Clampdown on apartment list firms; Officials say be wary of that too-good-to-be-true bargain
Apartment hunting: Today it often means pounding the pavement in search of a place to call home while dodging the pincers of low vacancy rates and high rents.
The tight rental market in many cities has produced a new burst of apartment-finder agencies, clearinghouses for rental listings -- a tempting service to apartment hunters weary of hearing, ''It's been rented,'' or ''We don't take children or pets,'' or ''The one-bedroom is $600 a month -- without a hot plate.''
A fee of $30 to $75 buys a prospective renter the right to look at an agency's lists of apartments over a one- to three-month period. There is no charge to landlords for listing.
Although the prepaid rental listing industry burgeons wherever hard-pressed renters are willing to pay for someone else to do their legwork, consumer agencies are clamping down on them, alleging their practices can be unfair to desperate renters.
''Finders Keepers, Users Weepers,'' a study recently released by the Massachusetts Public Interest Research Group (MASSPIRG), calls the industry's advertising techniques classic examples of '' 'bait and switch,' in which an attractively priced product is advertised to lure a customer and then proves unavailable, leaving the customer to settle for a less desirable product.''
The MASSPIRG study of Boston-area apartment listing services -- similar in their operation to others that have generated complaints in New York and Los Angeles -- lists these questionable techniques:
* Ads suggesting the product offered is apartments rather than lists of apartments.
* Ads describing specific apartments -- usually very attractive ''bargains'' -- even though listings don't include those apartments.
* Apartment listings copied from local newspapers.
* Apartments, sometimes listed without the landlord's permission, advertised months after they have been rented.
* Misrepresented apartments. Descriptive phrases like ''chef's kitchen'' can turn out to mean a sink and stove; a ''vanity bathroom'' is simply a toilet and sink.
Monitor checks on the apartment listing business in three tight housing markets found a high turnover of such businesses. Consumer complaints have generated regulations that have put many agencies out of business.
In New York City, the prepaid apartment listing industry pulled in $8 million-$10 million in 1981. The state shut down the industry by the end of that year, according to Nathan Riley, a spokesman for the New York State attorney general. Consumer complaints prompted the state to crack down on the agencies, registering and licensing them, and requiring them to deposit fees in escrow accounts for refunds to dissatisfied customers.
When the industry chose to ''ignore the law,'' continuing in some cases to ''make up ads . . . that turned out to be fire stations or burned-out churches, '' the state prosecuted and even sent one agency owner to prison on fraud charges, explains Mr. Riley. ''The fact that the industry couldn't exist when it was required to make refunds is pretty good indication'' of its reputation, he adds.
Although the industry has been ''cleaned up'' by a licensing procedure in California, illegal agencies continue to prosper despite consumer complaints, says Randy Brendia, chief of investigations for the Los Angeles office of the California Department of Real Estate. One unlicensed outfit allegedly made $20, 000 a month, he says.
''When an ad offers $125 a month for an apartment on the beach in Newport, which is swank,'' explains Mr. Brendia, ''Some people look at the ad and don't see how unreasonable it is . . . how outlandish.''
''I would never use a service,'' says Brendia. ''If I came off the plane in Boston, I wouldn't know the area. But I would get out and do some footwork. I'd get a newspaper, see what's available, see what's the going rate.''
With agencies constantly opening up and going out of business, prepaid listing services have not established an official trade group to speak in their behalf.
''The reputation of the business has been bad and well-deserved,'' admits Mary Riley, co-owner of Homefolks, Boston's largest operation. Her two biggest competitors have been closed by the state in the past six months. But she adds that honest agents make a good-faith effort to keep listings accurate and that ''there is definitely a need for help in getting housing. Listings can be an advantage; they're a faster and lower-cost way of providing possibilities'' than paying a half-month's rent to a real estate agent to show apartments.