Missed Opportunity in Social Media Marketing: The Rental Market

December 30, 2009
By: Drew Meyers
Author's Website: http://virtualresults.net

Ever since Zillow launched rentals a few weeks ago, I’ve becoming more and more convinced that social media marketing in the rental market is a significant missed opportunity for real estate pros as a means to build a future book of business. It’s a given that the vast majority of renters at some point become home buyers — helping them navigate the rental market seems a good way to get in front of them and start earning their trust BEFORE they are actively looking for an agent. I know for a fact that helping generation x & y renters at a time where you aren’t trying to “sell” them on your services as an agent will go a long way toward converting them into clients when they enter the home buying process. Of course, it all depends on how much time you have as to whether the rental market is worth your time. If you already have more work than you can handle, then tackling the rental market is probably not for you. But, if you are a tech savvy agent without a large existing book of future business, then the rental market seems an interesting niche to tackle in the social media space.

What got me thinking about this today? The rentals category in Zillow Advice. For instance, here are several questions that present an opportunity to engage with future home buyers:

Carson City, NV — what can happen if my landlord does not give me a contract to sign to rent his/her home?
Temple City, CA — What is reasonable rent for 3 bedroom 1,200 sq. foot single family residence in Temple City Calif.?
National City, CA — how much can a house 660 sq ft, 2 bdrm 1 ba on a large lot, rent for?

Are there real estate professionals who have effectively used social media marketing to help people through the rental process and ended up turning those people into clients? What sites do you utilize to connect with renters? And, of course, let me know in the comments if you think this strategy is flawed…

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Categories: Lead Acquisition, SMM

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Travis Foote

You are absolutely correct about moving the renter to buyer. When I started my real estate career a few years ago, my focus was investors and property management. This led to my development of Woodlandsrentals.com. A website devoted to rental properties in The Woodlands TX area of Houston. I would say 90% of my new clients come from people moving to the area and looking to rent for a year while they figure out where they want to live. They all say it. So is it a great long term strategy? Absolutely. Does it require a lot of time and effort for a initial commission? You bet it does. Anyone who has dealt with tenants know they are as picky as buyers. The benefit is creating a long term relationship that will lead to future home sales.

I was one of the first to start answering questions in Zillow's new Rentals section. It is a strategy I want to continue to use and build upon.

Tony Sena

I got into the Property Management business in early 2009 as I saw this as an emerging market. I had pretty darn good year and I generated hundreds of potential renter leads every month. Can you believe I had a hard time finding agents here in Las Vegas that wanted to work with renters. I couldn't believe how many agents who had no or little business were not willing to work with renters???

Like you said, it's a great way to build your pipe line. Eventually these renters will be buyers!

Josh Ferris

Rentals are a mixed bag. In some markets where renters are in high demand by rental complexes and it's customary for the landlord to pay the brokers involved in the transaction it can be worth doing. My suburban market works a bit differently. We don't really have apartment communities to bring renters to and 99.99% of all rentals in our MLS require that the TENANT pay the broker fee (typically in the amount of one month's rent).

So let's say you're renting a home for $2,000/month. That means the tenant would have to pay $2,000 security deposit, $2,000 first month's rent and $2,000 broker's fee.

Combined with the broker splits that still apply to rentals (say 70/30) in the above scenario where the broker fee is split between the two agencies and the agent ends up walking away with $700 before taxes and expenses.

I did a few rentals in 2009 and it was worth it for the money it provided between sales but in the end I felt it was more trouble than it was worth.

Travis Foote

The Tenant pays the fee? Wow. Where are you? Here in the Houston market, the fee is typically One Months Rent split 50/50 between listing and leasing brokers for a one year lease or longer. The landlord pays it, not the tenant. I disagree with the Tenant paying it. Its a marketing cost to the owner. I can't imagine your area has a lot of renters using your MLS when they can use Craigslist, Hotpads, etc for free.

Josh Ferris

I agree, I think the landlord should pay. We have a handful of renters in addition to the mass influx of military people relocating to West Point each year. It's a very challenging objective to overcome for sure. Basically if the tenant wants a rental that's in the MLS then they have to pay the broker fee regardless of whether they use a tenant agent or not.

I imagine this way of business came about from the Manhattan rental market where renters pay upwards of 10-12% in commission. I don't know what the tenant receives for 10-12%. Hopefully a Manhattan agent can give us better insight into their market.