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How will StreetEasy's new broker fees affect New York renters?

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Brokers, StreetEasy reps, and renters weigh in

Finding a place to live in New York is generally accepted as a stressful and unpredictable process—but in the midst of such drama, listings aggregation site StreetEasy emerged after its 2005 launch as a popular go-to with renters. Its clean layout easily beat out the all-caps mess of listings on Craigslist, and the details StreetEasy provided—price history and changes, location, square footage—took some of the headaches out of an already overwhelming experience.

In 2014, the industry took notice as Zillow Group, the Seattle-based real estate database, forked over $50 million in a deal to buy the website. It was Zillow’s opportunity to break into New York’s notoriously complicated, competitive market, and for the first few years, the average StreetEasy user likely didn’t notice anything had changed.

But recently, the drama of the city’s real estate world has arrived at StreetEasy’s door, with a changing business model that will likely impact the everyday New Yorker’s online apartment hunt.

Signs of tension within the real estate community first emerged this spring, when the site rolled out a “premier agent” feature that lets brokers pay to have their contact information appear on sales listings in specific zip codes. Brokers, feeling like the move added unwanted competition to listings, trashed the initiative and tried to kill it. But this June, The Real Deal reported that four major firms—Corcoran, Douglas Elliman, Nest Seekers International, and BOND—did a 180, deciding to opt in and pay for the exposure.

And this summer, there was an even bigger change to StreetEasy’s model: it announced a surcharge of $3/day for every rental listing a broker wanted up on the site. Brokerage firms accustomed to submitting their listings for free were once again up in arms, angered by the site’s transition to what they saw as a “pay to play” model. The charge was instituted on July 18, and reportedly, about half the listings dropped off the site that day.

Weeks into the new policy, questions of StreetEasy’s future as the go-to resource for apartment hunters remain. “Do they remain the industry leader if they take away the thing that made them the industry leader—which is the most accurate inventory?” asks Philip Lang, COO of Triplemint.

StreetEasy has never claimed to have all the listings in New York; in fact, there never was one single place to look,” Gary Malin, president of Citi Habitats, says. He points out that StreetEasy has only featured listings that came directly from landlords and brokers offering exclusives, leaving out about two-thirds of the rental market—the “open listings” that any broker can show. (Those appear on places like RentHop, Zumper, and Naked Apartments—that last one, which is also owned by Zillow Group, charges a monthly subscription fee for brokers.)

StreetEasy set itself apart from other listings aggregators with its clean, easy-to-read layouts.
Via StreetEasy

But some agents feel StreetEasy has successfully marketed itself as an aggregator with a bulk of the market share. “It’s where the consumer is looking,” says Richard Grossman, president of Halstead. For some brokerage firms, that makes StreetEasy worth investing in as an advertising tool. Halstead, for one, will reimburse agents to promote listings up to 45 days, says Grossman; BOND will also pay for its listings to remain. “We’re looking at it as a more traditional advertising platform,” says Douglas Wagner, director of brokerage services at BOND.

But some brokers feel that this shift is duping the everyday renter. “$3 will not put a dent in a successful agent’s pocket,” says Compass agent Gabriele Sewtz, who calls the change “highly deceiving toward the consumer.”

“They position themselves as an aggregator, a one-stop shop,” she explains. “And overnight, StreetEasy decided to kick 50 percent of the rental inventory to the curb and failed to make an announcement of the transition.”

Representatives at StreetEasy, however, are quick to defend the daily charge as something that will benefit their consumer and improve the site’s inventory. “Anyone who has rented in New York City has had the experience of finding an apartment too amazing to be true—it’s a marketplace rife with fraudulent and stale listings,” explains Susan Daimler, StreetEasy’s vice president and general manager. “We wanted to combat that and make sure we were delivering the renter the most accurate, real database of rentals possible.”

Daimler says the company expected the initial drop in listings, and that since instituting the surcharge, StreetEasy saw a 50 percent decrease in complaints of fraudulent listings. But while the stale listings disappear, it’s unlikely the same number of legit listings will return to the site.

Corcoran and Citi Habitats—both major players in the market—decided not to continue feeding rental listings to the site. And recently, the Real Estate Board of New York (REBNY) just unveiled its own Residential Listing Services in a long-awaited effort to get all of the city’s rental listings in one place. StreetEasy has said it will not accept listings from the REBNY feed, preferring to work directly with brokerages themselves, but it looks like brokers are saddling up to REBNY. According to a report in The Real Deal, Compass, Stribling, Brown Harris Stevens, and Town decided to cease sending listings to StreetEasy now that the RLS is in place.

This isn’t great news for the average renter, as REBNY’s listing service is not available to renters. (Wagner, part of the board of directors for REBNY’s RLS, says it won’t become consumer-facing anytime soon.) StreetEasy clarified this week that no listings have been lost as a result of the four brokerages moving to the RLS, but will instead no longer be updated.

Still, all of these changes bring one big question to mind: How will this affect New Yorkers? An informal poll of renters, none of whom work in the real estate industry, revealed that many had no clue the site changed its business model, though all had utilized StreetEasy in past apartment hunts. Nobody said they’d stop checking it, but one woman worried that the remaining rental listings would only be the expensive ones.

Another renter, a journalist who covers real estate, says, “Lots of people ask me for advice on looking for an apartment here. I used to recommend that all my friends use StreetEasy to search for rentals—and it's how I find places, too. Now that the number of listings has dropped, I'm not so inclined to recommend it so highly.”

Nicole Basile and her boyfriend found their apartment—listed through an independent broker—three years ago on StreetEasy. “I think it's definitely more for the larger brokers now,” Basile says. “At the time it seemed like a more vetted version of Craigslist. Now I think it's all Corcoran and Elliman listings. If we were to move again, I think we would still probably check out StreetEasy to get an idea of what places are going for, but probably check other sites for the same listing. I would first go back to the broker we used last time though.”

Brokers know renters use many channels to apartment hunt, with word of mouth still a big source of business. Sewtz says her team at Compass gets many word-of-mouth referrals and utilizes portals like NYU’s student housing database. As Malin of Citi Habitats notes, “StreetEasy is one place to look, [but] it’s not the only place to look. Renters have always looked at more than one medium to find listings and that’s not changing.”

It could, however, provide an opening for a new real estate site to take StreetEasy’s place in the spotlight. Dan Levy, founder of the listing aggregator CityRealty—which doesn’t charge for listings—says his traffic has gone up in the past few weeks. He characterizes StreetEasy’s claim to combat stale listings with a $3 fee as “a false argument.” He says, “I have trouble understanding why you need to charge people to take care of your data problems.”

And industry insiders point out that above all, New York’s real estate industry is a fast-moving marketplace that’s undergone plenty of change in the past several years. “It wasn’t that long ago that the New York Times or Craigslist owned that portion of the market,” notes Grossman. “StreetEasy hasn’t owned it for all that many years.… We’ll have to see how it works out.”