Houston Association of REALTORS® study clearly demonstrates importance of embracing the rental/sales lifecycle.

by Marilyn Wilson on March 22, 2013

RENTAL CYCLEIf 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.

Consumer Research Screen Shot

 

 

 

 

 

 

 

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.

Consumer research panel screen shot

 

 

 

 

 

 

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.

 

 

 

 

 

 

 

 

 

{ 3 comments… read them below or add one }

brad jenkins April 3, 2013 at 1:07 pm

Marilyn,
What looks good in theory does not always maintain it’s shine when put into practice. Rental ROI is speculative at best for an agent. Just because Zillow or Trulia latch upon something does not necessarily mean it is good for everyone. They are only concerned about their bottom lines for the Wall Street watchers.

I researched your prior experiences seeking some sort of relevant real estate association, unfortunately I found it lacking in that regard. Maybe for future reference you might discuss your advice offerings with someone who is in the actual day to day business as it might lend you more credibility before you put words to blog and give you a different view point instead of just assuming something. The mere fact that agents have not embraced your concept should be an indicator that there are deeper issues then what you have looked at on the surface.
Wishing you all the best.

Reply

Marilyn Wilson April 4, 2013 at 6:40 am

Brad,

Thanks for your comments. Like most sales opportunities in real estate, rental are not for everyone. Some rental markets are much stronger than others. We have in fact talked to many agents and brokers in many markets who are aggressively pursuing rentals and property management divisions because they are proving to be profitable ventures in and of themselves. Those with teams are also using rentals as a way to help their newer team members generate ongoing revenues while they build out their referral base.

There’s also a larger point I’m trying to make in this article. Many consumers are cynical about real estate agents because they believe that agents are simply interested in collecting a commission and not in providing them with good service. By helping a client when they are facing tough times after a foreclosure, for example and an agent takes the time to find them a comfortable rental situation while they rebuild their credit, the agent is building a meaningful, long-term relationship that may lead to one or several transactions with that client down the road. When agents demonstrate they generally care about the welfare of their clients, they are much more likely to build out their referral base, not to mention their goodwill in the local community.

Thanks again for your comments.

Reply

www.argent-web.biz November 27, 2013 at 8:27 pm

We are a group of volunteers and starting a new scheme in our community.

Your web site provided us with valuable info to work
on. You have done a formidable job and our whole community
will be grateful to you.

Reply

Leave a Comment

{ 2 trackbacks }

Previous post:

Next post: