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Real estate agents are telling prospective renters they'll have a better chance if they offer more. Here's why that's … – ABC News



Sophie* and her partner are relieved to have a roof over their heads after a nightmare experience looking for a rental in inner Brisbane.

With their lease coming to an end, Sophie turned all her attention to finding a new place.

A two-bedroom unit within 10 kilometres to Brisbane’s CBD was the goal — somewhere close to both their workplaces.


Struggling to find a place within their price range in decent condition, Sophie stopped working in her job as an e-commerce manager to focus her days on looking for a place to live.

For two months she would wake up, check websites for new listings, contact agents, get on inspection lists, schedule inspections and, from 11am to 6pm drive around to inspections.

What she encountered was shocking.

“It was like a nightmare that we had to live every day,” she said.

For rent
In Queensland it’s legal for tenants to offer more, but illegal for agents to ask. (ABC News: Nic MacBean)

Most of all, Sophie was disheartened by the more than 10 agents who encouraged her to offer more for the property.

Some were more blatant than others, though all of them would only address Sophie when they were not within earshot of other prospective tenants.

Sophie said one of the more popular ways of encouraging bids was for agents to say “you could offer what you think the property is worth”.

Others were more up front, saying “if you offer more you’ll get the place” or simply “you can offer more”.

A hill with many houses on it.
Some agents told Sophie “you can offer what you think the property is worth”.(ABC News: Christopher Gillette)

Sophie said she never did bid higher because she feared it would normalise the behaviour, and make it more difficult for others to secure rentals.

“The best advice that I can give to people is just to try and stay positive,” she said.

“Looking for a house in Brisbane right now beats you down to your last reserves.”

The Rental Affordability Index (RAI), published by National Shelter, Community Sector Banking, Brotherhood St Laurence and SGS Economics & Planning, is a price index for rental markets.

Its most recent report found Brisbane to now be the second-least affordable capital city for rents, which have risen over 17 per cent in the 12 months to June 2022.

The rental squeeze is also borne out in figures published by the Real Estate Institute Queensland (REIQ).

The statewide vacancy rate was sitting at 0.8 per cent at the close of last year, well below the 2.6 per cent figure the institute considers a healthy market.

Rental affordability has declined in the past two years. The average-income rental household now pays 27 per cent of their wage if renting at the median rate.

Rent bidding is a murky practice

In Queensland the Residential Tenancies and Rooming Accommodation Act governs the relationship between tenants and lessors, as well as the way property managers conduct tenancy relationships.

Under the law, rent bidding is prohibited. 

But REIQ CEO Antonia Mercorella said it could end up being a bit of a grey area.

Antonia seated, smiling in a white suit
REIQ CEO Antonia Mercorella.(Supplied: Antonia Mercorella)

In Queensland, similar to New South Wales, tenants are able to offer more than the advertised price.

But the rental must be advertised at a fixed price, and agents are not able to advertise with a rent range, conduct a rental auction or proactively tell rental applicants to offer over the advertised rental price and encourage them to outbid each other.

“The law doesn’t prevent a tenant from offering more … where it gets tricky is where certain kinds of behaviour is encouraging rent bidding,” Ms Mercorella said.

Tenants trying to gazump each other is behaviour Godwin Beach property owner Annie Pastars has seen first hand.

She rents a self-contained two-bedroom studio at the rear of her house, and is “inundated” by offers when she lists it.

“I’ve been offered up to $200 more a week, which I wouldn’t accept because I think its unethical and it’s just adding to the whole situation,” she said.

A woman standing on the front stairs of a home.
Godwin Beach home owner Annie Pastars.(ABC News: Jake Lapham)

Ms Mercorella conceded not all landlords were so principled.

“If an owner or a property manager were to start encouraging tenants to apply and offer above the asking price, potentially, then that may constitute a breach of the act,” she said.

“We’ve been encouraging the property management sector to act with the appropriate level of emotional intelligence, professionalism and showing care, and obviously understanding how stressful the current environment is for tenants.”

What can you do if an agent encourages you to bid?

There are avenues renters can take in response to an agent soliciting rental bids, even though it may not be practical in helping a tenant secure a rental.

A renter could report the potential breach to the Residential Tenancies Authority, which can take action against the offending party.

A tenant could also complain to the Office of Fair Trading, which is the licensing authority for real estate agents.

And there is always the (more costly) option of seeking independent legal advice.

Ms Mercorella said legislative guidelines could help clear up what exactly constitutes rental bidding.

She said it would be hard to determine whether the law needed strengthening to match states like Victoria, where tenants are prohibited from offering more than the advertised price.

“It’s always a delicate balancing act, making sure that the laws provide adequate protection for tenants and also that the laws allow a certain amount of flexibility and freedom to property owners to ensure that they’re prepared to keep providing private rental.”

A woman with glasses stands with arms folded.
Greens MP for South Brisbane, Amy McMahon. (ABC News: Jake Lapham)

In 2021, Greens’ MP Amy McMahon introduced legislation that would, among other reforms, ban rent bidding.

The Queensland government’s response came a month later in Housing Legislation Amendment Bill, which failed to include it.

“I don’t think the Queensland government have any idea about what everyday Queenslanders are going through,” she said.

“What we need to see in terms of rent bidding is not just a ban on real estate agents soliciting increasing rent, but for property investors and real estate agents to not be able to accept higher rents than what’s advertised.”

Housing Minister Leeanne Enoch was contacted for comment.

Where the law stands on rent bidding in Australia




Legal for tenants to offer more than the advertised price but illegal for agents to ask renters to bid higher.


Legal for tenants to offer more than the advertised price but illegal for agents to ask renters to bid higher.


Illegal for tenants to offer more than the advertised price and illegal for agents to ask renters to bid higher.


Illegal for tenants to offer more than the advertised price and illegal for agents to ask renters to bid higher.


Legal, with the territory government considering rental reforms to prohibit rent bidding, though tenants will still be allowed to offer rental amounts above the advertised price.

South Australia

Legal, with the state government considering reforms to the state’s residential tenancies laws, including a crackdown on the practice of rend bidding.

Western Australia


Northern Territory


*Name has been changed to protect privacy.

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Commercial real estate is in trouble. A banking crisis will make it worse.



If there is anything commercial real estate owners don’t need right now, it’s a banking crisis.

Big owners of property around the country were already under pressure from the Federal Reserve’s aggressive campaign to raise interest rates, which raised borrowing costs and lowered building values. They also had lots of space still sitting empty in city centers as a result of more hybrid and remote work arrangements resulting from the pandemic.

Now they face the prospect that beleaguered banks, especially smaller ones, could get more aggressive with lending arrangements, giving landlords even less room to breathe as they try to refinance a mountain of loans coming due. This year, roughly $270 billion in commercial mortgages held by banks are set to expire, according to Trepp, and $1.4 trillion over the next five years.

“There were already liquidity issues. There were fewer deals getting done,” Xander Snyder, First American senior commercial real estate economist, told Yahoo Finance in an interview. “Access to capital was getting scarcer, and this banking crisis is almost certainly gonna compound that.”


Most of the banks that hold commercial real estate mortgages are small to mid-sized institutions that are experiencing the most pressure during the current crisis, which began this month with the high-profile failures of regional lenders Silicon Valley Bank and Signature Bank. The pressure on regional banks continued Friday, stoked by intensifying investor pressure on German lender Deutsche Bank as the cost to insure against default on its debt soared.

Smaller banks began ramping up their exposure to commercial real estate in the aftermath of the 2008 financial crisis, which was triggered by a housing bust, and stuck with it even after the pandemic emptied out many city-center properties and other forms of borrowing provided by commercial mortgage backed securities and life insurers dried up.

Signature was among the banks that made some of these bets, becoming an aggressive lender in New York City to office towers and multifamily properties. By the end of 2022 it had amassed nearly $36 billion in commercial real estate loans, half of which were to apartments. That portfolio comprised nearly one-third of its $110 billion in assets.

More than 80% of all commercial real estate loans are now held by banks with fewer than $250 billion in assets, according to a report by Goldman Sachs economists Manuel Abecasis and David Mericle. These loans now comprise the highest percentage of industry loan portfolios in 13 years, according to John Velis of BNY Mellon.

“There’s a lot of commercial real estate that’s been financed over the last few years,” BlackRock Global Fixed Income CIO Rick Rieder told Yahoo Finance on Wednesday. “When you raise rates this quickly, the interest-sensitive parts of the economy, and particularly where there’s financing or leverage attached to it, then that’s where you create stress. That’s not going away tomorrow.” Commercial real estate, he added, doesn’t represent the same type of systematic risk to the economy as housing did during the 2008 financial crisis but there are “isolated pockets that can lead to contagion risk.”

Two early warnings of the danger that rising interest rates pose to commercial real estate came last month. Giant landlord Columbia Property Trust defaulted on $1.7 billion in floating-rate loans tied to seven buildings in New York, San Francisco, Boston and Jersey City, N.J. That followed a default by giant money manager Brookfield Asset Management on more than $750 million in debt backing two 52-story towers in Los Angeles.

. Leaders of the Senate's banking committee on Thursday, March 23, warned former chief executive officers at Silicon Valley Bank and Signature Bank that they expect them to testify before the panel, saying in a letter to each: “you must answer for the bank's downfall.” (AP Photo/Seth Wenig, File). Leaders of the Senate's banking committee on Thursday, March 23, warned former chief executive officers at Silicon Valley Bank and Signature Bank that they expect them to testify before the panel, saying in a letter to each: “you must answer for the bank's downfall.” (AP Photo/Seth Wenig, File)
Signature Bank was a big commercial real estate lender in New York City. It was seized by regulators earlier this month. (AP Photo/Seth Wenig, File)

Forced sales of more trophy buildings at large discounts are expected in the coming years as owners struggle to refinance at affordable rates. “Sellers will want the price that everyone was getting [back] in December 2021, and buyers are kind of even afraid to buy something right now cause they don’t even know what the price of these buildings are,” Snyder said.

Banks were already squeezing terms on commercial real estate loans before this month’s chaos. According to the Federal Reserve’s latest senior loan officer opinion survey, nearly 60 percent of banks reported tighter lending standards in January for nonresidential and multifamily property loans.

“Bank lending standards had already tightened significantly over the last few quarters to levels previously unseen outside of recessions, presumably because many bank risk divisions shared the recession fears that have been widespread in financial markets,” according to a note last week from Goldman Sachs. More tightening of lending standards expected as a result of new bank stresses could slow economic growth this year, Goldman said.

Federal Reserve Board Chair Jerome Powell arrives to speak at a news conference at the Federal Reserve, Wednesday, March 22, 2023, in Washington. (AP Photo/Alex Brandon)Federal Reserve Board Chair Jerome Powell arrives to speak at a news conference at the Federal Reserve, Wednesday, March 22, 2023, in Washington. (AP Photo/Alex Brandon)
Federal Reserve Board Chair Jerome Powell arrives at a news conference on Wednesday in Washington. (AP Photo/Alex Brandon)

Fed chair Jerome Powell agreed with that view at a Wednesday press conference following the announcement of another rate hike. He said he also anticipates a tightening of credit conditions as banks pull back, which will help cool the economy. “We’re thinking about that as effectively doing the same things that rate hikes do,” he said.

But he said regional banks with high amounts of commercial estate loans were not likely to become the next Silicon Valley Bank.

“We’re well aware of the concentrations people have in commercial real estate,” he said. “I really don’t think it’s comparable to this. The banking system is strong. It is sound. It is resilient. It’s well-capitalized.”

The larger commercial real estate world is still absorbing the shock of the Fed’s aggressive campaign, according to Marcus & Millichap CEO Hessam Nadji. The effects may not pose a systemic risk, he added, but they will add to the industry’s many challenges.

“Commercial real estate has been through a pandemic, very rapid recovery, then massive tightening of financial conditions unlike anything we’ve seen in modern history,” he told Yahoo Finance Thursday. “The last three years have moved the industry through a significant rollercoaster.”

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv


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The real estate market is rallying but why?



A few weeks back, I went out on a limb and said that all signs were pointing to the fact the real estate market was waking back up again.

I spoke of houses selling in multiple offers a day or two after going to market. Colleagues around the water cooler who were telling me of clients coming back in out of the wind, ready to think about real estate again.

Buyers were showing a willingness to come in off the sidelines, I said. Could it be that they think the worst is now over?

Well, turns out that theory of mine wasn’t just born of “hopium” — incidentally, my new, most favourite word to come out of the past few months of real estate downtime.

No, no. Hopium be damned — the real estate market is alive again.

By Wednesday of last week — the first days post-March break, which is unofficially the start of the spring market — I personally witnessed four midtown houses go within hours of being listed.

What might we glean from that?

Could it be that people are feeling optimistic?

Clearly consumer sentiment has improved. Though if a year ago someone had told me there could be excitement at seeing rates creep just below 5%, I would have told them to give their head a shake.

But those rates have clearly started to normalize.

Assisted by the fact that markets are evidently now considering the banking meltdown south of the border may serve to bring about the great pivot sooner than late-2024 as consensus had previously thought.

Even the permabears seem to acknowledge we are witnessing a rally of sorts.

And while it’s hard to know why, the reality is that life will always goes on. The three D’s of real estate — death, divorce and debt — are immune to consumer sentiment. And with record lows in transaction volume, there is without a doubt pent up demand waiting to greet spring.

But this appears to be more than that. This seems to also relate to a belief that the worst is now over and while it has certainly been bumpy, better days lie ahead.

But why is that?


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New York Fed board member warns of commercial real-estate risks



NEW YORK, March 24 (Reuters) – An executive who also serves on the board overseeing the New York Federal Reserve warned on Twitter of potentially systemic problems in the real estate finance market and called on the industry to work with authorities to avoid things getting out of hand.

Noting there is $1.5 trillion in commercial real estate debt set to mature in the next three years, Scott Rechler, who is CEO of RXR, a large property manager and developer, tweeted: “The bulk of this debt was financed when base interest rates were near zero. This debt needs to be refinanced in an environment where rates are higher, values are lower, & in a market with less liquidity.”

Rechler said he’s joined with the Real Estate Roundtable “in calling for a program that provides lenders the leeway and the flexibility from regulators to work with borrowers to develop responsible, constructive refinancing plans.”

“If we fail to act, we risk a systemic crisis with our banking system & particularly the regional banks” which make up over three quarters of real estate lending, which will in turn put pressure on local governments that depend on property taxes to fund their operations, Rechler wrote.


The executive weighed in amid broad concern in markets that aggressive Fed rate hikes aimed at lowering high inflation will also break something in the financial sector, as collateral damage to the core monetary policy mission.

The Fed nearly held off on raising its short-term rate target on Wednesday after the collapse of Silicon Valley Bank and Signature Bank rattled markets. The failure of Silicon Valley Bank was linked to the firm’s trouble in managing its holdings as markets repriced to deal with higher Fed short-term interest rates.

The real-estate sector has also been hard hit by Fed rate rises and commercial real estate has also been hobbled by the shift away from in-office work during the pandemic.

Also weighing in via Twitter, the former leader of the Boston Fed, Eric Rosengren, offered a warning on real estate risks, echoing a long-held concern of his dating back a number of years.

Pointing to big declines in real estate investment indexes, he said “many bank lenders will be pulling back just as leases roll, with high office vacancies and high interest rates. Regional bank shock and troubled offices will be negatively reinforcing.”

Real estate woes are on the Fed’s radar, but leaders believe banks can navigate the challenges.

Speaking at a press conference Wednesday following the Fed’s quarter percentage point rate rise, central bank leader Jerome Powell said “we’re well-aware of the concentrations people have in commercial real estate,” while adding “the banking system is strong, it is sound, it is resilient, it’s well-capitalized,” which he said should limit other financial firms from hitting the trouble that felled SVB.

Rechler serves as what’s called a Class B director on the 12-person panel of private citizens who oversee the New York Fed. That class of director is elected by the private banks of the respective regional Feds to represent the interest of the public. Each of the quasi-private regional Fed banks are also operated under the oversight of the Fed’s Board of Governors in Washington, which is explicitly part of the government.

The boards overseeing each of the regional Fed banks are made up of a mix of bankers, business and non-profit leaders. These boards provide advice in running large organizations and local economic intelligence. Their most visible role is helping regional Fed banks find new presidents, although bankers who serve as directors are by law not part of this process.

Central bank rules say that directors are not involved in bank oversight and regulation activities, which are controlled by the Fed in Washington.

Reporting by Michael S. Derby; Editing by Andrea Ricci

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