Fake Listing to Test Rental Price?

Question

On the last podcast, the guest said he created a fake listing for a rental he was thinking of purchasing, essentially to test the waters to see if his monthly rate estimate was correct or not. Is this something others have tried? I'm planning to rent out my house once we move out, but I want to know ahead of time how much I can rent it for. Is there anything unethical about creating a fake ad for my own house just to see if I can get a bead on what it will rent for when I do in fact rent it out?

Patrick M. · Answer

I really don't see the difficulty in learning your market and keeping a regular eye on it to see where it is. I find it one of the more fun parts of being a landlord. I know down to a block what makes one area or one property more or less advantageous to another. I compare amenities and features and it gives me ideas in which directions to move.

It seems more and more of us are relying on websites that are running an algorithm that I believe, is less qualified then our own homework.

As for running a fake ad, while I could speculate on problems that could rear themselves- the bottom line is that any of us with a nice unit to rent can tell you that we get a lot of attention, viewings, etc. that don't materialize. Seems to me your time would be better spent learning your market.

Also as an aside- I am in a market with many "professional" landlords. One building has had some nice new units up for a couple months every now and then dropping their price ever so slightly. They have much higher over head than me and many more mouths must be fed out of that building. I can't afford that. I just listed a unit just below their figures- and they immediately dropped again. So a listing can have a real impact on the market- fake or not.

Jenifer Kynor · Answer

I think using comparable properties and rental estimate reports will give you the same information with only half of the work.

Rental estimate reports use your zip code, bed/bath number and give you a starting point of what others in that area are renting there properties for. You can adjust it from there.

Russell Brazil · Answer

I use to do it all the time...but now I pretty much know all the aspects of my market, so I dont need to. I use to post a few ads at different price points to test the market to see where the top or sweet spots were. 1-3 replies at a high price was probably top of the market, a healthy 5-10 replies were usually the sweet spot.

Anthony Dooley · Answer

Just look at what similar homes in your area are renting for. It's not that complicated. I will go ahead and tell you that your residence will not cash flow as a rental, so you should look at selling it, especially if you have a lot of equity. Then use the equity to buy an actual rental property at a discount that will cash flow much better. Just saying.

Jim Goebel · Answer

@John Woodington

Hi John

My wife and I have had these discussions at length.

I don't have any issues with doing this.

Here's a few more possibly related questions:

When you don't know the 'fair market price' is it fair to offer a house for sale or a place for rent, only to later increase the price when frequency of responses support a higher price? I'd say YES , this is business. Do you want pricing authority or not?

I'm of the opinion that there's not a ton of morally black and white issues.

Pricing is one of those things that is fluid and needs some feedback to confirm fair market price.

I don't stress it - from both my time going out to do research on what places are worth on the front end, I assume that people shopping know that not every place they reach out on is a winner.

Granted, there needs to be enough 'real' listings and non spam etc there to make a zillow or other place to advertise worthwhile to draw users. However, my position is that sorting that question out and ensuring quality of listings is a problem for those aggregators, not for us, the investors of the world that need to get the most out of our large investments.

Fake Listing to Test Rental Price?

Fake Listing to Test Rental Price?

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