Renters Offering Landlords Higher Rent in Bidding-War Craze

Photo-Illustration: Bordered

Andrew* and his fiancée thought it was a good sign that the guy who showed them the duplex in Bushwick had co-founded a non-profit that “works to end poverty”. The application process was described as “very dynamic”, says Andrew: the man handling the lease was a friend of the landlord, lived down the street and “collaborated” with him to find new tenants. The couple had found the place on the Registration projecta weekly newsletter that bills itself as “committed to building an anti-oppressive community rooted in collective self-care”.

Things quickly got very anti-vibrant. The landlord’s friend told the couple they were ‘shortlisted’ from a few finalists and would have to send in their ‘best offer’ on the rent, which, rather than a fixed amount, was now more of a floor from which to negotiate. The couple’s willingness to pay above the $3,000 asking price wouldn’t be the only factor the owner considered, they were assured via email, but would “help” the owner take his decision.

The pair was offering the maximum it reasonably could: $3,400 per month. Unfortunately, this additional rental income of almost $5,000 per year was not enough to steer the owner towards his request, although the owner’s friend really enjoyed meeting them.

Rental bidding wars are not unheard of in New York. They are expressly prohibited in rent-stabilized and rent-controlled apartments, a prohibition that gave rise to the somewhat retro concept of “purse” in the 1970s and 1980s: an illegal bribe paid under the table to a broker, landlord or existing tenant in order to help a new tenant obtain a coveted apartment. (Nora Ephron infamous paid $24,000 in key money to secure a rent-stabilized apartment in the Apthorp on the Upper West Side, which she thought would “depreciate to just a thousand dollars a year” if she lived there for 24 years.) For market-priced apartments , where the practice of offering or soliciting rent above the asking price is permitted, it more commonly occurs at the high end, where tenants can afford to spend themselves.

But the bidding wars have spilled over into the current pandemic rebound market, where the vacancy rate is just over 2% in Manhattan according to recent data collected by appraiser Jonathan Miller, who also reports that a out of every five apartments rented in the borough. ended in a bidding war over the past two months. This means that on top of all the other hurdles renters have to jump through – maniacally checking listings, dropping everything to run to showings, paying a credit check and security deposit and even brokerage fees – there are still one more thing to do: raise your own rent.

If “key money” is an almost forgotten term, I propose a new one for this kind of palm-greasing: cuck money. That sums up the abject indignity of the tenant right now, in a market where not only is everything more expensive, but where the competition is so crazy that tenants are offering to make it even more expensive themselves just to end the process and go home ashamed. Rudeness offers its own kind of precision: the tenant doesn’t just get fucked by the landlord. The tenant asks if the landlord would like to fuck them. Cuckold money is a form of collective debasement – ​​and there are no signs it will subside any time soon.

Asking for a “best deal” on a rental apartment in the market is legal, even though it seems like it shouldn’t be. “If it’s an open market property,” says Neil Garfinkel, attorney at Abrams Garfinkel Margolis Bergson, “then it’s certainly possible to get the highest rental amount anyone is willing to pay. pay. There are no limits and no controls there. As a result, there are no regulations on how bidding wars are conducted. “There is no protocol,” I’m told. Corcoran agent Tiga Mcloyd, governing how a landlord or representative may solicit additional rent.Euphemisms for the practice abound: “strong offers” or “robust offers”.Potential tenants may find that rent makes l ‘best deals’ round in person during visits, or even when they’re still queuing.

For some, the solicitation is in the app: “Hello and thank you so much for coming to my open house today,” an agent wrote to a potential tenant in Greenpoint. In her email, she listed the “asking rent” ($4,995), the brokerage fee of 15% of one year’s rent (at least $8,991), and the month’s rent and security deposit. one month required. Then: “Please submit your best offer,” she demanded. “I will collect all offers and review them with the owner this weekend.” In a follow-up email, the broker clarified the apparent distinction between better and upper offer: “A potential tenant is invited to offer what he deems fair and to negotiate where he sees fit,” she added. (Applicant did not get the apartment.)

This kind of throat clearing is common. Another agent instructed a tenant, “To be clear, it is NOT necessary to offer more than the asking price of $3,000 to stay in the game,” then quickly added that “the landlord will choose probably an offer rather than the asking price”. The tenant said the whole process, which took 72 hours, was like The hunger Games. (He also didn’t get the apartment.)

Then there are the tenants who make a pre-bid themselves: Alyssa Cass, a political consultant, recently went to an exhibition in Brooklyn where the first couple at the door introduced themselves to the broker and offered 1 $200 above the request. Brokers are not obligated to inform potential bidders that the auction has taken place, if the owner has already accepted one of these offers. A friend who was applying for a $4,500 a month apartment in the Clinton Hill area while arranging a viewing was abruptly informed by the agent that he had already received “several strong offers for over 5 $000”. (“Do people not want to see the apartment? What if there are mice??” her husband replied.) Many people I spoke to who had been burned in a war auctioneers went to their next attempt by simply bidding 10% or more off the asking rent to increase their odds – it’s like asking to be found, a sex fetish in which a submissive enjoys sending money to a dominant, by an owner. Except only one side is having a good time.

“I’ve never seen inventory this low in 16 years,” Lesley Steiner, an Elliman agent in Manhattan, told me recently. Steiner has had three walk-in bidding wars in Chelsea and Soho in recent months, after hundreds of inquiries about each, all of which cost more than $600 above asking rents. Mcloyd, Corcoran’s agent, said even brokers are overwhelmed with demand: “Bidding wars are an upsetting situation.” He said it didn’t do any good to tell qualified applicants that someone had made an astronomical offer – as he recently had to do for a one-bedroom apartment in Brooklyn, listed at $3,500, which is went to a graduate student whose parents called at the eleventh hour and offered $4,800. Still, “I don’t think it’s unfair,” said Mcloyd, who is also an owner. “It’s unfortunate, but that’s the deal.”

The question of whether “the market” is an effective steward of what is fair and unfair, however, seems increasingly relevant as it extracts more and more money from New Yorkers. It is a bad omen to think that there is simply nothing to prevent the competition for accommodation from accelerating into utter madness – especially when the regulations we To do have on illegal rental practices is already applied randomly. City agencies that monitor income discrimination have been reduced to a fraction of their size under the Adams administration, with correspondingly tiny budgets. During my conversation with a housing attorney for this story, I discovered that the $500 deposit requested by my own broker for my apartment application, which I paid without hesitation, was potentially illegal.

I asked Charles McNally of NYU’s Furman Center, which collects data on rents and evictions, what we can expect if wealthy people are willing to pay a premium on a very low inventory of available housing. Is it a market distortion? His response was grim: “No, so that is the market,” McNally said. “That’s what’s going to happen in a housing shortage situation.” Renting in town used to feel like being slapped, but today’s market has made it more grotesque: tenants are reaching out to the landlord and slapping themselves with it.