Just as Internet auctions of homes for sale have met with great acceptance in the Boston area recently, two Internet companies have proven that auctioning off rental units in the Hub can be equally successful.

Boston-based BostonApartments.com, one of the city’s leading apartment search Internet sites, and Connecticut-based Qrent.com, which is working to bring the apartment rental auction platform to the area, recently announced that the area’s first-ever Internet rental auction was completed earlier this month. Company officials called it a success.

“It went really well,” said Matthew Smith, cofounder and director of Qrent.com.

The test auction came after months of working on perfecting the auction process, teaming up with a local apartment site, and finding a property owner willing to go along with the new concept. The response, Smith said, exceeded his expectations.

“We had 75 people that had registered to bid on the apartment,” he said. “We were expecting 10. When you compare that to the number of people that, say, take part in an eBay auction, you think, ‘Wow.'”

Within 48 hours of the online auction being advertised on BostonApartments.com, Qrent.-com’s local partner, the site was visited by hundreds of users, Smith reported. By the close of the auction, more than 3,600 users had visited the auction site.

“A lot of people who visited the site weren’t from Massachusetts,” Smith noted. “I think we’ve really tapped into something for people who are looking to relocate. Most people who get a job here find they have to live in a hotel for a few weeks and take time off from their new job to find a place to live. Now they can get their apartment through the auction before they even get here.”

Site visitors came from places as far away as Italy and the United Arab Emirates.

Officials at Qrent.com were equally pleased with how smoothly the process ran. “The site was basically self-running,” Smith said. “We thought we would get a lot of questions e-mailed to us. It was a test site, so it was a little half-baked. We put our contact info on the site in case people had any questions or problems, and we only got one e-mail.”

That, Smith said, shows that people in the Boston area are for the most part comfortable with using the Internet to make transactions even as big as securing a place to live.

“People buy holidays online and they buy groceries online. This only seems logical,” he said. “We’re just going down a path that has already been trotted down by other products and services.”

The test apartment for the launch of the Boston online rental auction was located just outside the city along Route 1A in Revere. Web users bid on unit 109 in the Point of Pines luxury apartment building at 190 North Shore Road.

Initially, construction on the 72-unit building was stopped in 1988 by order of the Attorney General because the original developer was building on an old railroad right-of-way without clearance from the Massachusetts Executive Office of Transportation and Construction. Today, with proper permits in place and construction complete, the building houses units that boast Pergo wood flooring in the family room and Italian tile in the kitchens and baths, along with balconies and washers and dryers in each unit.

Eric Boyer, owner and webmaster of BostonApartments.com, said he had worked with the property manager in the past and had little trouble convincing him to test the waters of an Internet apartment auction. “It took one phone call,” he said.

Smith would not disclose what unit 109 finally rented for, nor would he say what the reserve price – the landlord’s threshold below which he need not accept a bid – on the auction was. He would only say that the reserve price had been met. According to information posted on BostonApartments.com, two-bedroom apartments in the building start renting at about $1,200 per month.

“Boston is a very connected city,” Boyer said. “From the monthly traffic I get to my Web site alone, I would say the majority of people looking for apartments in Boston now utilize the Internet. When we put the pilot auction up on the Web site, you could see from the increase in traffic and participation that there was certainly a lot of interest for this new renting model.”

Ruthless People
Smith said Qrent.com plans on continuing its relationship with Boston.com, and has been contacted by companies in Sydney and the United Kingdom to launch similar ventures abroad. In the United States, Qrent.com is looking to bring its model to the Washington, D.C., and Portland, Ore., areas, as well as to sites in the Midwest.

In Boston, Smith said companies have already expressed an interest in marketing their apartments through the auction process. “We cleared the first hurdle,” he said. “As soon as [the auction] closed, people called from other companies saying ‘Let’s do it.'”

“I was really surprised,” Boyer said. “People started bidding on day one, and we did no advance notice or [marketing]. We just put a little banner ad up on the site.”

As with other Internet auction sites, Qrent.com will derive its income from collecting a fee to set up an apartment auction. Smith said the fee price has not been determined, nor has it been determined whether the landlord or tenant will absorb the cost of the fee. “In a hot market like New York City, the tenant pays all fees associated with looking for an apartment, but in lower-demand markets the owner might decide to pay the fees,” he said.

Although the test was successful, Smith said there are a few changes the company plans on making for future apartment auctions.

First, he said the duration of the auction would be shortened. The test auction went on for a month. “Bidding took place all month, but the first 72 hours was when we had the biggest impact, then things slowed down a bit, then the bidding picked up at the very end.

“We could probably reduce the length of the auction to a week and provide quick turnaround, especially in this hot market,” he continued.

Boyer termed the bidding “active” as well. “Some people were ruthless bidding against each other,” he said. “It was like watching a horse race.”

He added that, for the most part, he has received positive responses concerning the auction from people with whom he does business. “There have been a lot of good responses. Some brokers said they were fearful that something like this might put them out of business, but I don’t think that’s a problem.

“I don’t see this killing their business any more than places like eRealty.com or 1Roof Realty.com that offer discounted services,” he continued. “Besides, most of the people that do this were probably looking for no-fee apartments anyway.

“On the Internet, to go from an auction for buying a pair of slippers to determining how much rent you’re going to pay shows what a crazy market this is,” he said.

Local Online Rental Auction Draws International Interest

by Banker & Tradesman time to read: 5 min
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