Frenzy of Vancouver rental market whips up bidding wars
Landlord B.C. warns about fairness of renting out a property to the highest bidder
It took Devin Cox and his roommate more than four months to find a home to rent in Vancouver, and what they experienced along the way was "disheartening."
"You sort of feel a little bit helpless," said the 28-year-old massage therapy student.
With a budget of about $2,000 per month for a two-bedroom, the pair figured they had a pretty good shot at finding a place within a short commute of the downtown core.
But then Cox noticed something odd — about a quarter of the application forms they submitted had a little box to fill in asking how much more above the listed price they would pay, because the property was in high demand.
In one or two cases, Cox says the landlord even told them someone else had put in a higher offer, and asked them if they be willing to bid more.
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"It's crazy. I've been renting all over town for the past 10 years or so. I've been in lots of different places for various reasons, and I've never seen this before," Cox said.
At one point, they even tried putting in a bid themselves for an apartment in the Woodwards building, offering an extra $250 over the asking price. They were out-bid.
"Who knows how much higher it went for," Cox said.
Andrew Sakamoto, executive director of the Tenant Resource and Advisory Centre, says there's little tenants can do about bidding wars given the region's ultra-tight rental market — with less than one per cent availability.
"It certainly is one of the signs that we have a housing crisis in the province," Sakamoto said.
"There are a lot of tenants competing for a limited number of rental units and this is what happens — it can engage in this sort of practice where they have tenants bidding on their properties."
As wild as bidding wars may seem, Sakamoto says they're not illegal.
"Landlords have the right to set the rent at whatever they feel they can get," he said.
<a href="https://twitter.com/cbcnewsbc">@cbcnewsbc</a> the reason the rent has doubled because rent bidding is now the thing. My coworker not knowingly was at 3 bidding wars the week!—@Mona_Robertson
'No property manager enjoys it'
Property manager Costas Papadopoulos says the practice of bidding on apartments is nothing new.
The company he works for, Prompton Real Estate Services, handles more than 1,200 properties in Metro Vancouver and he says managers have long gotten bids on high-demand properties.
"Much like what's happening in the real estate industry in sales, we have tenants that literally are bidding," Papadopoulos said.
The company doesn't actively solicit bids from prospective tenants, Papadopoulos says, but offers over the asking price come in anyway. He says when they do, the managers have a fiduciary responsibility to the property owners to pass them on.
"It's bad enough when we're involved in a bidding war. Believe me, it's not pleasant. No property manager enjoys it, so property managers try to make the best of it," he said.
On a lark, I took to craigslist to see about renting options that might better suit us. NOPE NOPE NOPE. Never looking again. <a href="https://twitter.com/hashtag/VanPoli?src=hash">#VanPoli</a> <a href="https://twitter.com/hashtag/VanRE?src=hash">#VanRE</a>—@Patmeister
'We try to be a little proactive'
The company has attempted to manage those bids in various ways. Papadopoulos says at one point they implemented an online bidding system, but they found it was too controversial.
So now they add fine print to their listings warning interested parties that the listed price may not be all that it seems.
"On behalf of the owner investor, a bidding system may be used to achieve market value," said a recent listing for a two-bedroom apartment in Coal Harbour.
"Unfortunately, in a tough market like this there are times where there is bidding," Papadopoulos said.
<a href="https://twitter.com/BombasticLove87">@BombasticLove87</a> In Vancouver people are beginning to give up the "dream" of renting a home—@ensembleator
"And we try to be a little proactive in letting people know out there that, hey, this is a possibility. If you're going up against someone else, it's an option for you."
He says the property managers don't disclose the amount of the other offer as part of that process.
A question of fairness
Despite understanding landlords' rights to get as much money as the market can bear for their properties, Landlord B.C. CEO David Hutniak says he's concerned about the idea of bidding wars and auctioning off a property to the highest offer.
"Certainly, as an industry, when we hear that they're encouraging bidding wars, that concerns us. It becomes a question of is that fair to the renters out there," he said.
"We're not insensitive to the fact that it's a challenging market, and we would hope that those owners and managers who are out there would be sensitive to that as well."
<a href="https://twitter.com/CanSpice">@CanSpice</a> <a href="https://twitter.com/lailayuile">@lailayuile</a> and <a href="https://twitter.com/kevinolearytv">@kevinolearytv</a> has argued that we should all B renting instead of owning. But <a href="https://twitter.com/hashtag/VanRE?src=hash">#VanRE</a> people can't even afford rent—@mrdruthers
Both Hutniak and Sakamoto said they haven't had complaints of bidding wars and auctions, leading them to believe that the practice isn't widespread.
But Sakamoto, a renter himself, admits that he's put in bids of his own in the past.
"I have gone to viewings and offered a little bit more than the listed price to try to secure the property," he said.
"It's certainly, you know, just based on the ultra-competitive housing market that we live in, it's one strategy that tenants may want to consider."