In metros where demand outstrips supply, renter competition has created bidding wars. A few landlords, in turn, ask competitors for their “highest and best offer.”
CHICAGO – Bidding wars have grown common in home sales, but now they’re part of the apartment rental process as well. As demand outstrips supply, renters try to outbid others to get the property they want.
“Properties are definitely in short supply, and demand is high,” says Bruce Ailion, a real state pro and attorney for Atlanta’s RE/MAX Town and Country. “For example, we had a property that had been renting for $1,260 a month. When the tenant left, we put the property on the market at $1,595 and had over 600 inquiries and close to 300 applications. That means we were underpriced for the current climate.”
Some tenants will offer more than the listed price to get their application ahead in the stack. Property owners may even return to multiple over-offer applicants and ask them to submit their “highest and best offer.” Some owners have even changed their rental-unit ads, adding a note that tells potential customers to be ready for a bidding war, and that they should submit their very highest offer upfront.
Austin, Texas, real estate pro Jasen Edwards says that in the first quarter of the year, rentals in the suburbs were sold out for 35% higher than the listed asking price.
In the Los Angeles rental market, “We’re seeing bidding wars with 10-plus offers leading to leases going for substantially over ask,” adds Blake Stargel, a real estate professional with Compass. “This is now the norm. According to local agents, while 10% over asking is common, particularly hot properties can go for 1.5 times the listed monthly rent.”
Source: “Inside the Wild World of Rental Bidding Wars – and What It Takes to Win,” realtor.com® (May 11, 2022)
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