Recently Craig Newmark, the creator of craigslist, laid the hammer down on the real estate market by annoucing he would be
charging rental brokers adspace on craigslist. So why is this such a huge development in the real estate field? For that answer let’s go back to the Grunt’s origin in real estate.
The Grunt began his career in a well known rental brokerage company where the use of craigslist was standard operational procedure since it was free and the site attracted a high amount of traffic. My manager at the time ordered us to put out ten craigslist ads a day using the database of listings that the company possessed.
My manager loved touting the wonders of craigslist. If an agent was stuck in the mud he would ask if they put any craigslist ads out and then berate them for not doing so.
The Grunt quickly learned that these attributes made craigslist really aggravating. By being free it often attracted the dregs of the rental market including people with very limited budgets and horrendous credit. I would get hits on my craigslist ads for apartments that were $1300 or less but anything above $2000 was a ghost town. But the majority of those clients did not have the budget to cover a fee or even a security deposit. I knew one broker who put out ten ads on several $800 a month studios way uptown and ended up with over 50 hits. Because of its popularity and the simple graphic user interface, clients would often call on multiple ads put out by other brokers. It was not uncommon to talk with other agents in the office about our clients and find out we were talking about the same ones. So client loyalty was nonexistent.
Basically craigslist is classified as a lead generator, which is an advertisement that attracts customers. The objective is to get that customer to call the broker and than make them yours. Of course Craig has a different view of the lead generator concept.
"The problems we’ve seen are brokers charging a fee for apartments posting in no-fee section, some not disclosing who they are. Sometimes subtle forms of bait-and-switch. This is becoming the exception. We're hearing that things are getting better... People only cut corners when they think everyone else does... I'm trying to dress in black more and be more cynical, but it’s not working."
The bait and switch issue that Craig is referring to is actually a gray area in rentals. First of all what is a bait and switch?
a deceptive way of selling that involves advertising a product at a very low price in order to attract customers who are then persuaded to switch to a more expensive productThis is one of many definitions but the gist is that a product is advertised and when the customer calls they are told it is no longer available but there is another product similar to it.
Now are rental agents engaging in the act of bait and switch tactics? That’s complicated and the Grunt will explain why.
In the real estate business particularly with rentals a well-known fact is that when someone calls on an ad for an apartment chances are they will most likely not rent it because it does not fit their needs or it has already been taken.
A good broker will design a strategy around this fact by collecting a portfolio of ten comparable apartments similar in budget and features and place ten ads on craigslist. When the customer calls for an appointment there will be nine other apartments to view in case the client does not like the apartment or the apartment has been already taken. The objective of the lead generator is to have the customer call the agent and if the agent is worth their salt they will be able to make them their client.
Now here’s the gray area. Sometimes customers call for an apartment which was available but is told it has just been taken off the market and then agrees to look at some other apartments. But the customer has no idea whether the original apartment existed in the first place.
An apartment that is priced correctly will often go quickly the very day an ad is put out. That is the nature of the business. One also has to keep in mind the chaotic nature of the application process and the cryptic lines of communication between broker and landlord.
The Grunt had an experience where an apartment had ten applications and it looked like the Grunt’s client was not going to get the apartment however all ten applications were unqualified except for the grunt’s client. Hence the Grunt got the commission check.
It is theses types of variables that complicate the apartment hunting process which are completely out of the agent’s control.
For customers using craigslist, it can be a maddening experience particularly sifting through the ads and figuring out which apartments to select from and looking at apartments that were far different from what was described in the ad.
Anyone who is reading this and thinking of ways to exploit craigslist with bait and switch schemes please be advised that Craig does not look too kindly on that sort of conduct. He is the Stew Leonard’s of the Internet and always believes the customer is always right. He takes all feedback about his site very seriously and regularly patrols the halls of his temple ever vigilantly for anything that casts a dark shadow on his beloved creation. If you play Greedo Craig will Han Solo your ass since as far as he is concerned you shot first despite what others say. Craig started this list out of love for his friends and family and as far as he is concerned the only thing that has changed is that his community has just gotten bigger. He could have cashed out a long time ago and would have made out like bandit in the landscape of the ill fated dot com boom but he chose to stay and fight on behalf of the proletariat.
So has the Grunt ever engaged in any abuse of craigslist? No. Because the Grunt has a healthy respect for the law and paid attention to the Human Rights and Fair Housing course during the real estate class. Besides that’s not the Grunt’s style.
What does the future bring for craigslist and rental brokers? Whatever the outcome, Craig is going to be sitting on the catbird seat because his site gets a ton of traffic and ebay already owns a percentage of the site.
For rental brokers it’s a completely different story. The Grunt has already heard rumblings from the grapevine that certain rental brokerages have no desire to play by Newmark’s rules and will be forbidding agents to use craigslist. Agents who primarily use craigslist for their business will feel the pinch and will have no other option other than to use whatever internet ad space is available to them or buy ads in the New York Times.
No offense to Craig, but the Grunt was not the biggest fan of craigslist. The clients that the grunt acquired either had low budgets, bad credit and in general wasted the Grunt’s time. Grunt would cringe whenever the manager would bark orders to put out craigslist ads. Where the Grunt works now craigslist is verboten because we believe in paying for our advertising. Craig, this isn’t sour grapes. Grunt highly recommends craigslist for those who are seeking bargains. Those deals are definitely there. There are a ton of success stories where craigslist has played a key role. Besides some of those ads are really amusing.
