- RealStir allows homebuyers to ask sellers -- through their agents -- if they can stay for a few nights to test out listings.
- Agents can pay to advertise on realstir.com.
- Sellers are well-advised to attach sensible terms to their short-term rental offers and learn about local short-term rental regulations.
Imagine Zillow and Airbnb had a baby. That’s RealStir.
The San Diego-based startup not only lets homebuyers search listings and connect with agents, it also allows house hunters to ask sellers for the opportunity to take their homes for a test drive. If sellers agree, buyers can use RealStir to book a short-term stay in a home to get a better sense of whether it’s a good fit.
“It becomes a dual listing. It’s a listing for sale, but it’s also available as a short-term listing,” said CEO Walid Romaya. “We just think it’s a great additional marketing tool to help someone sell their property.”
RealStir may be able capitalize on the increasing popularity of peer-to-peer short-term rentals, a trend driven in large part by the rise of the short-term rental platform Airbnb.
But like Airbnb hosts, sellers thinking about renting their homes out through RealStir would be well-advised to attach sensible terms to their short-term rental offer and learn about local regulations that may restrict short-term rentals.
Sellers can convert their for-sale listing into short-term rentals upon requests from buyers, or even advertise a short-term rental offer on their listings right off the bat. RealStir believes sellers will be willing to tack short-term rental offers onto their listings to drum up more interest in their properties and whet the appetites of prospective buyers.
RealStir, which launched its rental booking platform last week and has raised $3.5 million in seed funding, has dubbed this type of short-term rental offer “Try Before You Buy (TBYB),” a term that it’s trademarked.
RealStir hasn’t processed any short-term rental bookings (it only rolled out TBYB last week) yet, so it’s still far from clear whether buyers and sellers will embrace such exchanges. And it’s worth keeping in mind that we’ll only learn if the concept resonates with consumers if RealStir can grab users away from popular listing portals — no easy task.
How it works
To request a TBYB today, a user clicks the “Try Before You Buy” button on a listing page, creates an account with an email address, and requests the days that they’d like to stay in the home.
RealStir then sends the request to the listing agent, who can forward it to the seller. If the seller is game, she must then claim her listing on RealStir and set the terms of her short-term rental offer.
For now, sellers must offer their home as a short-term rental on RealStir for a minimum of $100 a night. They can require the buyer to pay for short-term rental insurance and hand over a deposit, and may stipulate any other conditions they like, such as a cleaning policy.
RealStir offers short-term rental insurance for $89 through CSA Travel Protection and earns a small commission on every policy bought by RealStir users.
Underwritten by the U.S. branch of global insurance company Generali, the policy has no deductible and covers up to $5,000 in damage to the contents of a home, such as furniture, carpets or vases.
When a seller agrees to make a short-term rental offer to a buyer, they also must consent to having that offer advertised on their listing for all other prospective buyers to see. This will help RealStir build up an inventory of listings with short-term rental offers and streamline the process of setting up temporary stays.
Sellers can also choose to advertise a short-term rental offer on their listing from the get-to, rather than wait until they receive an inquiry from a buyer. Buyers will eventually be able to filter for listings with short-term rental offers if RealStir manages to accumulate an ample supply.
Realtor.com’s ‘Try Before You Buy’ partnership with Airbnb
RealStir isn’t the first listing portal that’s tried to scramble short-term rentals and for-sale listings into an omelet.
Realtor.com partnered with Airbnb in June 2015 to sprinkle Airbnb listings into listing search results and property pages. Realtor.com cast the collaboration as allowing buyers to “try before you buy,” a phrase RealStir says it’s trademarked. Realtor.com promoted the partnership with a “Try Before You Buy Sweepstakes.”
The difference between the realtor.com-Airbnb venture and RealStir is that RealStir aims to allow buyers to test out the actual homes they might want to buy instead of properties that aren’t for sale.
Indeed, when asked how RealStir would respond to realtor.com’s use of the phrase “Try Before You Buy,” a phrase RealStir has trademarked, RealStir said: “… since realtor.com’s ‘try before you buy’ is not exactly what we are offering there is nothing to respond to.”
While realtor.com no longer displays Airbnb listings, the listing portal says its agreement with Airbnb is ongoing and that realtor.com is planning a “rotation” of “ad placements” for the first quarter of 2016.
Bringing order to impromptu exchanges
While RealStir’s platform remains untested, there’s evidence to suggest the startup may be on to something. It may simply be promoting and bringing structure to exchanges that already occasionally take place.
“The house I liked was for sale … it was furnished and vacant so I thought, ‘I wonder if they will rent it to me for the weekend,’” commented Estero, Florida-based agent Jesse McGreevy on Facebook. “I asked and they accepted. That was seven years ago and I am still in that same house.”
Romaya said he thought of the idea for TBYB in the because of how often prospective buyers would ask if they could test out homes he’d built before deciding on whether to make offers.
Initially, sellers who use RealStir to rent out their homes will be expected to vacate them so buyers can experience the homes alone. This means TBYB might be most suited for furnished vacant properties.
But RealStir plans to make TBYB more feasible for unfurnished listings by offering sellers the option to rent furniture from partner vendors. It also plans to eventually allow sellers to rent out individual rooms rather than entire properties, so sellers can stay put during the buyer’s visit and avoid paying hotel fees.
Romaya is well aware that TBYB will not appeal to all homesellers and may be met with skepticism from some housing observers.
Sellers in hot markets might not have any trouble attracting offers, in which case there would be no reason to offer buyers test runs. Others might not be comfortable hosting strangers. Critics say the risks of renting out for-sale listings outweigh its potential benefits.
No more risky than Airbnb?
But “even a very small percentage would still be a significant number,” he said of sellers and buyers who may take to TBYBing. And just as skepticism of Airbnb and Uber, the driver-hailing service, has largely evaporated, Romaya foresees a similar “mindset adjustment” in how the public will view TBYB — an evolution that he believes will drive steady growth.
TBYB is no more risky for people to use than Uber and Airbnb, he claims.
To ward off lookie-loos or opportunists hunting for cheap accommodations, sellers can require buyers to provide mortgage pre-approval letters and bank statements. Requiring buyers to purchase short-term rental insurance and pay a deposit reduces risk as well, he says. And sellers can always feel out buyers, including by chatting with them through RealStir’s instant-messaging system, before deciding whether to hand over the keys.
“We’re giving you the platform, but common sense still applies,” Romaya said.
RealStir charges 10 percent booking fees to both buyers and sellers. That means if a seller offered a three-night stay for a nightly rate of $100, the buyer would pay $330 and the seller would receive $270, with RealStir pocketing $60.
RealStir says the terms and conditions that TBYB users must agree to offer the startup ample protection from claims of damages by buyers or sellers were they to arise.
Just as sellers offering their homes as short-term rentals are well advised to take sensible steps to protect their properties, they also should familiarize themselves with local regulations that govern short-term rentals.
Some cities require hosts to obtain licenses to list short-term rentals, while others prohibit them outright. Local governments and homeowner associations may place additional restrictions on short-term rentals as well. And hosts must keep in mind that they are often required to pay federal and local taxes on rental revenue generated by short-term rentals.
Local tenancy laws could further complicate matters. While he finds the concept of TBYB intriguing, Geoff Bray, a Minnetonka, Minnesota-based broker-owner, says state regulations make it very difficult for property owners to evict renters in Minnesota.
Scam artists posing as serious buyers might sign up for a short-term rental under the pretext of wanting to feel out the property, only to never leave until the sheriff comes knocking, he said.
“If the renter decided to stay, and not pay, there would be little protection for the owner of the home who is now trying to sell a place with a ‘squatter,’ he said.
RealStir offers agents the option to pay $30 a month with a free 30-day trial for exposure on listing search results maps. Visitors can click on head shots of agent advertisers that pop up on the listing search results maps on realstir.com to contact them through a built-in instant-messaging system.
So that visitors don’t end up feeling harassed, RealStir lets buyers communicate anonymously with agents through this messaging system, Romaya said.
Agent advertisers also gain the ability to post on the site’s social media platform. These posts appear on an agent’s profile and in a news feed featuring posts from all other local agent advertisers, and can be syndicated to other social networks.