By Elijah Nicholson-Messmer

When Alexandra Stephanou and her partner started looking for a new apartment in February, “rent bidding” was an unfamiliar concept to them. By the end of their search, it was a $1,200 reality.

After living in the same North End apartment since moving to Boston in May 2020, Stephanou enlisted the help of a real estate agent to ease the process of looking for a new apartment. The agent's assistance quickly proved to be a stressor itself.

“She was very aggressive with [us saying], ‘Well, if you like it, you have to apply now,’” Stephanou said. “And mind you, this is early March and we're trying to rent a Sept. 1 unit. She created an environment of a lot of pressure, like: ‘There is going to be rent bidding. Are you prepared for that?’”

Despite the pressure from her agent, Stephanou was not rushing to apply for any of the poorly maintained, often dirty apartments she toured, let alone bid on them. Then, one Friday night, she saw an apartment — the apartment — pop up on Zillow. She contacted the listing agent immediately.

The agent, Scott Haines, responded, telling her about the tour scheduled the next morning. There is a lot of interest, Haines said, so make sure to arrive on time. Saturday morning, Stephanou and her partner arrived right at the scheduled time only to see “12 people with different brokers walking through the apartment.”

As soon as Stephanou stepped into the apartment with Haines, she knew she wanted to apply.

“He gave us the information and told us to run home and apply,” she said. “So that's what we did. We shuffled home really quickly, got all the paperwork done in a frenzy, and then in the span of just a few hours, he was able to say that our application was approved.”

Then came the bid.

He just called. He received an application along with ours and they’re offering $3,500, $100 more than the asking price. He prefers to go with you, but wanted to see if you’ll take it for $3,500.

Thanks for the transparency. If we do $3,500 would that definitely include the parking spot? We’re happy to match that offer.

“Parking is $100 [extra] per month. I would do two tandem spots for $150 a month. Pet fee is $50 per month”

Stephanou called Haines: “Are you bullsh---ing us? Did somebody really put [a bid] on an application?”

“It's pretty common,” Haines told her.

Reluctantly, Stephanou and her partner agreed to match the other applicant’s offer. The one-bedroom, already listed for $3,400, was about to get even more expensive.

All in, they paid $250 over the asking price, with a $100 bid, a $100 parking spot, and a $50 pet fee. Over their 12-month lease, that equates to $3,000 in unexpected expenses.

“I sympathize with renters and give them a lot of credit for putting up with the rental market, but what can be done?” Haines said in an email. “It's simply capitalism. Money talks.”

A costly recovery

Real estate agents point to a variety of factors behind the issue, including rising interest rates that are forcing would-be home buyers to remain in the rental market, the return-to-office push by employers, and a vacancy rate below 1% across Greater Boston.

devin michelle bunten, an assistant professor in the Department of Urban Studies and Planning at MIT who asked for her name to not be capitalized, said housing shortages, whether in sales or rentals, are at the root of hyper-competitive markets like Boston’s.

Boston’s vacancy rate hit a multi-year high of nearly 8% in Sept. 2020, but the number of available rentals has rapidly declined across the city, driving the vacancy rate to below pre-pandemic numbers.

The city’s tight market leaves many renters lining up, often literally, for a limited number of units.

One way that higher-income individuals, and low-income renters with roommates, "try to jump the line is by offering above the asking price," bunten said.

The emerging phenomenon is a boon for landlords, some of whom may be using rent bidding to make up for revenue they lost during the state's six-month eviction moratorium back in 2020, said Sarah Doucette, a real estate agent at Rise Realty.

Rather than simply increasing rent prices in unit listings, landlords may use rent bidding as a tool to learn just how much they can charge for an apartment in the current market, bunten said.

Standing out at any cost

Rent bidding is not the only tactic Boston renters are forced to use to try to get an edge in a competitive market. One Cambridge renter said that while she did not bid on the rent price itself, she offered her agent $500 in cash on top of the standard fee to secure an apartment.

A Somerville resident said that, on top of offering an extra $150 a month on the listed rent price, she also created a “rental resume”' for her and her roommates, detailing references, hobbies, and job experience to strengthen their application, at her broker’s suggestion.

Even high-earners like Stephanou and her partner have tried signing longer leases to escape a bidding war.

“The whole experience just made us feel really fortunate that we have that type of income to pay for a place like this — as well as really discouraged about the housing market,” Stephanou said. “I don't know how people can afford to live here who don't have high-paying jobs. I don't understand how families or low-income families do it.”

An academic problem

Moritz Proell, a third-year undergraduate student, and his three roommates did not expect to pay over the asking price when they were apartment shopping earlier this year.

“It’s not really common that you would bid for a rental apartment, so, we were very surprised,” Proell said.

Early in their search, an agent encouraged Proell and his roommates to bid above the asking price on an apartment in Fenway–Kenmore. After offering $200 on top of the $5,200 list price for a four-bedroom unit, another applicant outbid them. The agent asked Proell and his teammates whether they wanted to increase the bid again, but they decided it was too much for them.

The group soon found a four-bedroom unit in Mission Hill, but it was attracting interest from many other students. Determined to secure the apartment, Proell and his roommates offered $400 over the $4,500 asking price. It worked.

“There was no second round of bidding,” Proell said. “We substantially outbid, I think, most of the competition.”

Proell and most of his roommates get financial support from their parents, he said. “Otherwise, we would be unable to afford moving off campus.”

Ranjita Singh-Ortiz, a partner and broker at Cambridge Premier Realty, said some undergraduates like Proell may get financial help from their parents, but many graduate students who participate in rent bidding are taking on extra loan debt to secure an apartment.

Students and young professionals are often more willing to bid on apartments than other renters, but the practice is often prompted by landlords, Singh-Ortiz said.

Singh-Ortiz said the landlords of several clients she helped asked whether they would be willing to increase their offer — even after their application was approved and they had signed the lease.

“That happens a lot,” she said. “It kind of boggles my mind, because, at that stage in a deal, … the property was off the market. It’s considered a done deal — but it wasn't.”

The squeeze from rent bidding is maxing out some renters financially, Singh-Ortiz said.

It’s also forcing others out of neighborhoods entirely.

The rent eats first

Neighborhoods with large Black and Latino populations like Roxbury and Dorchester have experienced some of the most severe rent bidding in Greater Boston. Bidding wars don’t pop up as frequently in these neighborhoods compared with the rest of the city, but when they do, renters end up paying 7% to 8% above the list price on average — amounting to thousands of dollars a year in additional costs.

For Black and Latino residents, who are already disproportionally rent-burdened, keeping up may push them even closer to the brink.

“Psychologically, they’re destroying us,” Lucia Guardado said through a translator, a housing advocate who works with City Life/Vida Urbana to educate renters about their rights. To keep up with the rent at her Chelsea apartment, Guardado leaves for work at 4 a.m., returning home on public transportation 15 hours later at 7 p.m.

Rent shapes nearly every aspect of life for many people in Guardado’s community.

“We have to sacrifice our food intake. We cannot go to a restaurant for a meal,” she said. “We cannot spend more time with the family because we have to work more to pay for the rent.”

Guardado said her landlord has shown her apartment multiple times, even though she is not leaving the unit. “If we pay, let's say, $3,000 and the other people offer $3,300, they prefer to rent it to the other people,” she said. “Then we are part of a bidding war.”

Some reports have indicated that the population of Black Bostonians has declined because of rising rental costs, but more recent research suggests that Black and Afro-Latino residents are actually increasing in number in the Greater Boston area.

Even in the face of severe rent burden, Guardado said she and others in her community don’t have any better options.

“We don't qualify for those condominiums and those housing units that they bring to our communities,” Guardado said. “It’s not a matter of not wanting to leave; it’s that we don't have anywhere to go. That's the difference. We don't have any choice.”

The regulatory landscape

Real estate agents are not prohibited from participating in rent bidding, according to the state Board of Registration of Real Estate Brokers and Salespersons.

Some brokerages have internal policies that prohibit bidding wars, but, for such policies to work, landlords have to offer an "exclusive listing," in which they choose to list with only one agency. But, it’s unknown how common such exclusive listings are.

Even for Scott Haines — whose brokerage’s internal policy does not allow for rent bidding — the majority of rentals he works with are “open,” meaning that multiple brokerages have access to advertise and rent out the apartment.

“When my clients are interested in an apartment that's exclusive to another brokerage, especially if there's an open house, I tell them that there are apartments out there that rent for a price higher than asking,” Hanes said in an email. “I'm the source of the information, and it's up to them to make a decision.”

Under the current regulatory landscape, whether or not a bidding war happens is ultimately up to the landlord, according to Doucette, a local real estate agent.

The lack of regulation is unsurprising given the phenomenon’s nascent state in Boston, but agents like Doucette would like to see legislation passed that bans the practice.

“The rents are one price advertised, and that's really what it should be,” Doucette said. “You know, you have somebody with a certain budget, and then you have to really go into it telling them it's going to be $100 to $200 over.”

Exactly what that regulation would look like for Boston is unclear, but laws in Australia offer some potential approaches.

The Australian state of Queensland led the country in addressing rent bidding, passing legislation in 2008 that barred landlords and agents from soliciting bids from applicants. Other states have followed suit over the past few years, with Victoria, South Australia, and New South Wales all passing their own bans on the practice.

The exact legislation differs from state to state, but most bans in the country only prohibit soliciting bids, not accepting them. In practice, that means rent bidding is still legal when applicants make unprompted offers above the asking price.

Chris Martin, a senior research fellow at City Futures Research Centre in New South Wales, said regulating the solicitation of bids is “absolutely a good move,” but where governments go from there is still a topic of debate.

The prohibition problem

At the heart of that debate is the same tension that defines all prohibition arguments — outlaw a practice in its entirety and risk creating an illicit market or legalize and regulate the practice.

In September, Victoria’s state government opted for the former approach, announcing its plan to ban fully the solicitation and acceptance of rental bids. Housing advocates welcomed the move, but experts like Martin have “real doubts about the practicality” of that approach.

“I don't think regulators have a lot of insight into what happens between the application process and the signing of a lease,” Martin said. “That sort of regulatory surveillance is something they don't do, and it would be quite a task for them to do it, I think.”

In neighboring New South Wales, Guardian Australia found that since the state passed its ban on the solicitation of rent bids last year, the government had not issued a single fine to agents or landlords, despite handing out hundreds of warnings. Whether Victoria can take on such a regulatory undertaking remains to be seen.

Real estate groups have warned that a total ban could also lead to jacked-up list prices, where instead of receiving bids on a modest list price, landlords could start the unit at a high price and slowly lower it until it is rented. But, Victoria’s premier pushed back against such “doomsday predictions.”

In New South Wales, the bidding ban has led to the rise of “secret rent bidding,” in which some applicants have continued to make offers above the asking price on apartments, without any solicitation from the agent or landlord. The problem is exacerbated by the fact that agents are not allowed to disclose to other applicants that a bid has been made on the unit, leading some applicants to make costly offers for fear that someone else will outbid them.

To address these secret bidding wars, the state government announced this past May a proposal to formalize the rent bidding process. Under the proposal, agents would have to keep a record of any bids made on a unit and report any bids to other applicants, allowing them time to make a counteroffer if they wish. The news was met with criticism from housing advocacy groups, who said the proposal would ultimately encourage rent bidding.

Martin, who was in the minority of housing experts who supported the proposal, said the plan would — along with eliminating secret rent bidding — potentially discourage parties from participating in it in the first place.

“If an applicant thought that the higher bid they were making wasn't going to be secret and that it could initiate a rent bidding situation, they'd probably be less inclined to do it,” Martin said. “So, even as it formalizes rent bidding, it will probably be mildly discouraging.”

At the risk of the government’s broader housing legislation not passing, the proposal was ultimately dropped from the bill. Despite his own support for the proposal, Martin said its loss is not particularly significant in the broader picture of addressing New South Wales’s rental market.

Without more impactful reform alongside a rent bidding ban, such legislation is simply “Band-Aid law reform,” he said.

The new rules

As Boston's supply of housing trails behind demand, rent bidding will probably continue.

Housing shortages turn the rental market into a game of musical chairs, bunten said. Historically, the people who were able to secure a seat, so to speak, were those who submitted their applications the quickest, assuming they met the landlord's qualifications.

Rent bidding is changing that.

Now some renters are simply paying to get a seat — and taking on a higher rent burden in doing so. Others may not get a seat at all.

"In any case, there's a bunch of folks who are not gonna be able to sit down and who are not going to be able to find housing in Boston," bunten said.