If you visit any of the large third party property search sites today you will see a significant focus on the rental market. In most cases, rentals are now getting just as much focus as residential sales. A few months ago Zillow purchased Rentjuice again underlines the growing importance of the rental market. They paid $16mm for the company to take advantage of its younger, renter focused 2.8 million viewers. Zillow, once again, is closely watching what real estate consumers are looking for. They are addressing their needs with an aggressive push into the rentals space and are WAY ahead of brokers and MLSs in the rental space.
MLSs and Brokers historically have not paid that much attention to rentals because the commission rates are much lower and the offers for cooperation and compensation are much more muddy. That’s starting to change among the most progressive MLSs, however. Utahrealestate.com, for example, has launched their own rental site, Propertypond.com.
The Houston Association of REALTORS® recently completed a study that clearly demonstrates the need for every Association and MLS to quickly embrace the rental market to help their subscribers take advantage of this important consumer trend.
Through the industry’s first dedicated consumer research panel, made up local Houston residents, HAR conducted a study to find out more about the rental phenomenon in their market. The study revealed some astounding results.
Historically, the real estate industry has thought of rentals as a separate process and a separate set of customers from homebuyers. According to the study, this is simply not true. Nearly 40% of the respondents to the survey said they had previously owned a home.
Second it is clear that a portion of those that were historically committed to home ownership are now moving to rentals because they believe it is more affordable or requires less maintenance and hassle. It appears as though the prestige of homeownership is being eroded at least to some level.
Third, conventional wisdom would suggest that renters are generally young people who cannot yet afford to buy a home. While renters do skew younger overall than residential homebuyers, there is a significant portion of renters that are over 45 as well.
Renting is part of a family’s life cycle. When we’re young and just starting we rent, then we purchase a home to raise a family. When children grow up and move away, parents sometimes downsize to a rental or even multiple rentals to give them the flexibility to visit their family, travel and generally reduce their burden of maintenance and upkeep. The industry clearly needs to understand this cycle and help agents participate throughout the cycle to maintain long-term relationships with their clients.
Fourth, the rental market is growing most aggressively with single family homes. More than half of those that are renting are looking for single family homes. Those that rent a home today may want to buy it tomorrow. Those that have homes that are underwater might want to rent just to stay afloat until the market continues to turn.
It’s time for the industry to aggressively embrace rentals just as the third party sites have. Agents need to build and maintain relationships with consumers throughout their home occupancy life cycle.
Here are a few suggestions for ways that MLSs and Brokers can participate more fully in the rental growth phenomenon.
Suggestions to get started:
- Aggressively build out Rentals section on your website –make it easy to find and easy to search
- Leverage current strength/goodwill of your website – ideally, it is best to offer BOTH rental and for sale properties on the same site so that you get consumers used to coming to one site for all of their real estate information needs
- You may need a much more comprehensive database than what you currently offer. You may need to work with large leasing companies and developers to get all of their listings on line in addition to listings submitted by individual agents.
- Ideally, you will have an education program helping members understand the rental/purchase “ecosystem” and why they need to embrace renters as much as home buyers and sellers
- You may need to put new rules in place to allow for fair compensation of rental deals.
- You may also need policies to enforce rental data quality and education about best practices just like you offer for residential sales.