The city’s largest residential firm just endorsed StreetEasy’s controversial new rental program in the most emphatic way possible – with its checkbook.
Last month, the Zillow-owned listings platform said it would begin charging agents a $3 daily fee for each rental listing. Now, Douglas Elliman plans to cover those costs for its agents through their advertising budgets, company COO Scott Durkin told The Real Deal, potentially giving the firm an edge in recruiting rental agents.
StreetEasy’s paid initiative is set to kick off on July 18, and has upset many of New York’s biggest brokerages. Elliman’s rivals, such as the Corcoran Group, Town Residential, Halstead Property and Brown Harris Stevens, moved to syndicate their listings exclusively through the Real Estate Board of New York’s listings service in a bid to win back leverage against StreetEasy. The firms have criticized the aggregator for its monetization plays, saying the rental fee feels like “a tax on agents.”
From August 1, Elliman agents can use their ad budgets to pay the fee. They won’t have to formally sign up for the StreetEasy program, since StreetEasy will bill Elliman directly.
With between 1,300 and 1,500 exclusive listings a day on StreetEasy, the program could cost the firm $1.6 million annually, according to a back-of-the-napkin analysis. The funds would come out of agents’ existing ad budgets, leaving them less money for other marketing expenditures.
Due to fewer new development closings, Elliman’s profits dipped to just $100,000 during the first quarter of 2017, down from $7.1 million during the same period last year. Still, Durkin is confident that backing its agents on the rental initiative would pay off.
“We felt that it would be a disservice to agents and clients if we didn’t subscribe to their new rental listing program,” Durkin said. “StreetEasy is our biggest driver of traffic, other than our own site, to our listings. There was no way we were going to let that feed be interrupted. It was a smart business decision.”
He said it will also force Elliman to manage its rental inventory more wisely. He asked agents to be diligent in updating listings as soon as they were rented in order to avoid unnecessary costs.
“It sounds like a lot [of money] but it will also encourage us to manage it better,” he said. “The time clock is ticking– each day you have it up there you’re incurring the cost.”
As for the REBNY RLS syndication deal, Elliman is still the lone major firm in the city not to get on board.
The company will continue to distribute its listings via REBNY’s RLS, but will also independently send its listings to aggregators such as StreetEasy, Durkin said.
StreetEasy disclosed the new rental fee to agents last month, saying their listings would be removed from the site if they didn’t opt into the paid program.
The fee for agents will “enable us to continue to fuel innovation, technology and resources to support a robust rental marketplace,” said StreetEasy General Manager Susan Daimler. Over the past two years, the number of renters who use StreetEasy to find an apartment has increased 70 percent, according to the firm. Daimler has said StreetEasy will refuse to work with the RLS.
The industry reacted negatively to the fee.
At the time, Jordan Sachs of Bold New York said the cost of the program would add up for rental agents.
“I think what StreetEasy needs to be smarter about is understanding that without firms like myself that are putting up a large amount of rental listings, we’ll start taking those off StreetEasy and diminish the experience for the user,” he said.
This story was updated to emphasize that the cost for StreetEasy’s rental program will come out of existing ad budgets. Elliman will not have to dish out further funds.