Dear PoP – Bid on your rent???

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by Prince Of Petworth July 27, 2011 at 11:30 am 56 Comments

Photo by PoPville flickr user yostinator

“Dear PoP,

OK – I have actually had prospective tenants offer to pay more rent then I was asking, but I never thought of just holding an auction!”

The Craigslist ad said:

“Bid on this 2 bedroom 1 bath townhome conviently located near 2 subway stations with off street parking, large back yard.

Just come by apply & right your highest bid on the application. The highest bid with approved credit wins. Simple!

All bids do not include utilities or the deposit. The application fee is a non refundable $35 per applicant.
* Additional $1.99 fee. To ensure your applicant’s identity and consent to release information about their credit profile the tenant is required to pay a minimal processing fee.”

Do you think bidding is a good idea for setting rent?

The 2 bed/1bath house is located at 747 Morton St NW:

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Anonymous

Seems pretty douchey to me
Topher

$1 Bob!
D

Sure, just “right” your highest bid.
- Native American JD in DC
  
  Ignorance breeds.
just a thought

PoP, please follow up on this to see if it actually works. I can’t decide if this will actually raise rents or lower them. I have a rental unit and I was surprised by how quickly responded to me and paid to submit applications. I kept thinking I should have asked for a higher price. Its a landlords market (even in this crazy tenant friendly town) so I guess this is just next step…
- Hilary
  
  of course it is a tenant friendly town – think about what you just said “I kept thinking I should have asked for a higher price.” someone has to make sure that when shitty landlords are sucking tenants dry and running slums tenants are protected
  - Anonymous
    
    Landlords charge high rent because of the high costs of being a landlord in DC. DC’s tenant protection laws mean that smart bad tenants, who do not care about their credit, can live for free (while trashing their rental if they wish) for 6,7, or more months before the landlord can evict them. Of course most tenants aren’t like that, but every landlord is scared of that – which limits the number of rentals (many potential landlords don’t enter the market because of this possibility) – and encourages those landlords who do enter the market to charge as high a rent as possible (to cover the costs of having the occasional bad tenant). Less tenant protections would lead to a better market for good tenants and good landlords, while hurting bad tenants, and doing little either way for bad landlords (who are adept at avoiding the consequences of current law anyway).
    - Park View Drew
      
      @ Hilary: In terms of the skewed-ness of DC laws in favor of the tenant, let me put it this way:
      
      I once entered a business arrangement with a real estate broker licensed in DC, MD, and VA with about 30 years experience. One of the stipulations of our agreement was that I could manage properties in MD and VA, but not DC, because she didn’t want her license to have anything to do with it. She also was unaware of any company that would manage townhouses or single family houses in DC for this same reason.
      
      @ the OP: In theory, you will get the highest price anyone is willing to pay for your property. Personally, I intentionally charge less than this price for two reasons –
      
      1) I’d rather have more candidates to select from so I don’t end up with a bad tenant.
      
      2) I’d rather have someone who actually wants to live in my property and not feel like he/she is getting screwed.
      - Park View Drew
        
        Also, Anonymous is right – The cost to evict is factored into the rent, and in DC it’s more costly to be a landlord than most places (even if that cost is only represented as a risk).
  - me
    
    Speaking of which, I heard a story on the radio this morning about Marion Barry’s son being taken to court to be evicted because he didn’t pay his rent for June. From all of the stories that I’ve heard about DC being so renter-friendly, this was kinda surprising.
    - joker
      
      The first court appearance is just step one. With all the backstops, paperwork and requirements it will be a minimum of ~4 months from the first court date to the issuance of an eviction notice.
La Bella Donna

Annnnnnnnnnnnnnnd let the flaming begin!!!
SF

Nice way to ratchet up the rent insanity to new levels.

Theoretically, I don’t have a problem with your idea. Realistically, I think you’re a money-grubbing jerk, and I hope you end up with a similar money-grubbing jerk as a tenant, who fosters deep-seeded resentment toward you for treating him/her as a contestant rather than a person with specific housing needs.
- victoria
  
  I’m not usually grammar police – but it is actually “deep- seated” not “deep-seeded.” Though deep-seeded does kind of make sense and sound right – it isn’t.
  - SF
    
    So it is. Thanks for the unusually helpful idiomatic correction.
  - greg
    
    this is what as known as an “eggcorn”
    - Anonymous
      
      Fascinating! Thanks, Greg! Now have the Language Log to add onto my distractions.
- Whoa_now
  
  except, he has a right to get what someone will pay. I’m sorry you think he is “money-grubbing” jerk. But should he not get the fair mkt rate? Should he lower his rent, so that its below mkt? I don’t understand your point. Yes, this may be a odd way to see the mkt price, but we have car auctions (every sat), The city has house actions. He is simply looking at another route to determine the mkt. Its not something I would do, and if I was renting I probably wouldn’t offer anything. But I don’t blame him for trying or call him names.
  - SF
    
    Like I said, in theory, I don’t have a problem with it. In practice, I have tried to rent out places from people like this (e.g., a landlord who tries to instigate a bidding war at a packed open house), and they strike me as jerks that I wouldn’t rent from.
Anonymous

I mean, in THEORY it shouldn’t rent for any more or less than any other apartments–there’s a price it’s worth and that’s it. Bidding over that would be silly.

The only good reason I can see for doing this is if the landlord “doesn’t know what it’s worth” so to speak — if he thinks market conditions are changing so fast or the unit is so unique that he can’t tell how to price it through comps.

Despite the crazy rental market, I doubt either of those are true for this unit.

It seems as though the owner is trying to play psychological warfare — there always might be one idiot that will put down $3000 or $4000. But trust me — the idiot will have remorse. They won’t sign the contract, or if they do they will make the owner’s life hell. This isn’t really a good town in which to play games with people.

And the $35 app fee is a scam. I think this should be regulated. It should be via credit card and only charged if someone actually requests your credit report. But that’s neither here nor there.
- jh
  
  I agree that the app fee is a joke. as a landlord i never charge an app fee. However, I think “regulating” app fees is an even bigger joke. If someone wants to charge an app fee, let them. If a tenant doesn’t want to pay it, don’t look at the property.
  - potential future landlord
    
    Do you request tenants’ credit reports? If so, how much does it cost?
    - jh
      
      I give the option to provide their own copy of their credit report, which everyone has complied to thus far. If not, I’ve stated I’d charge for the pull (two ways to handle, one is a yearly fee of $80-$100 with virtually no limit, or $20 for a one-time pull), but this doesn’t happen till i basically decide who the prospective tenant will be (basically verifying what they’ve told me, vs. sifting through a bunch of peoples credit reports to deem who’s the most worthy, which seems a little silly/intrusive IMO). Also call at least one of their references.
  - Whoa_now
    
    This is how I would do the application fee. I would ask for a 35 dollar check. I would number the applicants as to preference. I would run number 1 credit. If acceptable, and they sign a lease I would then return or tear up all other checks. If their credit is not acceptable I would run number 2. and so on.
    - Anonymous
      
      Yeah this is what I meant by regulated — make your reasonable and respectful approach (or some reasonable approach) an actual law. I didn’t mean send out armies of compliance officers or something. I think the word ‘regulate’ gets a bad wrap sometimes.
    - Bullwinkle
      
      You can have the prospective tenant get their own credit report and submit it as part of the application. This way the expense, if any, is theirs and they get to keep the report for future applications
- Tres
  
  I agree *in theory* it wouldn’t change the average price for a given type of unit very much, but you I think you’d see a wider range in rents for comparable units.
Anon

judging by the usual PoP comments, I suspect this guy wont get a bid above 300 or 400/month because the bidders/pop commenters know of a friend who once got a similar house 3 miles away in 1991 for that price.

I hope for the landlords sake he sets a reserve price.
oneal

As someone who has been outbidded for a rental unit, it sucks, but at the same time its business. Rarely do you see someone come out and just post it on a CL ad that he is taking bids, but behind the scenes, if it is a desirable rental, this type of thing is happening… Such is life…
RD

I think it’s a good idea. just value the place and offer what it’s worth. if the landlord is sending potential renters back to up their offers saying “you’re close, just up it to you’re max,” that’s pretty shitty though. that’s probably what’s going to happen.
Anonymous

In that case it seems to become a form of discrimination, but I do agree that regulating it would probably be more trouble than it’s worth.

People should just be nice and decent I guess.
- Anonymous
  
  Discrimination? That’s like saying a high rent price is discriminating against people that can’t afford it.
- Tres
  
  Yes, it’s called price discrimination.
  
  If you’re very particular, you bid more. If you’re more concerned about value, you bid less. It’s less of a “one size fits all” model.
  - Slim
    
    You can’t have price discrimination on one item. You need to charge different prices for identical items for price discrimination. This is just finding the maximum payment from all prospective renters.
TEM

The post has been flagged for removal…
Pravda

I would never get involved in this – I thnk it bodes ill for future landlord-tenant relations in this place (Imagine: Tenant: “The roof is leaking.” Landlord: “Please submit your bid for me to come and fix it.”)

All that being said – I would be very interested in a follow-up to see how it plays out.
- Tres
  
  That’s why there’s a contract called a lease agreement, which lays out the responsibilities of both parties.
Anonymous x2

That house looks like garbage. Overpriced at your suggestion of $1800.
Matthew

An auction doesn’t really instill confidence that the landlord will be a good one and tend to the needs of the tenants. I wouldn’t bid at all.
CornholioDC

Pocketing the application fees and getting back to no one, then renting out the unit at a set price?

Just being cynical.
textdoc

That Craiglist ad is showing up as having been flagged for removal.
- textdoc
  
  Whoops, I see TEM already noted this.
- Tres
  
  I hope they repost. There’s nothing wrong with their ad, in terms of CL’s standards. I’m interested in seeing how it works out.
- Eric in Ledroit
  
  No doubt the naive socialist contingent was deeply offended by the idea that a seller should receive a market rate for her property. Far better would be for the government – which we all know is impartial and adheres to only the highest ethical standards – to get more involved in setting rental rates. What this town needs is price ceilings so evil landlords will stop gouging the hapless victims of living in the US city with the strongest job market! Power to the people!
  - jh
    
    Just because a person owns the property doesn’t mean they should have the right to offer it to others how they see fit.
    
    …tongue in cheek
anon

Depending on the rental history (when was it last rented and for how much) and on the winning bid, this could violate DC’s restrictions on rent increases.

Setting that side, in theory I like this idea, although I agree that this particular craigslist post is a bit too casual for me to feel very comfortable having this person as my LL.
- potential future landlord
  
  Don’t the rules on rent increases apply only to landlords with four or more units?
  - Anonymous
    
    Yes, but you have to fill out a form to have that exception. Until you do so, rent control laws will apply to your rental property.
    - potential future landlord
      
      Good to know. Thanks!
Lolly 716

I have a rental that is posted on CL now with a huge response and many appointments lined up this weekend. I think it would be crappy to take bids; it would start things off on the wrong foot. Instead, if I have a few good candidates, I’ll offer a 2 year lease with built-in small rent increase (2 or 3%) in year 2. I think that is a more fair way to take advantage of a ‘landlord’s market’.
MB

This place has actually been on the rental market for awhile. My friend and I looked at it back in May; then, it was listed for $2,000, and we didn’t think it worth that price.

My guess is that the landlord was having trouble getting $2,000 for it, lowered the price, and began soliciting bids (thinking if s/he didn’t get $1800, s/he might take $1650 or something). But because demand spikes so much in the late summer (students, interns, etc.), s/he was astonished to find offers coming in that were higher than the $1,800 price.
Neighbor

Apparently the listing has been flagged for removal by Craigslist…
the Gup

ha ha ha ha “right your highest bid”!!!!

…why is the app fee nonrefundable. sounds like a scam to me. it doesn’t cost that much to run a credit check.
Anon

As if renting in this city wasn’t already scummy and awful enough…
anon

I went to see a place I saw on Craig’s and it ended up being an open house where 50+ people showed up. The place was perfect, exactly what I was looking for, etc. so I emailed the guy and bugged the hell out of him for 2 days and OFFERED to pay more in rent if it gave me an edge over other applicants. Guess who got the apartment? This guy.
Cooper

This is basically what goes on in some of the high-volume markets in the city already, or at least it seems that way to me.

I’ve been looking for rentals in the Glover Park, Georgetown, Foxhall area for a few months. Basically what happens there is that a landlord announces an open house, takes applications and the associated application fees on the day of, and then runs a credit check. From there on, the prospective tenants offer prices higher than that listed with the overt knowledge that others are doing the same thing. In a way, this is sort of “bidding” on the house.

For example, I went to an open house a month or so ago in Glover Park. It was a gorgeous 4 BR, 2 bath townhouse with front AND back porch listed at the absurdly low price (for the area) of $3100. My group of 4 were the first to turn in our applications…our credit checks were all spotless…but we didn’t know you were supposed to offer more than was listed. Consequently, we were called and told they went with someone else. I can only assume that we were “outbidded” by another group.

So, we wised up and started offering more competitive rates on the next few places we viewed, and we finally snagged one last week. Wooooo!!!!

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