
Airbnb could disrupt the broker business model - acmeyer9
https://medium.com/@alexcmeyer/why-airbnb-can-be-the-one-to-finally-disrupt-the-broker-business-model-7604493546f9
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pavel_lishin
> _No matter where you live in the US it seems that if you are looking for a
> new place to live, you have to go through a broker._

I lived in Dallas and Austin for many years, and have never even heard of a
broker being used to rent a personal apartment.

On the flip side, we've had about a 50/50 experience of needing brokers in New
York in the past six years.

~~~
shawnee_
If you rented from a "professionally managed" apartment company, it's not
always so easy to tell that you're dealing with a broker when you are.

The company name in the fine print of the lease is probably something generic
like UDR or AMC or Essex or "Home Properties, Inc" or "Equity Residential".
These REITs are brokers: they manage multiple apartment complexes in multiple
cities in multiple states: [http://www.rednews.com/2014/01/top-10-u-s-
apartment-reits-as...](http://www.rednews.com/2014/01/top-10-u-s-apartment-
reits-assets/)

These REITs are constantly merging, acquiring and/or swallowing each other
whole, consolidating into bigger and bigger conglomerate brokerages. The
bigger they get, the more they can throw their weight around and control
rents. Especially in "trendy" markets.

They tend to spam craigslist. They tend to require lots of fine print and have
fees for everything, with contracts that are far too big and lengthy w/credit
and background checks, excessive deposits, always always pet fees, and always
at least a year when you sign the dotted line.

It's pretty scary what's happening in this niche: it's like they've figured
out the trick is to steal any savings you might be able to build (rent hikes
~8 percent or more per year), thus trapping people in rental hell.

~~~
mikefivedeuce
I wouldn't confuse management companies with brokers and as the REITs
themselves own the complexes they wouldn't be considered a broker either. A
broker acts as a middle man and pairs a potential renter with a building and
collects a fee (which varies depending on the market). They're a third party
in the transaction. In Chicago, for example, brokers are compensated by the
ownership and it's typically one month's rent. In New York, the renter pays
the broker/locator directly.

Brokers do tend to spam craigslist and any other avenue because they are
motivated to be the first point of contact for a renter. They'll also buy up
common domains and adwords to show up high on generic searches like "luxury
Chicago apartment". It's not uncommon for them to represent themselves as
ownership by using unlicensed pictures and vague wording.

I don't think I follow your last two paragraphs. A year is a standard lease
because there are significant turn costs when somebody moves out and often the
apartment sits vacant for a month before a new tenant moves in. You can
usually get a shorter term but you'll pay up proportionately. Pet fees cover
the damage that pets often cause and security deposits are heavily regulated
in most major cities so that they can only be applied to legitimate documented
expenses. In Philadelphia, for example, you are entitled to twice your
security deposit back if your landlord doesn't return it with 30 days or
provide you with a list of itemized expenses.

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spikels
Rented in 7 cities on 2 continents - never used a broker. I know they exist
but are they that common. Don't people mostly uses Craiglist along with a few
other online resources?

Don't disagree the process could be greatly improved...

~~~
long
Apparently in London it is very common to use an agent; people said that
Craigslist was not really used.

Maybe agents are more common in Europe? Which continents did you rent on?

~~~
TillE
In Germany it's quite rare to find middlemen between a renter and whoever owns
the building/apartment. The exceptions would be for luxury apartments and
short-term rentals.

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empath75
I think brokers will just start managing listings on airbnb directly for
owners. About half the time I've used airbnb, the person I was dealing with
didn't actually own the property, they just managed a bunch of them for
people.

~~~
acmeyer9
This has happened but managing a property is different job than being a
broker, not quite apples to apples. We'll have to see if it becomes more and
more popular to do that if it increases the prices over time.

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xfour
The reason this is kind-of a terrible idea unless you're AirBNB is the fee
structure is setup in a way where a high amount of the transaction would be
going to them.

[https://www.airbnb.com/help/article/104/what-are-guest-
servi...](https://www.airbnb.com/help/article/104/what-are-guest-service-fees)

So if my napkin match is correct, we have 3% Booking fee and 6% low end guest
service fee, you're looking at a 10% off the top of the transaction which in
the end, doesn't really need any middle-man in there.

It's common for the first month's rent to be guaranteed via cashier's check or
equivalent, then usually you are building a trust relationship yourself.

I suppose in cases of short term renting, there isn't time for this trust to
be built, so the value-add is the security the service provides. Perhaps that
really is worth 10%?

~~~
acmeyer9
I suppose, but I have personally found you can actually get higher rents
through Airbnb. This might change as it becomes more popular, more clientele,
etc. but we've made more on Airbnb as landlords (including fees) then we did
just doing it all ourselves.

Don't forget all the marketing, time spent with potential renters, background
checks, etc you have to do on your own.

~~~
acmeyer9
And in the case of renters, they usually have to pay a broker's fee (if used)
which is typically 1 month up front. So 8% right there plus if you factor in
time value of money could be more.

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pinkrooftop
Competition in this space is sorely needed in LA. There is westsiderentals.com
and they're the only reliable place for rental listings (Craigslist is very
miss with a little hit).

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reustle
I've been using AirBnB to find some of my longer term rentals (1-2 months)
while traveling and I'm forced to look elsewhere because of the fees. A $50
fee on a $400/mo place is not small change when you're trying to watch your
spending closely. Plus, that extra $50 will get you a slightly nicer place in
most areas.

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pedalpete
I too have never heard of a broker in North America for rentals, but having
lived in Chile and Australia, brokers run the markets there, and are
universally hated for being lazy and not worth the money they take.

~~~
6t6t6
Don't come to Japan then. Not only they are lazy and not worth the money, but
also the tenant has to pay them an extra month of fee every two years, when
the contract is renewed.

And if that's not enough, in Japan there's no law that regulates the rental
contracts so, every time that someone wants to rent a flat, he has sign a
bunch of abusive clauses.

In any case, being a broker must be a good business because Tokyo is full of
them.

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rch
It probably won't be AirBnB that does it, but brokers should definitely be
contributing to a rainy day fund.

~~~
nemo44x
Probably eventually but as the author notes there is a large pile of bodies
where enterprising companies trying to reform the broker model used to stand.

It's hard and landlords are mostly not interested in changing a system that
has worked in their favor for years with people they have personal
relationships with.

Brokers have keys to the apartments too. This is not easily disrupted.

