November 17, 2016
How to Win a Rental Bidding War
If you’re a renter who has been in search of a new apartment anytime in the last year, you know the difficulty of finding affordable rental housing these days. You’ve likely missed out on great places by not contacting the landlords immediately after the rental listing went up or not being the first person to show up at the viewing. On top of this frenzied competition for a small number of suites, it probably hasn’t escaped your notice that rents have gone up on properties at all price points – causing a big squeeze on renters’ pocketbooks.
Vancouver and Toronto real estate are among the tightest rental markets; if you live in these cities, you might have even encountered a rental bidding war. It’s not uncommon now to find properties listed on Craigslist or Kijiji that are listed as available for the best offer.
The Reason for Rental Bidding Wars
While the Canadian Mortgage and Housing Corporation (CMHC) reported a 4.3% increase in the price of rent from 2014 to 2015, those who have studied new rental listings in Vancouver on Craigslist suggest that rental increases could be closer to 20% in that city. Meanwhile, in Toronto, a report by Urbanation saw rental prices increase by 6.8% in the last year.
The likely reason rents have gone up so significantly is due to a lack of rental inventory. While the national average rental vacancy rate is 3.5%, according to a City of Vancouver report, there was a 0.6% vacancy rate in rentals in Vancouver in 2016. Toronto isn’t much better – the CMHC recently found that the city has a vacancy rate of 1.6%.
There are a number of reasons that can account for the decline in the number of rental properties available in key markets like Toronto and Vancouver. Increased demand for rentals doesn’t help matters. Nor does the fact that some owners are choosing to keep their properties empty rather than rent them out.
Short-Term Rentals in Spotlight
The rise of Airbnb has been widely blamed for the problem since it takes rental properties off the market for use as short term rentals. In September, Airbnb released a report about the Toronto market that showed that the company has 8,600 Toronto-area accommodations. In Vancouver, it’s been estimated that there are over 5,000 apartments or houses renting on Airbnb and other sites.
This has led to the City of Vancouver to take action by creating restrictions on short term rentals. The city will require that hosts register their Airbnb home and will only allow rentals of less than 30 days if the site is the owner’s primary residence. They have also taken action to discourage people from leaving homes empty through a vacant home tax.
While that might help alleviate the problem over the long term, that doesn’t change the fact that landlords are taking advantage of the tight rental market to get the most from their rental properties. Unsure of what they can get in this changing market, some of them are starting to list properties and invite rental bidding wars.
How to Win a Rental Bidding War
If you do find yourself in the midst of a rental bidding war, here are some tips to help you come out on top:
Be an Appealing Tenant
It’s important to know that the person with the highest offer doesn’t always get the rental suite. That’s because landlords are also looking for people who are reliable, financially capable of paying the rent, and good tenants. So, it’s important that you’re ready and able to prove that you are the person that they should rent to. Make sure that you have your rental references ready, your social insurance number (in case they require a credit check) and that you have proof of your income. You might also want to have a cheque with you just in case, as well.
Take the time to speak to the landlord or property manager and get to know them. Tell them about yourself and your family. A good personal connection can count for a lot with many landlords and property managers.
One thing that landlords hate is turnover – since it means they have to prepare and show the suite again. So, if you have stayed for long periods of time at previous rentals then you could have an edge over the competition.
Other ways to make yourself an appealing tenant is to find out if there are any things that the landlord would prefer like a larger security deposit, longer lease terms, or an earlier moving date.
Scope Out the Market
It can be difficult to know how much to offer in a rental bidding war because you don’t want to offer too little, nor do you want offer too much. Do your research to see how much other properties have rented for in the area. Sometimes you can even find a suite in the same building which has a similar floor plan to give you an idea of the going rate. Depending on how much you want the suite, you can offer at the going rate or you can add a premium to it.
Ask for a Second Chance
If you’re afraid your offer is too low or you really want the apartment, you can ask the landlord to give you a second opportunity to bid if you don’t win. At that point, you can decide if it’s worth outbidding the highest bidder. While not all landlords or management companies will allow you to do this, some do so there is no harm in asking.
Work with a Broker
If you find yourself losing out on rental after rental, consider hiring a rental broker to help you find a new place. A rental broker will help you submit and negotiate the bidding process. This service isn’t cheap, however – it can cost as much as one month’s rent.
Coming Out on Top
Even if you follow these steps, it might be difficult to come out on top in a rental bidding war unless you can afford to offer a premium. But by following these tips, you can help increase your chances of winning.