Geoff Gerber has tried just about everything, including a steep price reduction well ahead of federal tax credits expiring, to sell his St. Paul condo, but still no deal. So he's also looking for a renter, but he'll settle for whichever comes first: renter or buyer.
That leaves Gerber and his real estate agent facing something of a marketing challenge, but starting next week things should get less complicated: The NorthstarMLS (multiple listing service) will begin listing rentals alongside homes for sale.
The change is a sign that the rental market is gaining considerable steam as the for-sale market has flamed out. Sales of existing homes fell 26 percent nationwide in July, the most recent data available, and renewed fears that the nation is not fully out of the recession. Sales in the Twin Cities fell even further -- 42 percent, compared to the previous year.
NorthstarMLS says the addition of rental listings has been motivated largely by agents and brokers, who have asked for a centralized database of rental listings to cope with the growing number of shoppers who aren't willing to make a long-term commitment to a mortgage.
That database, already filled with 27,000 houses and condos for sale, will include rentals of single-family houses, condos, townhouses and traditional apartments, but not individual rooms for rent. Other big cities around the country, particularly those where vacation rentals are popular, are already offering such rental listings. That includes Arizona, southern California and Chicago.
Not all subscribers to the MLS will be required to display rental listings. Consumers will have the same access to that info as they do for sale listings, but they won't be able to post listings themselves.
Coldwell Banker Burnet is already on board. Growing demand for rental listings motivated the company to start listing its own rental listings about a year ago, but the company will begin to include the full MLS rental listings.
"This has really expanded our business to another type of service," said Leonard MacKinnon, director of marketing. "We see this as part of residential real estate, and that's what we do."
To be sure, only a fraction of all real estate agents today also handle rentals. Brad Fisher, a sales agent who manages an Edina Realty sales office with more than 80 licensed agents, said he expects only a handful of his agents to embrace that part of the market. Still, he thinks the expansion of the MLS is a good idea. "It's an opportunity to make that info more easily accessible to consumers," he said.
One obstacle for traditional real estate agents is that commissions on rentals tend to be a flat fee -- usually one month's rent that is often split between the rental agent and the listing agent -- that's far lower than what agents get for selling a house. But when the market is stagnant, as it has been over the past couple of months, those commissions can add up, especially for big suburban houses and expensive downtown condos.
Vangie Nicklow said that a growing share of her business has become corporate rentals, especially for buyers who can't sell the home they're leaving, and for those nervous about buying into an unfamiliar market. The Coldwell Banker Burnet agent also works for Home Rental Systems, a CBB affiliate, and said that one corporate relocation client, for example, owned two houses that he was already renting out in other cities and refused to buy yet another.
"Rentals have become a very important part of the real estate market," she said. "And business is better than it's ever been."
Mark Brattvet, Home Rental's co-owner, said that the number of rentals has gone from about 75 in 2009 to more than 250 this year, and most of those are single-family houses, condos and duplexes that average $2,500 to $3,500 a month.
"With so much uncertainty in the market, a lot of buyers are afraid, or can't buy because they have credit issues," he said.
Edina Realty allows consumers to search MLS listings on its website, but general manager Barb Jandric said the company is going to wait before it adds rentals to its Web search tools. Jandric said that it remains to be seen whether there will be enough listings to justify adding the search tool.
Still, she was largely positive about the change. "This expands the choices that our agents can offer a seller," Jandric said. "It gives them [buyers and sellers] another option, and today there are a lot of people who like having another option."
Chris Galler, chief operating officer of the Minnesota Association of Realtors, said that from a licensing perspective, there are no restrictions on the ability of agents in the state to represent both renters and buyers and/or sellers. And long before real estate companies "specialized" in selling homes, it was normal for agents to handle both for-sale and rental properties with the expectation that when they could afford to buy there would be an established relationship that would lead to a purchase.
Just as the Commerce Department requires agents to report their commissions and pay tax on that income, those who handle rentals face the same requirement for those fees.
Coldwell Banker Burnet's MacKinnon said the value of a deal shouldn't be a factor in whether agents pursue a listing.
"We just view any real estate transaction as significant, regardless of the numbers," he said. "Because if people want a real estate transaction, we want them to think we're the ones to help them with that."
Jim Buchta • 612-673-7376