrupt and wages go to $0.
Owners / Investors demand a return on investment, if the market average is 8%, and business x is only returning 4% why would an investor continue to keep their capital there?
Worse still if inflation is 3% and the business is only returning 2% the investor is LOSING MONEY by keeping their capital in the business, better to cut their losses and move on
This mythical position where by businesses just "absorb the cost" because the prices are not elastic is pure fantasy
> This is correct in almost all cases (outside of highly commoditized goods) and it's crazy how people don't understand it.
What are you on about? Of course McD will change prices relative to input expenditure. You can even see this across all the countries they serve. If there were to be a significant impact on margin, they can increase prices.
All fees are passed onto customers, that’s how you calculate profit margins.
Most business only absorb the minimum amount of margin loss they can, and for very short terms. No business aims to operate at a loss unless propped up by outside investments.
All businesses will increase prices to maintain the profits they need, up until what the market will bear - which is why taxes will also not end up pushing it too far, the gov isn’t stupid.
Again, it depends on elasticities. Businesses can't just raise prices and expect demand to remain at old levels. People quickly substitute goods and services in the face of price changes. In the case of mcdonalds price increases cause people to cook or eat food that doesn't need to be prepared. In the case of rent, supply is fixed, so landlords are already charging monopoly prices. There is very close to zero wiggle room for landlords to raise prices.
> This is disproved very easily by reality - most places have increasing rent YoY. Same goes for house prices.
All this proves is that evolving market conditions lead to changes in price. Try charging 2030's market-rate rent in 2021, and see how many offers you get.
Except is does.. and no they do not charge "as much as they can" for the big mac. Prices go up all the time, just in the last year the price of the Big Mac has increased a lot due to input costs, including labor, going up
McDonalds is a bit of an outlier here; they have incredibly predictable food costs due to high levels of standardization and a worldwide inventory network. The franchisees have a certain amount of leeway on pricing, some of which is dictated at the corporate level down, but it's based on bona fide expenses.
If local regulatory conditions cause your labor cost to go up, they are absolutely allowed to (and will) raise prices to compensate.
So you just reject the field of economics entirely?
Like, lets say that the government adds a 20$ tax/fee on fast food, per burger sold. Clearly McDonalds would no longer be able to sell burgers for 4 dollars.
Thus price would increase. Or supply of burgers would go down (thereby only leaving higher priced burgers in the market).
Not quite; some of this is about moving wealth around, changing the captured value to favor the buyer instead of the seller.
But that’s just the “efficient market” part of this. A fee like this could very well be an inefficient rent-capture that has managed to make its removal more expensive in the short-term than the short-term cost of allowing it to remain. Said less charitably, it’s a racket.
I would have thought that on HN of all places, where so many folks are attempting “disruption” (ie finding these unnecessary market inefficiencies and stepping around their cultural/legal/systemic barriers in order to reap some of the otherwise captured value), this would be better understood.
lol - one way or another the buyer is paying for it. If sellers operate at a loss for too long, they won't have that thing to sell any more :p
Overhead is overhead. Trying to pretty it up with fancy language like "moving wealth around" and "changing captured value" doesn't alter the fundamental economics.
It was a state law that capped application fees at $20 or something, and some authority interpreted that as broker's could no longer charge fees to tenants, but then the real estate brokers association was granted a stay + the court eventually decided in their favor.
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.
I don't really get where brokers fit in. Most landlords should have the time/employees to take care of such things themselves. An absentee landlord would need a whole property management service to take care of everything, not just one small part.
Not really. My parents used a broker for their rental. They manage the maintenance and rent collection themselves, but did not have the time or energy to do marketing/showing/vetting of new tenants.
And the broker they used basically does all the listings in the condo complex, so he has a steady flow of interested and vetted renters as well as standard leases that cover the specifics of the condo complex, as well as a relationship with the management office to get the renters approved quickly and get them keys for amenities and such.
In our case we pay the broker, but I can see a lot of value in their services for the landlord.
> Most landlords should have the time/employees to take care of such things themselves.
Do they have to have their own fulltime electrician on staff or are they allowed to contract it out? Why the insistence that the work be done by their own employees instead of contractors?
Do you know how much it would cost to have an actual employee, just to show the apartments and answer questions? You're paying them hourly or salary, plus payroll tax, unemployment, all of the other added expenses that a blue state throws on top of that. Plus liability, you now have to comply with every blue state law- oops did you not give the employee their exact mandated lunch time under California's very complex, tough to parse lunch rules? Get ready for a six to seven figure fine. The employee could always invent a discrimination lawsuit, wrongful termination, claim they were injured on the job, etc.
The broker is an independent third party to whom you pay a fixed fee, and have no extra cost or regulatory liability beyond that. A no brainer
Yeah, last year it had briefly seemed that broker's fees had become illegal, but this year that was "clarified" and now they're definitively legal again. [1] [2]
Previously it had seemed like nothing could get rid of them -- landlords mostly didn't care since it was mostly tenants who paid them in the end.
But COVID suddenly made everyone a bit more willing to consider other options (like virtual tours), and with some rents down landlords are perhaps a bit more willing to realize that if there's no broker's fee, tenants can pay a little more.
I'm actually really excited about this lockbox technology, I genuinely think it could be the key to "unlocking" competition again.
My only concern is that a lot of buildings don't have anything obvious in the front to lock it to, as well as plenty of buildings prohibiting tenants from storing keys in lockboxes in front, both because anyone can take a hammer to one and smash it to get the building key, and also because they don't trust it's not someone running an AirBNB.
Yup, also banned in England now. It shouldn't have been, but it was very refreshing when I last renewed my lease not to be charged several hundred pounds for the privilege of emailing back a signed copy of the document with the end date changed.
The assumption that software can solve this problem is simply wrong. It's the regulation change that needs to happen if you don't want that renter pay the broker "services".
For example, a new law in Germany to apply the "who hires pays" principle for brokers in the renting market basically made the renting "broker fee free" for renters. Previously, the landlords would hire a broker that needed to be paid by the renter. Why not, it doesn't cost them anything, and at least they don't need to have a contact with the potential renters. Now, that they have to pay for the brokers service themselves, it's suddenly not that valuable to them.
That's like saying rent prices depend on the will of god. Retroactively, you can justify this claim regardless of what happened: "It was god's will" or "You had to adapt your price to the demand".
Actually the brokers' prices fell drastically in response to this law. Probably because the landlords now have an incentive to take the cheapest broker.
It addresses the principle-agent problem[0]. Yes, renters that want a broker may simply raise the rent to pay for it, but doing so affects their own bottom line because either (1) it's harder to find a renter at that higher price or (2) they could have found a renter without a broker and pocketed the higher rent themselves.
Both of those things happen regardless of who formally pays the fee: one side of the transaction has a desirable good (apartment) the other side only has money to bargain with, so it's obvious from who's pocket the fee will come from. Many times the buyer would openly raise that argument in negotiations: "You know, I have all those fees to pay, can you lower the rent a bit?". It's not like sellers are completely oblivious to fees paid by a buyer.
When the person choosing the broker is the same one that pays, it creates competition on fees. The renter cannot choose to change the agent to a cheaper one. They have to deal with whatever agent the landlord has chosen.
It works similarly when software is chosen by people who have to use it versus those who do not. IDEs and text editors are usually chosen by the users, so there is competition on usability between different options. Timesheet and other HR software are usually chosen by upper management, and the people actually using them cannot switch, so there is not the same kind of competition on usability. Instead, they compete on other things that make them more appealing to those who can make the decision.
> 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.
> So the landlords just make the rent more expensive to account for having to pay the broker, what changed?
Nothing.
Clearly brokers are doing something or else people wouldn't pay for them.
My theory is the broker fee has positive selection for wealthier tenants, which for every property - low or high rent - makes for an economically better tenant. Raising the rent has the same effect. We care that there's cheap rent because shelter is a basic human right, and we appreciate that spending tons of money on rent couldn't possibly be good in a positivist economic sense, but of course raising the rent also selects for a wealthier tenant.
Replacing the brokers with software has a similar effect. If your users feel comfortable using a complicated website with no human beings involved, they are going to be wealthier.
This comes up everywhere. For example Oscar selects for a healthier insurance pool by being a complicated app - old people want real human beings to talk to and are turned off by apps, and they are also more expensive for insurance to carry, so it's a "win" for Oscar. Credit card only restaurants with lines make higher revenue because lower-ticket cash paying customers are substituted by higher-ticket credit card paying ones. And the iPhone is a $800 phone versus a $300 Android one, no wonder iPhone users spend 2-5x as much on IAP.
It also solves the problem of having to source tenants and do all the legwork around that which is a pain in the ass part of owning property. Especially if you own many properties.
It's not unlike the role a recruiter plays for jobs.
> Clearly brokers are doing something or else people wouldn't pay for them.
In many cases (not talking about NYC here), what they're doing is simply blocking access to an apartment. You see an apartment, you have to deal with the broker / real-estate agent / makelaar. Or - you don't even see it in the first place, since it's only available via an agency.
This is similar to setting up a roadblock and collecting a transit tax; or the "troll under the bridge" from folk tales.
That being said - In some cases and some places brokers can help apartment seekers filter relevant apartments, and can help convince both the seeker and the landlord to compromise, agree to some arrangements to seal the deal. Another benefit of such type of apartment brokerage is that a broker with a minimum of reputation would not try to scam you (rent contract scams are a thing in some countries); and may be able to exert some pressure if, say, some serious problem is revealed right after you move in and the landlord doesn't want to address it.
> Clearly brokers are doing something or else people wouldn't pay for them.
They were, pre-internet. It actually made sense then in NYC with such complicated and massive amounts of inventory.
They don't make sense anymore. The only reason they still exist is because lazy landlords just want to stick with the system they've always known, because it feels "free" to them. In reality they get lower rents, but that's harder for them to see. And it's a problem of coordination -- as long as most other properties use brokers, you really don't have a reason to change.
The slow increase of no-fee listings has changed that. But it's still slow, and a lot of it is new buildings. It's hard to get landlords who have done things the same way for 40 years to change.
> Clearly brokers are doing something or else people wouldn't pay for them.
Just like the real estate agent business. Sellers have the option to sell it themselves, or use an agent. Agents do better and more organized marketing, handle the paperwork for the transaction, and offer help in prepping/staging the house. Etc.
They're also creating an implicit discount for longer-term tenants (which is good for landlords).
When I rented my place in NYC some years ago, the broker fee was meaningful to me. Once I paid it, I was less likely to want to move since I'd have to pay it again vs renewing my existing lease which did not involve another broker fee.
This is a fallacy, at least in NY. I asked my last landlord about this. I asked "if brokers can't charge renters their fee will you pay it instead?". He replied immediately, "no way, I'll just ask my nephew to show the apartments instead". I had just paid a 12% fee to a broker a year earlier with this same landlord! Thousands of dollars. The broker did very little for this exorbitant fee, they opened a door for a dozen people maybe, and uploaded a few pictures online. They were simply the gate-keeper and I had no choice in the matter.
The only reason landlords deal with them is that it's easier for them to do so, so why not. It's pervasive enough, as a quirk of history, that it's tolerated. They certainly do not provide value that matches up with their fees in most cases.
Rents may go up, but it will be only a fraction of the insane fees retail brokers in NY charge. It needs to change.
That's exactly what happened in Germany. As soon as the landlords had to pay the brokers out of their pockets, they quickly realized that the "service" is not worth that much for them, so many went without brokers, and the ones that still kept brokers had to pay them much less than before, and the price was related to actual service provided.
I've never seen it go towards first month's rent, but that's not the point. The money isn't going to the landlord or the tenant, but to the data aggregators.
A lot of it is highly manual on the back end, calling and faxing random state agencies. It’s not like it’s a 90% operating margin business or a lot of companies would be getting in and driving pricing down.
Nonsense. Spamming applications is strictly better than spamming low-information contact requests, and nobody seems to mind that. Instead you'll get structured applicant information that can be filtered against.
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.
Software can displace a middle man, and replace it with a monopoly. Once monopoly power is in place, Software will then become more and more expensive until it is as bad or worse than what it supplanted. Investors will get rich, there will be a brief bubble where some people will get a VC-funded good deal, and then nobody else wins.
You're going to have to work a lot harder to argue the connection between the first and second part of that first sentence, because one does not lead to the other. You might be right --I don't think you are, but you might be-- but right now that sentence means nothing, and that fully undermines whatever point you're trying to argue.
Are you saying that you don't think startups seek to displace middle men and create monopolies? or are you saying companies with monopolies don't exploit those to overcharge people as much as possible?
Because neither of those statements is exactly controversial.
What I think, and what you think, is irrelevant. Back up your claims, or they're just you trying to convince yourself you know something you don't.
Cutting out the middle man does not by definition lead to monopolies, especially not when the market has tens of thousands of sellers (if not orders of magnitude more), and tens of thousands of buyers (or, renters, in this case. And again, if not orders of magnitudes more).
It’s not cutting out the middle man - it’s replacing the middle man with a software middle man. The only way that doesn’t lead to a monopoly is if there are multiple software middle men competing. Like, do you actually believe that uber is just a platform connecting buyers (riders) with sellers (drivers)? It’s a taxi company. It replaced a dozen taxi companies in each city with a monopoly or an duopoly (when lyft is also present).
It can't be quite this simple. If your renter is paying $X to you plus $Y to your broker, then their willingness to pay for the apartment was at least $X+Y, and you're leaving at least $Y on the table. In theory there should be a lot of market pressure to shrink Y. So the question becomes, what transaction costs are getting in the way of that? Or maybe, is the $Y actually buying something that's of value to the landlord?
> "who hires pays" principle for brokers in the renting market basically made the renting "broker fee free" for renters.
How can that work? Landlord (absent regulation) set the rents as high as they want/can get away with. What's the difference between 100/month rent + 50/month broker fee, and 150/month rent + "zero"/month broker fee?
In Germany, the broker fee is a one time payment. That makes for an complicated calculation, as rentals are usually not fixed-term, and people will expect to stay for several years or decades. Is 900 EUR per month + 1,800 Euro one time payment better or worse than 1,000 Euro per month without a broker fee? Most people do not think like that. 900 < 1,000 Euro, end of story.
Of course, the real problem was that the landlords did not both to negotiate the brokers fee. There was a maximum broker fee defined by law, and everyone just charged the maximum. Not anymore!
The broker fee IME is usually an extra month of rent due at the time of signing the lease. Because in certain cities the vast majority of apartments will follow this convention, and it's not really something that will be mentioned until you're in the process of formally applying (unless you ask), I don't see it having a market effect in the same way that raising the rent would.
German landlords can't set the rent as high as they want, for starters. At least not in Berlin with the Mietpreisbremse capping how high rent can be relative to the past, and to the neighbourhood.
I find that German law idiotic. Of course it costs the landlord something to hire a broker, even if the renter is supposed to pay the fee. It still eats into the overall budget of the renter, that could otherwise have gone to the landlord.
You can find it idiotic, but finding a tenant is quite easy in popular places, so instead of finding a way to increase the overall price (which is also regulated), the landlords often just do it themself. In unpopular places, it is hard to increase the price.
I liked the idea of that law, but in high-density areas, it didn't change anything. The renters are now implicitly expected to cover the broker fee for thee landlord. If they don't offer that in advance, they won't get the apartment.
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 to the city and 2) could be super picky and I kept getting the sense brokers had no patience for someone like me.
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.
The agent isn't the one doing the connecting, that's my point. Most landlords I know "write" their own listings using a standard template and reusing old photos. Circulating this is trivial, especially in a hot housing market. A few of the landlords I know are older and will pass the info to an agent to paste into popular sites. But I'd hardly call that "connecting" and certainly not worth thousands of dollars.
Additionally, the landlords will often give first dibs to internal housing sites for local universities or to other current tenants to spread to their network. So it frequently doesn't even require posting on a public site, and in these cases the agent only becomes involved in the situation when it is time to fill out the rental app. This is especially common when people move for grad school or choose to stay after undergrad and want to live near their peers/friends. So you can imagine the sheer amount of money that gets collected for 0 return in Boston.
I'm not against real estate agent commissions in general obviously, but the way rental brokerage fees work is an absolute scam in parts of the US.
This whole discussion is so bizarre to me, since I've only been a tenant in the SF Bay Area. We don't seem to have brokers here, or at least I've never heard of them. If the landlord pays a property manager or realtor to show the place, that's, on their end and not an additional fee (in fact, non-refundable deposits are illegal in SF). Some people who are used to this broker system seem to assume it *must" be adding some value but I can attest that it doesn't.
> it *must" be adding some value but I can attest that it doesn't
And yet, landlords keep using it. A $2500/month apt in NYC will cost $34,500 the first year -- but only $30,000 goes to the landlord. Can you help explain why a landlord would freely give up $4500 (standard 15% fee) in potential revenue?
As I understand it, the difference between the broker system in NYC and the one I'm familiar with is that the tenant is obliged to pay the broker some amount directly. I've seen rental condos shown by realtors and property managers - presumably landlords pay these people although I'm not familiar with the standard rate.
Yes you are right about NYC, and the same is true in Boston - it's been explained repeatedly in this thread why the broker fee is not at all equivalent to a landlord giving up that money, but for some reason there are commenters that just keep repeating the same line about a perfectly rational market instead of engaging with the actual arguments presented.
For someone new to the market it is essentially a hidden fee you find out about at buy time. Since 90% of places do this it would be a huge hassle for a tenant to try to avoid the fee, especially with the pressures surrounding shopping for housing. It's not the same at all as changing a list price.
> Most landlords I know "write" their own listings using a standard template and reusing old photos
So, like Airbnb? Last I checked, that platform -- without a person -- also charges renters about 15% or more. And you don't even get to actually visit the place before you commit to paying the fee!
The landlords are the ones writing the listing, the agent is the one collecting the money for supposedly "connecting" someone, when AT MOST all they did was post it onto a couple websites like AirBnB. I have no problem with the fee a website collects for listings. They provided a service that allowed the listing to be spread. But the agent is now just an unnecessary middleman between the landlord and such services. 9 times out of 10 real estate agents don't meaningfully contribute to the matching of landlord/tenant in the NYC or Boston markets, yet they continue to collect a fee. And as I mentioned this happens even when it is provable that the prospective tenant found the apartment via a source 100% unrelated to the real estate agent (such as a friend in a different unit).
Before you try to argue that landlords wouldn't pay them if they didn't contribute - the landlord doesn't pay! In cities where the landlord has to pay, you will find agents are used much less often and charge cheaper prices for these sort of rental services. The problem is when the landlord chooses the agent but the tenant has to pay. Every agent just charges the max allowable fee, and the majority of landlords stick with this scheme, whether out of stubbornness, loyalty, or kickbacks I don't know - but it hurts tenants far more than landlords. Otherwise you are correct, landlords would stop using them unless their prices went down!
Let me know when a real estate agent makes their own website that gains traction across the city.
It's a huge hassle in Boston as well. Pretty boy hustle brokers deserve easy work that doesn't require real education so I can pay more to find a domicile - said no one ever...
It'd be interesting to see if that fixed the problem or just replaced one parasite with another.
Many software companies fix the problem, disrupt rent-seekers with reduced costs, only to later become rent-seekers that have the market power to increase costs.
If evictions didn’t take 3-6 months minimum in NYC (even pre-COVID), landlords could afford to be a lot less picky about who they rent to. Brokers or other middlemen also benefit the landlord by keeping the landlord at arms length from tenant selection and therefore possible discrimination lawsuits.
Similar situation in Boston. The value add is that the brokers are regulated and in theory this means no one gets scammed. For context, over the past few years of crazy rental market, many people have gotten scammed by finding a fake listing online, sending off a deposit, and never hearing from the "landlord" again.
Super rampant here in CA with Craigslist. Scammer will post a rental ad for a house that is currently for sale in Zillow. You know it's a scam pretty easily, but not everyone does. If someone other than Craigslist can get in this market and do a better job, one that verifies the Lister owns the property, and there is no funny business about who gets the property, that would be excellent.
I ran into this yesterday. It wasn't entirely clear it was a scam, well to me, at first. The first clue was "sorry, no in house viewing, we had son and 2 friends die from COVID, please understand". Yes, that's a big red flag but sounded like a legit excuse to me. But, at least it got me suspicious. Next was in their email they claimed to be working for somecompany.com but their email address was soomecompany.com. Finally the location was on redfin as having been sold only 4 month ago and the rental price was arguably 20% lower than it should have been. I can't prove it was a scam but I passed. It was frustrating to me that there is apparently no public online way to look up the owner of a property. I suppose there's some reason for that.
This one in Cali: I am in Philadelphia in the Military Camp, you can go by and view the inside of the house through the window, if you like it, you get back to me so we can proceed with the rentals.. then at the end of the email...
Thanks will be looking forward to your reply.
United State Army
General SCAPARROTTI
I lived in a UDR apartment property for the past 3+ yrs. They first had 2 full-time sales persons on site. That went down to one, then to zero. Now they lease based on GOOD 3d drawings of apartments, virtual showings, and easy Docusign based lease agreements. You can check it out here: https://www.udr.com/washington-dc-apartments/arlington/cresc...
No value seems to have been lost in going from humans to software. Yes, vacancies are up, but that is probably due to the 15-20% rent increases and general migration away from the city. I'm sure they are also saving a mint on the two fewer on-site sales FTEs. Seems like a big win for both the tenant and landlord (hopefully the savings are being split.)
EDIT: I dont think virtual showings are a replacement for a physical walk-thru. However, it is a great way to filter out obviously mismatching apartments and a way to not waste time visiting apartments way out of your requirements. For example, if I just want to see the size of closets (a big deciding factor for me), i can do that on a floorplan easily. I can easily filter out apartments w/o walk-in closets.
Virtual viewing is not a full solution for me. The plus is it helps me weed out places I'm sure I'm not interested in but I still need to see the real place before I rent.
The virtual version of the place might not represent the actual place. There's no easy way to check noise levels, lighting, ambiance, etc. And further, it's far easier to scam people with virtual showings. I had one yesterday where they sent a matterport tour link and claimed I couldn't see the place for real because they had a son and 3 friends die from COVID so "please understand, no in person showings". After looking into details it became clear it was a scam.
As a tenant I want to personally inspect the unit I’m renting. A 3D virtual tour won’t tell me if there’s low water pressure, a slow hot water heater, a stinky garbage bin outside the window or creaky floors.
Yes, but this highlights a very tenant-unfriendly side effect of "the algorithm" that I noticed during a recent apartment hunt: monthly rent estimates vary, sometimes wildly, day to day. It's really silly to me that selecting a move in date for next Friday results in a monthly rent $100/month cheaper than a move in date the following week. I mean, I understand some of the variables: length of vacancy, estimated market conditions at the end of the lease, etc, etc, could all contribute to slightly different market conditions or costs to the landlord that they want to pass on to the tenant. But it strikes me as intentionally opaque and hostile to renters.
> Renters would pay us to take over the remainder of their lease obligation, we'd find a new qualified tenant and get the landlord's approval for a lease transfer or sublease. If we weren't able to find a new tenant, we'd pay the rent until the end of the lease.
Also pretty nice that you do that, but one thing I would recommend is immediately not allow any landlords that require such evil practices and be banned from your system.
Well, it's either requiring rent to be paid throughout the entire lease term or not allowing leases to be randomly transferred to unqualified tenants. Does it really matter at that point which one GP meant?
In Oregon they realized how evil it was and made this law:
ORS 90.302 E
The abandonment or relinquishment of a dwelling unit during a fixed term tenancy without cause. The fee may not exceed one and one-half times the monthly rent.
My understanding is that the median condo in Singapore costs $1M USD. Is this not true, and if it is, then how is $1M USD for a condo considered cheap?
You can get condos next to The Four Seasons in Beverly Hills for that price...
That's for private condos. 80% of people in Singapore live in government built public housing. The cost of the average public apartment is more like $300k which is not that bad for a city like Singapore.
As far as I can tell most comparisons for "the price of housing between Singapore and X" only look at private condos, probably because X doesn't have anything like Singapore's public flats to compare with for almost all values of X.
(When you "buy" a public apartment from the government, you get a 99 year lease, which you can resell. There are restrictions on buying public apartments, if I remember right you have to be a citizen or PR, and you have to be married or 35+. They cannot be bought by corporations.)
It bars corporate landlords from 80% of the housing stock, which is public. However they can buy and rent out the other 20% much like anywhere else, I guess.
Landlords being able to require proof of no evictions in rent history makes sense (even though it absolutely makes life worse for people who fell on any form of hardship), but why are landlords even allowed to demand proof of no felonies?!
Probably for the same reason your employer does. Not saying it's fair to discriminate against people who have paid their debt to society but I wouldn't be crazy about having a rapist or murderer neighbor.
I'm German. Landlords here aren't allowed to check criminal backgrounds as are employers (with the exception of jobs dealing with children and valuable objects).
The idea behind that is that recidivism is best prevented by letting people be normal parts of society (=being able to work and live in peace) once they have served their term.
How does bankruptcy sound? The discovery phase of the civil lawsuit will uncover that you allowed a convicted sex offender/drug dealer/murderer to move in next door and you are now financially responsible for the victim's damages, pain and suffering.
> but why are landlords even allowed to demand proof of no felonies?!
As someone who has worked on tenant screening software, landlords typically care about a criminal history involving sex offenses or drug manufacturing. In case of recidivism, the former creates liability from other tenants if issues arise during tenancy, and the latter has potential for property destruction and/or harm to neighboring units.
There are also typically time limits on how far "back" they can look, typically 5-7 years at the most.
Because sometimes felons use their place of residence as the center of the location of their felonies? And sometimes those felonies are against nearby people? If you had an apartment complex, you wouldn't want to rent to a breaking-and-entering specialist, or even a car thief. You wouldn't want to rent to a meth manufacturer or distributor. And you wouldn't want to rent to a serial rapist.
Eventually it just becomes easier to just say "no felons" than to try to figure out whether this particular brand of felony is going to negatively impact you or your other residents.
On the other hand, felons have to live somewhere...
We started Seam (YC S20) a year ago to take on the problem of programmatic access to physical spaces (apartments, single-family homes, commercial buildings...etc).
Basically one API that can open any door (smart locks, elevators, commercial buildings...etc). We're still in private beta but feel free to reach out if you're struggling with programmatic access.
tbh, it's baffling that in 2021, this problem is still so difficult to solve. As a last point, we generally recommend against key-exhange solutions. From our experience at Sonder, people forget to return the keys and it creates a lot logistical headaches. You then have to re-key the doors...etc.
I disagree. Whether the prior occupant or the property management company has extra sets of keys, you generally don't want some random prospective tenant out there to have the keys to a unit that you will eventually want to rent out to another individual. For Airbnb's/STR's, same problem; guests returning to a unit much later to carry out illegal activities is rather well documented at this point. Across the board, it's not worth the logistical pain and/or liability risk. In the case of a prior tenant, you generally know who the person is...etc. There are edge cases for sure (e.g. evictions) but it's generally less risky.
You agree with the person you replied to. They are saying guests may return to carry out illegal activity even if they returned the keys because they could have just made copies.
My initial comment only said that, in our experience, it's a bad idea to use physical key-exchange system for short-term visits of a physical space. Key copies & key returns being two examples of problematic cases. I only brought up key returns in my initial comment because that's the one that caused the most headaches at Sonder. Most people, it turns out, are honest but also forgetful :) The key-copy potentially exposes you to a lot more liability though...
Yep. Bad actors will still find a way circumvent the system, either by copying keys or other means. It's a matter of risk and liability mitigation, not prevention.
I'd be curious to know if you're building a reputation system for renters/rentees (users), since that would provide value in such a market to fight it.
We are not. This is mostly because we are an infrastructure company that takes care of bridging the air-gap between the devices out there and the software applications that want to use them. Whether the locks are used for hospitality, self-storage access, or rentals is somewhat dependent on the context, and there's a lot of complexity that is unique to each vertical. We think our (beta) customers do a better job at this than we could.
How much is the technology around this mentioned in the lease agreement?
My current complex specified that I had to supply internet and some other things for their smart hub service, although that turned out to not be the case (it's not on my network and works), but it was really weird to have that clause but it not match reality because I was effectively signing a document saying I was responsible for it.
is this with SmartRent? My hunch is that they're trying to lower their cellular data costs by having you connect their units to wifi. I had no heard of this being surfaced as a lease-agreement clause though.
Fwiw, we haven't run into cases yet where landlords want to leave our hub inside a unit once it has been rented out. I think there are pros/cons to it from a security/privacy standpoint. It can also be very convenient and reduce certain OPEX costs (e.g. insurance). But there are horror stories out there of some of the cheap OEM hubs that get deployed [1] and we (Seam) would want to have a solid conversation internally first to see what's the right approach here.
Plus even though it says "If you elect to purchase..." half-way down, I basically had no option but to walk away from the lease entirely. They wouldn't remove them, turn them off and replace with a physical lock, or anything else.
Nothing until the battery runs out. I'm just thinking of situations like Texas, the East Coast hurricane season, the West Coast fire season, etc where power cuts can last up to a week.
Or what happens when GCP/AWS/Azure have a bad day and you lose connectivity with your API servers?
yeah the battery only lasts 24 hours, though I suspect we could eventually implement a low-power mode in our firmware to stretch that quite a bit. To be honest, I'm also not sure to what extend we want to over index black-swan events [1] as part of our product roadmap.
Your second point about GCP/AWS/Azure going down is really valid. When we started the company, we saw a few off-the-shelf gateways that relied on a permanent MQTT connection to function correctly, and from our Sonder experience, we knew that this was a non-starter for some of our early customers. Instead, we ended up creating our own hub and we run a ton of logic that runs entirely locally. For example, if an Airbnb reservation comes in, the hub immediately receives the door lock programming instructions even if the reservation is far out in the future. Our hub doesn't program the lock yet, but when the reservation time window arrives, the lock gets programmed by the hub irrespective of whether the internet or AWS is up/down.
[1] well at this point, it's questionable whether we should refer to, for example, wildfires as Black Swan events. But I think you'll agree that most people aren't interested in touring a new home or staying at an Airbnb when the town next door is on fire...
Oh does your company only work with short term rentals (airbnb) and showings? I checked your website and came away with the impression that you might have landlords installing these units on long term rentals as well as business locations potentially. That does lower the stakes here significantly than what I was thinking.
And yeah props for that solution to intermittent connectivity issues :)
If you have a smart lock that doesn't require Internet connectivity then power or network availability is not an issue. From the OP: https://www.igloohome.co/en-us/
It's the most innovative approach to smart locks I have ever seen and for this one nugget along I'm very grateful for the link to the original story!
Just a quick caveat that for non-consumer contexts, completely offline stuff doesn't cut it. The enterprise customers we have do want to get status reports for the devices (e.g. battery level, lock/unlocked status, which code was punched in...etc). There are good reasons for this, especially considering some operate fleets of 10K+ door locks across 3 continents.
Absolutely. For smaller/medium sites where you want some accountability but real time isn't required there are solutions out there like CyberLock - to get historical information you wait for keys to either check in as they charge or you can run around and touch the locks with a key and the system will do a status update.
It's not as convenient as wired/connected systems, but it's also a fraction of the price too. You can pick what's more important - real time or price :)
Yeah that's one option and does present the advantage of knowing which exact individual may have entered the premises (assuming one person = one code). We support most brands/model of smart locks (Yale, Schlage...etc) and standardize code programming across them despite differences that may exist at the protocol layer. Here's our API doc on it if you want to learn more: https://docs.getseam.com/#access-codes
Depends a bit on the lock or access system. As of right now, most smart locks out there are still using a combination of zigbee, zwave, or bluetooth. This means that if you want remote control, you need to bridge them over to TCP/IP. We have a multiprotocol hub that we've developed for this. The hub itself isn't always required per say. For example, we're starting to see wifi locks. They generally have much lower battery life, but they eliminate the need for additional hardware, which is great. For bluetooth locks (e.g. August), we're looking at also building a single mobile SDK that would work with the various brands. This is really tricky because this requires a lot of reverse engineering.
Ironically the company that produces the lockboxes used in the story for this item also has door locks that use the same one time code mechanism (similar to Google Auth). No network connectivity required. I was never interested in putting a lock that had any kind of Internet requirement, but now I'm very interested in this one.
hm, it's a good question. I (personally) really like Yale devices, but I hate the touchscreens and would prefer something with physical key buttons. I'm also generally against locks that connect directly to wifi because the batteries run out so quickly. As far as the type of lock, mortise locks are so cool but super expensive and most U.S. homes would need to change their doors to have one. Maybe a level lock or a simple dead-bolt does the trick.
I thought a bit more about your question. There's surprisingly not much unbiased research out there that correctly points out the pros/cons of each system. I'll try to write something soon and post it.
The same company that provided the lockboxes from the original article has smart locks that use the same rotating one time code mechanism - and the locks don't require internet connectivity. A huge plus!
I have had zero interest in using other smart locks - especially ones that require network connectivity of any sort, but this might be one that would be worth considering.
> I have had zero interest in using other smart locks - especially ones that require network connectivity of any sort
I think I used to agree with that sentiment, but then I realized that I can remotely control stuff for things like grocery deliveries (which as you point out Igloo can do while technically offline!). To be clear though, just because igloohome's lock is technically offline, it does not mean it's necessarily secure if there is a hole in their API auth.
> To be clear though, just because igloohome's lock is technically offline, it does not mean it's necessarily secure if there is a hole in their API auth.
Sure! But it sure cuts down on implementation complexity, and complexity is where security goes to die :)
This is interesting. Thx. The problem we've always had with smart locks at scale is connectivity headaches, which require a technical person as advanced or more than a locksmith.
We've gone through a bunch (including the Igloohome locks mentioned in the post) and landed on Yale's Assure line, specifically the YRD216 model with a physical keypad (not the touchscreen). Deployed in 100s of homes now (we're also property managers) with really no issue. We use Z-Wave to control but their modular system allows for Zigbee as well.
I would avoid the Schlage "Smart Deadbolt" model. At least when it comes to remote control they're pretty awful. (They're also hideous imo)
I agree 110% with this! The touchscreens confuse new people not used to it. As far as Schlage, yeah... let's just say there's a few folks in the Home Assistant community (and us too) who are not super impressed with their protocol implementation.
btw which z-wave controller do you guys use for the Assure?
We're using Smartthings, specifically the old graph API that gives somewhat easy programmatic access. Very interested in what yall are doing with Seam (we spoke for a little bit at the virtual event YC had earlier this year). With Samsung I'm always worried some new VP is going to going to get shuffled in and decide that Smartthings has had its day in the sun.
Yes I remember our convo! Also, i really don't like to be the bearer of bad news, but I was talking to their Venture team and unfortunately that ship has already sailed. They've sold the hardware business to Aeotek and are progressively scaling down the team :(
Ping me at sy@getseam.com and lets see if I can get you going with some beta units.
ah! I stand corrected. I swear I had two calls in the last 3-4 months with some Samsung Next folks where it was like, "yeah, we're kind of outta this game."
Probably just a miscommunication, we definitely seem to have gotten completely out of hardware (I wouldn't really know, I was never really involved in any of the hardware side of things), but the software side of things is going stronger than ever.
I know very large REITs that use Kwikset Smart Keys. They have a dozen keys and just reset to a different of the dozen after every move out. Tens of thousands of homes and never had a problem. It’s security through obscurity. Plus locks are easy to break/bypass for someone that’s motivated to do so. It’s the casual crime of opportunity that you can guard against.
SmartKey is a mechanical lock that is rekeyable without removing the cylinder. You unlock with the old key, insert a tool to release the internal wafers, then insert the new key and it repositions the wafers to match the key.
oh right! Yeah it's pretty neat actually (for anyone interested[1]). Unfortunately, it does require physical presence/labor (i.e. $$$) by whoever has the master reset tool. For Airbnb's or even self-tours, that's kind of a non-starter.
When you perform a move out or move in inspection, you change the key. It's super easy. The reset tool can fit in your wallet or glove compartment. It's a big change versus having to change the cylinder as in the past. Having to manage a load of electronic locks is likely more costly. Again, this is long-term rentals not short-term.
As for self-tours, they make electronic lockboxes. They've been around forever and used by every MLS.
I'm not going to try to convince you that key-exchanges are bad for short-lived visits (whether electronic lockboxes or not). We just know from experience doing millions of these for a large company that this is very problematic at times and you're better off with a remote controlled solutions that doesn't involve anyone having any physical key.
Nope - as Kevin points out all you need is a new key and their tool that basically "blanks" the lock, then the next key you insert resets the lock to operate with that key. It's pretty slick.
Yes I spoke to Julien (their founder) back when we started the company. Nice guys. He gave us a lot of insightful tips and frankly wished we would have existed back when they got started. Their business legitimately got killed by covid.
Maybe I'm old school, but I like to make sure I meet my tenants face to face during a showing before renting a property out. I guess it depends on if your tenants are all shorter term and you have high turnover.
I don't feel the paperwork part of it is a huge hassle anymore, with screening services and document signing all being online now.
That might make sense if you're in town, I rent out a house of mine that's far away from where I live most of the year and this seems like it might be worth a shot in that type of case.
I’ve had this urge lately after dealing with idiotic and incompetent property rental managers to automate their entire industry away. I’m glad I’m not the only one
This is what I enjoyed most about this article. It's an idea I've thought about in the past (who hasn't) and their approach seems so much better than anything I thought up.
I don't think you would (and that would be a terrible idea), more the 'organising' and booking of those maintenance items. I can count more than I'd like to the amount of times I've had double-handling, miscommunication and downright rude behaviour from rental managers trying to either refute that you need maintenance, call the wrong person or don't chase anything up and get things fixed.
Submit maintenance on an app and then boom someone is contacted to fix something
My point is automation is not going to fix the problem of an owner who is trying to squeeze every last cent of profit by skimping on maintenance, and hiring rude rental managers, or not paying enough for qualified people to come fix the problem.
Is this not already automated? I log into my apartments tenant portal, file a maintenance request, and tomorrow there's a dude at my door to fix my stuff.
Yes, my point was that the problem of a penny pinching owner trying to skimp on maintenance will not be solved by automating the maintenance request system.
The blog mentions they used Charles to intercept traffic and reverse engineer the digital lock [0]. How does a tool like that decode HTTPS traffic? I thought HTTPS was encrypted end to end by the browser.
I'm a huge fan of Rezi which has a very similar experience to my knowledge. They are able to reduce broker fee/rents because they can assure a reduced time where apartments are unrented.
Realtors are truly the scum of the earth, hustle culture, gate keeping, maligned incentives for clients, lazy industry in general. Only second to tech recruiters.
Wonderful writeup with a great balance of readability and detail. Thank you for sharing!
TBH, this would work very well as an introduction to modern tech product development for a general audience - you could pitch this to the digital edition of the Atlantic, say, and probably get it in without much editing. It helps that the domain is so broadly relatable!
Making being a landlord easier and more disconnected from people and your tenants etc for the investor class. What a great product for society and wealth inequality. Love it!!! Put an algorithm on judging if someone deserves shelter, we have never seen any problems with this in past studies!! Maybe one of the most evil things I seen on here in awhile tbh.
Commiting a felony seems to be a life sentence in the United States even after you have served your time. The algorithm can easily just disqualify them with no nuance.
The description on this was even funny "When you rent a place for 1 or 2 years". Just wait till it caretakes rent collecting, rent raising, and eviction services.
If the algo disqualifies them with no nuance, great, that means there’s probably a market for those who do want to take the time to understand the actual risk profile of a tenant. Also, society as a whole does not owe a clean slate to anyone who has committed a felony. Perhaps we can codify it into law but that is not the case right now and the market has decided that we do care.
About fifteen years ago, I set up a student rental website at the behest of the rental management. The list of things they wanted to automate, even then, was astonishing. I have seen this in other situations and it has led to a kind of maxim for me -- never underestimate the number of people who think that you can automate their jobs on their behalf and that they will still have those jobs at the end of the process.
I don't like putting people out of work but that bit about replacing someone with a shell script is not entirely inaccurate at times.
I think the home purchasing system can and should be streamlined radically, and good real estate agents can make too much money for their actual contribution in many cases, but there's a bit more involved than merely unlocking a door and giving a tour of the kitchen and living room.
For instance, merely putting together an offer to buy a house can be ultra complex. Once you've dealt with viewing the house and deciding to go for it, you have to deal with inspections and financing and insurance and other legal things. If there's a problem with the house, you have to know the right questions to ask and how to take the problems into account when making an offer. You have to know the local market well and what kind of offer to make or you could overpay by thousands or miss out on a dream home.
On top of that, client contracts aren't worth the paper they're printed on for a real estate agent. A real estate agent can in theory luck out showing a client one home, they love it, buy it without a hitch, and come away with thousands of dollars for a few hours of work. A real estate agent can also work with a client for weeks/months, show them dozens of houses, but then they go off and buy that exact house with another agent and lose out on the commission with basically no real recourse after investing many hours working for somebody for free. For every good financial thing that happens to an agent, they end up getting taken for a ride by others.
Disclosure: I do have my own biases here as a friend is a real estate agent and I see some of the good and bad parts of the job.
In my country at least, the ratio of professionalism, accountability, value-added to fees/earnings is the lowest of any occupation I can think of. It would be really low-hanging fruit for tech to disrupt, but unfortunately the real estate boards recognize this, and hold the critical data with an iron fist (from what I understand).
It would probably take some serious legal battles to pry that industry open.
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, pest issues, construction and renovation details, information about how the management company operates, light levels, info about neighbors and on and on. Ninety percent of the important information about a rental unit isn't discovered until the weeks and months after a lease has been signed, and I am desperate for someone to fix this problem.
During my apartment search in San Francisco I found that it was basically impossible to know whether a unit was covered by rent control or not. You'd have to explicitly ask the landlord, and even then they'd be cagey about it.
I just moved to SF and I just used craigslist and always asked if it was rent controlled in my intro mail. What’s the point of visiting a place if it’s not?
you can just ask when the building was built. any building built before 1978 in LA and 1979 in SF (iirc) is rent-controlled. you can also look up the build date via parcel maps on the county assessor's website (e.g., https://portal.assessor.lacounty.gov/ ).
You have to convince the property managers because they are purposefully gating that information. They want you to ask questions so they can gauge your interest and deny you early, also the benefit of not excluding the "right" people. And yes there is a lot of room for discrimination here
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.
"There is no way the management companies know anything about noise levels or neighbors"
They actually do, because they receive complaints from tenants. They should be required to document that information and provide it to potential renters.
This is a bit of a tangent, but finding reliable ratings for apartments is a complete quagmire. Many many apartments have extremely poor ratings, or boosted ratings that are not believable.
I wonder how much of this is due to the fact that a significant portion of rental situations end with a major conflict and even uneventful apartment living has some portion of minor conflict due to yearly rent increases.
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[ 1.8 ms ] story [ 371 ms ] threadIt somehow made the phrase "Everything that can be automated is automated." less... I don't know... scary I guess. I can't put my finger on it, but giving all this up to some algorithms seems wrong/worrisome for some reason, but seeing exactly how it was done made it less so.
Real estate in general is full of middlemen looking for a cut and providing little to no value. The whole industry is overdue for a shakeup.
In theory, these make sense and reduce anti-consumer inefficiency like scalping that individual venues are not equipped to deal with. In practice, they extract fees. It's not that they are bad, per se, just that if the opportunity exists, someone with a spreadsheet will spot it, likely with the best intentions but no eye to the overall impact.
EDIT: To be clear, I think these services are a net good. Stubhub allows me to get sports tickets at a reduced price if someone can't go to the game. Ticketmaster stops people from spamming the system to gobble up tickets, it's just that these industries are now going to want a fee for that and we end up back where we started. I'm sure at one time brokers were helpful as well (a landlord free way to compare properties).
But I do note that "the artist" isn't even mentioned in that list.
The author's extreme user empathy, attention to detail, and willingness to do whatever it takes to reach a standard makes this a comforting read. You know it's going to end without disappointment, because he does whatever it takes to get good results for all stakeholders.
We ended up figuring it out together.
"Now, I'm you're broker so if there are any problems throughout the lease, feel free to contact me. This isn't just a one time thing!"
We literally emailed/called him two weeks later and he ghosted us.
When we were moving out of our apartment when our lease was up, he was around showing another unit, introduced himself, asked us how long we lived there, etc
We banned letting agent fees charged to the tenant. Miraculously, landlords didn't find paying £250 for a contract renewal value for money.
Rents continue to go up and down, but now tenants know they are spending money on their flat or house, rather than paying inflated fees to a letting agent/broker.
All fees are passed on to the consumer in some way, it is either a line item or hidden
The consumer price depends only on supply and demand. Fees don't influence none of it, only the cost of the selling party and thus his profit.
Thinking that labor costs do not impact product costs is grossly ignorant.
No one is arguing that labor cost doesn't impact product cost, but the fact is that in general it doesn't impact product price.
Or to put it the other way: can you imagine a business not increasing product price as much as they can, regardless of the product cost, as long as the supply is matched?
If they can increase the price, why would they wait for cost to rise before doing so?
The outcome is that business/landlord already charge as much as they can, and increased cost doesn't change the product price, since they already chareg as much as they can.
Sure not all prices are infinitely elastic, but if Labor costs out strip the ability to prices to absorb them that do not mean the business simply magically makes them go away, no that business goes bankrupt and wages go to $0.
Owners / Investors demand a return on investment, if the market average is 8%, and business x is only returning 4% why would an investor continue to keep their capital there?
Worse still if inflation is 3% and the business is only returning 2% the investor is LOSING MONEY by keeping their capital in the business, better to cut their losses and move on
This mythical position where by businesses just "absorb the cost" because the prices are not elastic is pure fantasy
What are you on about? Of course McD will change prices relative to input expenditure. You can even see this across all the countries they serve. If there were to be a significant impact on margin, they can increase prices.
All fees are passed onto customers, that’s how you calculate profit margins.
>All fees are passed onto customers
is not even close to correct.
All businesses will increase prices to maintain the profits they need, up until what the market will bear - which is why taxes will also not end up pushing it too far, the gov isn’t stupid.
This is disproved very easily by reality - most places have increasing rent YoY. Same goes for house prices.
Because of low supply and large demand, like you say, landlords can charge monopoly prices. Not sure why you claim they don’t go up?
All this proves is that evolving market conditions lead to changes in price. Try charging 2030's market-rate rent in 2021, and see how many offers you get.
you are simply wrong
If local regulatory conditions cause your labor cost to go up, they are absolutely allowed to (and will) raise prices to compensate.
Like, lets say that the government adds a 20$ tax/fee on fast food, per burger sold. Clearly McDonalds would no longer be able to sell burgers for 4 dollars.
Thus price would increase. Or supply of burgers would go down (thereby only leaving higher priced burgers in the market).
But that’s just the “efficient market” part of this. A fee like this could very well be an inefficient rent-capture that has managed to make its removal more expensive in the short-term than the short-term cost of allowing it to remain. Said less charitably, it’s a racket.
I would have thought that on HN of all places, where so many folks are attempting “disruption” (ie finding these unnecessary market inefficiencies and stepping around their cultural/legal/systemic barriers in order to reap some of the otherwise captured value), this would be better understood.
Overhead is overhead. Trying to pretty it up with fancy language like "moving wealth around" and "changing captured value" doesn't alter the fundamental economics.
Brokers should be a niche service at best.
And the broker they used basically does all the listings in the condo complex, so he has a steady flow of interested and vetted renters as well as standard leases that cover the specifics of the condo complex, as well as a relationship with the management office to get the renters approved quickly and get them keys for amenities and such.
In our case we pay the broker, but I can see a lot of value in their services for the landlord.
Do they have to have their own fulltime electrician on staff or are they allowed to contract it out? Why the insistence that the work be done by their own employees instead of contractors?
The broker is an independent third party to whom you pay a fixed fee, and have no extra cost or regulatory liability beyond that. A no brainer
Previously it had seemed like nothing could get rid of them -- landlords mostly didn't care since it was mostly tenants who paid them in the end.
But COVID suddenly made everyone a bit more willing to consider other options (like virtual tours), and with some rents down landlords are perhaps a bit more willing to realize that if there's no broker's fee, tenants can pay a little more.
I'm actually really excited about this lockbox technology, I genuinely think it could be the key to "unlocking" competition again.
My only concern is that a lot of buildings don't have anything obvious in the front to lock it to, as well as plenty of buildings prohibiting tenants from storing keys in lockboxes in front, both because anyone can take a hammer to one and smash it to get the building key, and also because they don't trust it's not someone running an AirBNB.
[1] https://www.nytimes.com/2021/05/27/nyregion/broker-fees-real...
[2] https://www.timeout.com/newyork/news/you-will-still-have-to-...
For example, a new law in Germany to apply the "who hires pays" principle for brokers in the renting market basically made the renting "broker fee free" for renters. Previously, the landlords would hire a broker that needed to be paid by the renter. Why not, it doesn't cost them anything, and at least they don't need to have a contact with the potential renters. Now, that they have to pay for the brokers service themselves, it's suddenly not that valuable to them.
[0]: https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...
It works similarly when software is chosen by people who have to use it versus those who do not. IDEs and text editors are usually chosen by the users, so there is competition on usability between different options. Timesheet and other HR software are usually chosen by upper management, and the people actually using them cannot switch, so there is not the same kind of competition on usability. Instead, they compete on other things that make them more appealing to those who can make the decision.
Tenants can't "shop around" for a different letting agent that won't charge them £250 for a £50 credit check. Landlords can.
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.
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.
Nothing.
Clearly brokers are doing something or else people wouldn't pay for them.
My theory is the broker fee has positive selection for wealthier tenants, which for every property - low or high rent - makes for an economically better tenant. Raising the rent has the same effect. We care that there's cheap rent because shelter is a basic human right, and we appreciate that spending tons of money on rent couldn't possibly be good in a positivist economic sense, but of course raising the rent also selects for a wealthier tenant.
Replacing the brokers with software has a similar effect. If your users feel comfortable using a complicated website with no human beings involved, they are going to be wealthier.
This comes up everywhere. For example Oscar selects for a healthier insurance pool by being a complicated app - old people want real human beings to talk to and are turned off by apps, and they are also more expensive for insurance to carry, so it's a "win" for Oscar. Credit card only restaurants with lines make higher revenue because lower-ticket cash paying customers are substituted by higher-ticket credit card paying ones. And the iPhone is a $800 phone versus a $300 Android one, no wonder iPhone users spend 2-5x as much on IAP.
It's not unlike the role a recruiter plays for jobs.
In many cases (not talking about NYC here), what they're doing is simply blocking access to an apartment. You see an apartment, you have to deal with the broker / real-estate agent / makelaar. Or - you don't even see it in the first place, since it's only available via an agency.
This is similar to setting up a roadblock and collecting a transit tax; or the "troll under the bridge" from folk tales.
That being said - In some cases and some places brokers can help apartment seekers filter relevant apartments, and can help convince both the seeker and the landlord to compromise, agree to some arrangements to seal the deal. Another benefit of such type of apartment brokerage is that a broker with a minimum of reputation would not try to scam you (rent contract scams are a thing in some countries); and may be able to exert some pressure if, say, some serious problem is revealed right after you move in and the landlord doesn't want to address it.
They were, pre-internet. It actually made sense then in NYC with such complicated and massive amounts of inventory.
They don't make sense anymore. The only reason they still exist is because lazy landlords just want to stick with the system they've always known, because it feels "free" to them. In reality they get lower rents, but that's harder for them to see. And it's a problem of coordination -- as long as most other properties use brokers, you really don't have a reason to change.
The slow increase of no-fee listings has changed that. But it's still slow, and a lot of it is new buildings. It's hard to get landlords who have done things the same way for 40 years to change.
Just like the real estate agent business. Sellers have the option to sell it themselves, or use an agent. Agents do better and more organized marketing, handle the paperwork for the transaction, and offer help in prepping/staging the house. Etc.
When I rented my place in NYC some years ago, the broker fee was meaningful to me. Once I paid it, I was less likely to want to move since I'd have to pay it again vs renewing my existing lease which did not involve another broker fee.
There's a great Joel Spolsky comment[0] that explains why landlords use brokers. They perform work that would otherwise be done by the landlord.
https://news.ycombinator.com/item?id=9961727
The only reason landlords deal with them is that it's easier for them to do so, so why not. It's pervasive enough, as a quirk of history, that it's tolerated. They certainly do not provide value that matches up with their fees in most cases.
Rents may go up, but it will be only a fraction of the insane fees retail brokers in NY charge. It needs to change.
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.
> 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
;)
In the mean time: software can solve this problem now. Now sounds good.
Software can displace a middle man, and replace it with a monopoly. Once monopoly power is in place, Software will then become more and more expensive until it is as bad or worse than what it supplanted. Investors will get rich, there will be a brief bubble where some people will get a VC-funded good deal, and then nobody else wins.
Because neither of those statements is exactly controversial.
Cutting out the middle man does not by definition lead to monopolies, especially not when the market has tens of thousands of sellers (if not orders of magnitude more), and tens of thousands of buyers (or, renters, in this case. And again, if not orders of magnitudes more).
It can't be quite this simple. If your renter is paying $X to you plus $Y to your broker, then their willingness to pay for the apartment was at least $X+Y, and you're leaving at least $Y on the table. In theory there should be a lot of market pressure to shrink Y. So the question becomes, what transaction costs are getting in the way of that? Or maybe, is the $Y actually buying something that's of value to the landlord?
How can that work? Landlord (absent regulation) set the rents as high as they want/can get away with. What's the difference between 100/month rent + 50/month broker fee, and 150/month rent + "zero"/month broker fee?
Of course, the real problem was that the landlords did not both to negotiate the brokers fee. There was a maximum broker fee defined by law, and everyone just charged the maximum. Not anymore!
While searching for my current apartment, I was month-to-month on my previous NYC lease and was therefore 1) not a complete noob to the city and 2) could be super picky and I kept getting the sense brokers had no patience for someone like me.
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.
Additionally, the landlords will often give first dibs to internal housing sites for local universities or to other current tenants to spread to their network. So it frequently doesn't even require posting on a public site, and in these cases the agent only becomes involved in the situation when it is time to fill out the rental app. This is especially common when people move for grad school or choose to stay after undergrad and want to live near their peers/friends. So you can imagine the sheer amount of money that gets collected for 0 return in Boston.
I'm not against real estate agent commissions in general obviously, but the way rental brokerage fees work is an absolute scam in parts of the US.
And yet, landlords keep using it. A $2500/month apt in NYC will cost $34,500 the first year -- but only $30,000 goes to the landlord. Can you help explain why a landlord would freely give up $4500 (standard 15% fee) in potential revenue?
For someone new to the market it is essentially a hidden fee you find out about at buy time. Since 90% of places do this it would be a huge hassle for a tenant to try to avoid the fee, especially with the pressures surrounding shopping for housing. It's not the same at all as changing a list price.
So, like Airbnb? Last I checked, that platform -- without a person -- also charges renters about 15% or more. And you don't even get to actually visit the place before you commit to paying the fee!
Before you try to argue that landlords wouldn't pay them if they didn't contribute - the landlord doesn't pay! In cities where the landlord has to pay, you will find agents are used much less often and charge cheaper prices for these sort of rental services. The problem is when the landlord chooses the agent but the tenant has to pay. Every agent just charges the max allowable fee, and the majority of landlords stick with this scheme, whether out of stubbornness, loyalty, or kickbacks I don't know - but it hurts tenants far more than landlords. Otherwise you are correct, landlords would stop using them unless their prices went down!
Let me know when a real estate agent makes their own website that gains traction across the city.
Many software companies fix the problem, disrupt rent-seekers with reduced costs, only to later become rent-seekers that have the market power to increase costs.
10 years ago I would have entertained owning rental properties. I'm so glad with todays climate I didn't go down that path!
No value seems to have been lost in going from humans to software. Yes, vacancies are up, but that is probably due to the 15-20% rent increases and general migration away from the city. I'm sure they are also saving a mint on the two fewer on-site sales FTEs. Seems like a big win for both the tenant and landlord (hopefully the savings are being split.)
EDIT: I dont think virtual showings are a replacement for a physical walk-thru. However, it is a great way to filter out obviously mismatching apartments and a way to not waste time visiting apartments way out of your requirements. For example, if I just want to see the size of closets (a big deciding factor for me), i can do that on a floorplan easily. I can easily filter out apartments w/o walk-in closets.
The virtual version of the place might not represent the actual place. There's no easy way to check noise levels, lighting, ambiance, etc. And further, it's far easier to scam people with virtual showings. I had one yesterday where they sent a matterport tour link and claimed I couldn't see the place for real because they had a son and 3 friends die from COVID so "please understand, no in person showings". After looking into details it became clear it was a scam.
Now that was about 5 years ago, so the market might have changed.
Also pretty nice that you do that, but one thing I would recommend is immediately not allow any landlords that require such evil practices and be banned from your system.
Most municipalities at least in the USA also have tenant-friendly laws on that books that mandate either or both of:
a) landlords are disallowed from refusing reasonable sublease (e.g. one that passes the same credit check etc that you did)
b) landlords must release you from the remainder of a lease if you leave and a reasonably suitable replacement tenant is found
ORS 90.302 E
The abandonment or relinquishment of a dwelling unit during a fixed term tenancy without cause. The fee may not exceed one and one-half times the monthly rent.
You can get condos next to The Four Seasons in Beverly Hills for that price...
Keep in mind Singapore has a higher PPP per capita than the US.
As far as I can tell most comparisons for "the price of housing between Singapore and X" only look at private condos, probably because X doesn't have anything like Singapore's public flats to compare with for almost all values of X.
(When you "buy" a public apartment from the government, you get a 99 year lease, which you can resell. There are restrictions on buying public apartments, if I remember right you have to be a citizen or PR, and you have to be married or 35+. They cannot be bought by corporations.)
The idea behind that is that recidivism is best prevented by letting people be normal parts of society (=being able to work and live in peace) once they have served their term.
As someone who has worked on tenant screening software, landlords typically care about a criminal history involving sex offenses or drug manufacturing. In case of recidivism, the former creates liability from other tenants if issues arise during tenancy, and the latter has potential for property destruction and/or harm to neighboring units.
There are also typically time limits on how far "back" they can look, typically 5-7 years at the most.
Eventually it just becomes easier to just say "no felons" than to try to figure out whether this particular brand of felony is going to negatively impact you or your other residents.
On the other hand, felons have to live somewhere...
Basically one API that can open any door (smart locks, elevators, commercial buildings...etc). We're still in private beta but feel free to reach out if you're struggling with programmatic access.
tbh, it's baffling that in 2021, this problem is still so difficult to solve. As a last point, we generally recommend against key-exhange solutions. From our experience at Sonder, people forget to return the keys and it creates a lot logistical headaches. You then have to re-key the doors...etc.
I'd be curious to know if you're building a reputation system for renters/rentees (users), since that would provide value in such a market to fight it.
My current complex specified that I had to supply internet and some other things for their smart hub service, although that turned out to not be the case (it's not on my network and works), but it was really weird to have that clause but it not match reality because I was effectively signing a document saying I was responsible for it.
Fwiw, we haven't run into cases yet where landlords want to leave our hub inside a unit once it has been rented out. I think there are pros/cons to it from a security/privacy standpoint. It can also be very convenient and reduce certain OPEX costs (e.g. insurance). But there are horror stories out there of some of the cheap OEM hubs that get deployed [1] and we (Seam) would want to have a solid conversation internally first to see what's the right approach here.
[1] https://techcrunch.com/2019/07/02/smart-home-hub-flaws-unloc...
Here's the wording if you're interested:
https://i.imgur.com/qF22wG9.jpg
Plus even though it says "If you elect to purchase..." half-way down, I basically had no option but to walk away from the lease entirely. They wouldn't remove them, turn them off and replace with a physical lock, or anything else.
Or what happens when GCP/AWS/Azure have a bad day and you lose connectivity with your API servers?
Your second point about GCP/AWS/Azure going down is really valid. When we started the company, we saw a few off-the-shelf gateways that relied on a permanent MQTT connection to function correctly, and from our Sonder experience, we knew that this was a non-starter for some of our early customers. Instead, we ended up creating our own hub and we run a ton of logic that runs entirely locally. For example, if an Airbnb reservation comes in, the hub immediately receives the door lock programming instructions even if the reservation is far out in the future. Our hub doesn't program the lock yet, but when the reservation time window arrives, the lock gets programmed by the hub irrespective of whether the internet or AWS is up/down.
[1] well at this point, it's questionable whether we should refer to, for example, wildfires as Black Swan events. But I think you'll agree that most people aren't interested in touring a new home or staying at an Airbnb when the town next door is on fire...
And yeah props for that solution to intermittent connectivity issues :)
It's the most innovative approach to smart locks I have ever seen and for this one nugget along I'm very grateful for the link to the original story!
It's not as convenient as wired/connected systems, but it's also a fraction of the price too. You can pick what's more important - real time or price :)
Their site if you didn't pick it up from the original article: https://www.igloohome.co/en-us/
https://www.igloohome.co/en-us/
I have had zero interest in using other smart locks - especially ones that require network connectivity of any sort, but this might be one that would be worth considering.
I think I used to agree with that sentiment, but then I realized that I can remotely control stuff for things like grocery deliveries (which as you point out Igloo can do while technically offline!). To be clear though, just because igloohome's lock is technically offline, it does not mean it's necessarily secure if there is a hole in their API auth.
Sure! But it sure cuts down on implementation complexity, and complexity is where security goes to die :)
I would avoid the Schlage "Smart Deadbolt" model. At least when it comes to remote control they're pretty awful. (They're also hideous imo)
btw which z-wave controller do you guys use for the Assure?
Ping me at sy@getseam.com and lets see if I can get you going with some beta units.
[1] https://www.youtube.com/watch?v=p5MQz3JjZl8&ab_channel=Kwiks...
As for self-tours, they make electronic lockboxes. They've been around forever and used by every MLS.
ps: your personal site is really interesting.
I don't feel the paperwork part of it is a huge hassle anymore, with screening services and document signing all being online now.
It's for investors with 50+ rentals where every unit is simply a number in a spreadsheet.
Submit maintenance on an app and then boom someone is contacted to fix something
[0] https://www.charlesproxy.com/
https://www.rentrezi.com/
Please keep up the good work!
TBH, this would work very well as an introduction to modern tech product development for a general audience - you could pitch this to the digital edition of the Atlantic, say, and probably get it in without much editing. It helps that the domain is so broadly relatable!
The description on this was even funny "When you rent a place for 1 or 2 years". Just wait till it caretakes rent collecting, rent raising, and eviction services.
I don't like putting people out of work but that bit about replacing someone with a shell script is not entirely inaccurate at times.
Their job is to unlock a door.
Why they can make a hundred thousand dollars a year is criminal.
For instance, merely putting together an offer to buy a house can be ultra complex. Once you've dealt with viewing the house and deciding to go for it, you have to deal with inspections and financing and insurance and other legal things. If there's a problem with the house, you have to know the right questions to ask and how to take the problems into account when making an offer. You have to know the local market well and what kind of offer to make or you could overpay by thousands or miss out on a dream home.
On top of that, client contracts aren't worth the paper they're printed on for a real estate agent. A real estate agent can in theory luck out showing a client one home, they love it, buy it without a hitch, and come away with thousands of dollars for a few hours of work. A real estate agent can also work with a client for weeks/months, show them dozens of houses, but then they go off and buy that exact house with another agent and lose out on the commission with basically no real recourse after investing many hours working for somebody for free. For every good financial thing that happens to an agent, they end up getting taken for a ride by others.
Disclosure: I do have my own biases here as a friend is a real estate agent and I see some of the good and bad parts of the job.
In my country at least, the ratio of professionalism, accountability, value-added to fees/earnings is the lowest of any occupation I can think of. It would be really low-hanging fruit for tech to disrupt, but unfortunately the real estate boards recognize this, and hold the critical data with an iron fist (from what I understand).
It would probably take some serious legal battles to pry that industry open.
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.
They actually do, because they receive complaints from tenants. They should be required to document that information and provide it to potential renters.
I wonder how much of this is due to the fact that a significant portion of rental situations end with a major conflict and even uneventful apartment living has some portion of minor conflict due to yearly rent increases.