Alex Tseng | February 8, 2017
We all want to be “right.” We’ll even go to extremes to make sure we’re not making the wrong move, whether it’s buying a pair of shoes or finding an apartment.
Months before moving, Alana Payne began making spreadsheets of all the buildings she was interested in, even the ones that didn’t have available apartments yet, just to make sure she wouldn’t miss an opportunity. Some of us may visit too many apartments and calculate price / square footage ratios, and are left wondering if there’s even one apartment out there that fits exactly what we’re looking for – after all, if you end up with the “wrong” one, you have to live with it for a year.
According to our user research data, 77% of renters begin looking for an apartment 2 or more months before they intend to move – that’s a lot of time spent looking at the wrong place, considering 96% of apartments don’t get listed until a month before they become vacant. Furthermore, we discovered that the average apartment hunter visits 6 to 10 apartments before putting down an application on one. Why do we have such a hard time finding the right apartment?
Our team at REMY decided to look into this phenomenon by interviewing renters across a broad range of ages and socioeconomic backgrounds. We tried to figure out where the possible hold-ups were, in order to create some kind of “time AND stress saver” for apartment hunting, as blogger Erika Fox AKA Retro Flame put it.
We found three recurring reasons why renters were unable to find the right apartment, or when they do, why they can’t get it.
There’s too much information out there, leading to analysis paralysis.
At any given time, 20,000 to 40,000 apartments are available for rent in NYC, listed across hundreds of apartment websites serving NYC – Streeteasy, Renthop, Craigslist, and many more that you’ve probably never heard of. NYC also happens to be the only city without a centralized MLS (multiple listing service), meaning that many apartments only show up on one or two of these websites. You would have to go through multiple websites to ensure that you didn’t leave any stones unturned. How do you decide which website(s) to devote several hours of your time to?
The process of renting an apartment is generally opaque to anyone who’s not a real estate professional.
What’s the broker fee for this apartment? Is the broker fee negotiable? Am I meeting with a real estate agent or the landlord? Furthermore, once you find a place you like and want to apply for it, every landlord seems to ask for different qualifications and types of verification – some want your income to be 40x the rent, some won’t even look at your application if you don’t make 50x. Some want to run a credit/background check and ask for your last 4 paystubs and most recent 4 bank statements, in addition to 3 letters of recommendation, while others may simply ask for a copy of your ID. It's enough to make anyone go mad.
Often renters don’t really know what they’re looking for.
The two fundamental differentiators in choosing an apartment are price and location. A renter once came to us asking for a 2-bedroom apartment in Manhattan for under $1500/mo. Anyone familiar with Manhattan real estate will know that there isn’t a single market-rate apartment that meets this criteria; however if we learned what she prioritized, we may be able to help her get closer to finding a new home. During our user tests, we also found out that 69% of renters have not decided which neighborhood they want to move to next. Current apartment search platforms assume that you have answers to these questions.
What we learned...
We took all this data and decided that the only way to change the system was to build a new one. Starting from a local community of renters and partner landlords, we’re building for them an intelligent platform that learns what they want and guides them in the process of finding a new home.
We start from basic human psychology – by understanding that humans have a tendency to get overloaded by too much information, our first priority was to limit the amount of noise. Instead of giving renters a full list of every apartment that’s available, we only present the viable options based on answers to match questions, and we only present the 3 best matches each day. Swipe, swipe, swipe, done.
Next, we are rethinking the fee structures currently in place in the NYC real estate arena. By partnering directly with landlords and property management companies, as well as brokers who advertise their listings on a no-fee basis, we are shifting the initial costs of renting an apartment away from renters who typically come to the city with not much more than two suitcases and a couple thousand – or even as little as a couple hundred – dollars. By reducing the burden of having to start off living in NYC with pennies in one’s pocket (as I did when I first came into this city) we hope to level the playing field for renters and give everybody a fair opportunity to explore everything the city has to offer. By removing the 15% broker fee, we also hope to remove the single largest obstacle to relocating under unfortunate circumstances – an abusive landlord, a deteriorating building, bed bugs, or unsavory neighbors.
Finally, we believe that our biggest innovation comes from looking at the supply and demand as a gradient rather than a simple yes/no. Our COO, Cleo Yang, came up with the idea for the algorithm by drawing from her experience at a marketing consulting firm where she analyzed shopper behavior. "It's about figuring out the necessities versus the 'nice to haves.' For example, if you're looking for an elevator building with a doorman and laundry in your unit that's close to Fairway [Market], one of those is a necessity and something else is a 'nice to have,'" she said. "Our job is to tease out which is which, and it goes back to understanding the customer."
We’re about to rock NYC. Get pumped!