Last year, my friends decided to move from their small East Los Angeles apartment. When they applied for a more spacious two-bedroom near Highland Park, the property management company told them another applicant was offering $1,000 above the listed price. Were they willing to offer more?
My friends felt duped. They moved on and found a different apartment listed with a one-year lease. After applying, they were strong-armed into signing a two-year lease.
There are numerous tales of rental bidding wars in highly competitive markets like Los Angeles, New York City and Austin, Texas. Once the economy picked up post-COVID lockdowns in 2022, there was a growing pool of renter applications, and prospective tenants needed to boost their odds of scoring a unit. In areas where demand is still higher than supply, the outbidding hasn't yet let up.
Though not all properties are embroiled in rental wars, such smackdowns are becoming increasingly common for highly sought-after properties in great locations, according to Blake Stargel, a Compass realtor based in West Hollywood.
"When renters face competition from multiple applicants, there's a strong likelihood that they will increase their offer to secure the rental, especially if they are under a time constraint or have been consistently outbid in the past," Stargel said.
Renting battles are closely linked to unaffordable housing market conditions. High mortgage rates, surging home prices and scarce inventory are pushing many prospective homebuyers to the sidelines, motivating them to rent instead, said Stargel. As rent prices have surged over the past five years, many households have been priced out of specific neighborhoods and forced to choose between location, square footage and other amenities.
Until you sign a rental agreement, anything goes: Landlords can try to get more money or longer leases than initially listed, and property owners and managers could act unfairly. But that doesn't mean you're completely powerless.
Read more: Should You Rent or Buy a Home?
How to increase your chances of winning a rental war
If you live in a highly competitive housing market and find yourself in a rental bidding war, here are some tips on increasing the odds of getting your preferred place:
✔️ Come in prepared
Be prepared to apply for the rental by having your financial details, valid forms of identification and necessary documents to apply for the apartment. If your credit is frozen, unfreeze it with the credit bureaus so the property manager can run a credit check. Make sure you have enough money in the bank for the deposit, the first and last month's rent and the application fee. Some landlords also like to see that you have sufficient savings or an emergency fund in case of a job loss or financial crisis. If you have thin credit or limited funds, get a lease guarantor -- someone who legally commits to paying the rent if you can't.
✔️ Go above and beyond
Property managers often evaluate tenants based on their rental histories. Make sure your current or former landlord is easy to reach for a referral, or obtain a written letter ahead of time to demonstrate that you're responsible and always pay your rent on time. Indicate your willingness to obtain additional recommendations from employers and professional acquaintances. If you know the landlord has certain preferences (i.e., long-term, no pets), make sure to highlight those qualifications. You might be able to offer other incentives, such as maintaining the garden or installing security cameras.
✔️ Act fast
If you love a property and know multiple applicants want the same unit, submit an application immediately. Show your enthusiasm and make a strong appeal up front, even if you're not the highest bidder. If you hesitate, the landlord might think you're not serious and could go with another tenant. Having all your financial paperwork and referral letters in order can help you get to the top of the list.
✔️ Consider working with a broker
To help you secure the rental of your choice, you might want to work with a broker who understands the nuances of the market, said Joseph Castillo, a licensed real estate agent with Compass based in New York. Brokers often have connections with property owners and might be able to help negotiate rental agreement terms, including the price.
Make sure to always review the particular rental laws related to the property or jurisdiction. If you live in a place that has rent control, a landlord can't charge an exorbitant amount. For instance, in New York City, rent regulation limits what a landlord can charge on certain units, which prevents outbidding by tenants, said Ami Shah, the deputy director of citywide housing at Legal Services NYC.
Your financial health is important
If you're competing in a hot rental market, don't agree to pay more than you can reasonably afford. However, if you're comfortable going above budget for a property you don't want to miss out on, go for it. Just be aware that if your bid is accepted, you'll have a new rent ceiling, said Castillo. "When it comes time to renew your lease, the increase will be based on this higher amount," he said.
Rental bidding wars are a reality in an unaffordable housing market. The most you can do is to be prepared, know your rights and stay within your budget. While it's always good to get a leg up on the competition, the goal is to find a rental unit that works for you, not one that will cause more hardship in the long run.
