For the first time, J Turner Research presents a summary of the methodology and perspectives behind its ORA Power Rankings, with its new white paper The Mechanics of Online Review Sites and Internet Listing Services—The Untold Story.
This document, which will be updated on a consistent basis, is designed to provide the multifamily industry with a “quantitative perspective” on the workings of online apartment review sites and subscription-based Internet listing services (ILSs), including facts, historical trends, and renter prospect impact.
Joseph Batdorf, founder and president of J Turner Research, hopes multifamily professionals will be able to use the data provided in the paper to expand their knowledge and understanding of online review sites, from their methodologies to the reality of their impact on potential tenants and investors.
“I don’t think the industry has seen this kind of information [yet],” says Batdorf. “They’ve been working off their own portfolio data. What we’ve tried to accomplish here is to give them an overall view of what’s going on in the market … a textbook of the mechanics of online reviews.”
Key Findings
Over the past five and a half years, J Turner Research has examined the mechanics of online apartment review sites and ILSs and monitored the online reputation of more than 64,000 residential units, covering about 78% of the country’s apartment units. As of April 2017, 4,320,543 ratings exist for the properties J Turner monitors. Almost 89% of these properties, or 57,104, have at least one review. The white paper’s findings are based on these properties.
In J Turner’s most recent research study, The Internet Adventure, Part II, 75% of resident respondents reported that they looked at ratings and reviews in their apartment search process, and 75% said they look at ratings and reviews multiple times. The same respondents were only moderately likely, on average, to rent a property personally recommended by a friend if that property had negative online reviews.
Reliance on online ratings in the apartment research process has risen by 10% in the past two years, from 52% in 2015 to 62% in 2017. The effect of ratings and reviews on a prospect’s decision to visit a property rose by 13% from November 2016, when J Turner conducted The Internet Adventure, Part I, to April 2017, up from 6.48 to 7.33 on a scale of 0 to 10.
The total volume of apartment reviews grew by 19.3% from the first quarter of 2016 to the first quarter of 2017. Most of these reviews are on the top five sites by apartment market share, based on the number of listed properties with resident reviews: Google, ApartmentRatings.com, Facebook, Apartments.com, and Yelp.
In April 2017, J Turner recorded 115,929 new apartment reviews, 30% of which came from Google, followed by ApartmentRatings.com and ApartmentGuide.com, at 16% each.
Google is, by far, the strongest presence in the online review market. Part of this stems from the site’s low barrier to entry for posting reviews. Unlike other dedicated review sites, Google doesn’t require a paid account or perform checks on the reviewer’s credibility.
Review Sites and How They Function
When the ORA Power Rankings began in 2012, J Turner tracked apartment ratings only on two sites. “When we first started doing this study, there were six reviews being added, on the average, per year,” Batdorf says. “And now, there are two reviews being added per property across 64,000 properties per month. And there’s 19% more reviews that came in the first quarter of 2017 versus 2016. All that data’s in there, but it’s gaining momentum.”
Today, J Turner estimates that 18 to 20 review sites exist that are large enough to cover a minimum of 1% of the apartment market.
The online review and ILS market is highly fragmented, with no industry standard for collecting, displaying, or conducting reviews. The top three ILSs by reviewer sentiment all use different systems to encourage positive feedback. ForRent.com, which has an average reviewer feedback rating of 4.68 out of 5, collects and displays the most positive reviews from other sites, including Google, Facebook, and Yelp, for its clients.
Modern Message, an ILS that incorporates gamification and rewards systems into its tenant feedback platform, has the second-highest positive review sentiment, at 4.16 out of 5, on average. This stems from a review system in which respondents are rewarded for a certain volume of feedback. J Turner notes that the average star rating on Modern Message is higher than it is for the same properties on other sites. (Modern Message also sports an average of 109.3 reviews per property, far above the national average of 72.32 views per property.) Apartments.com, unlike most other sites, assigns star ratings to properties based on its proprietary CoStar Building Rating System, which doesn't take into account residents' opinions. Its average CoStar rating is 4.01 out of 5.
The ILS with the lowest average star rating (2.78 out of 5) is ApartmentRatings.com, which has historically been used as a space for negative feedback. Batdorf notes, however, that the overall sentiment on this site is improving over time.
“The ILSs are in sort of a dilemma in that they're being paid to promote properties on the one side, and they know that prospects are looking for authentic reviews on the other,” Batdorf says. “So they’re grappling with how to do that.”
For the most part, despite these systems’ influence on positive or negative review volume, it's important for multifamily companies to remember that the differences between apartment review sites are largely invisible to a tenant or investor prospect.
“I think that, from the prospect’s perspective, they’re looking at it as if everything is the same, and so we’re taking into account how they’re looking at it,” Batdorf says. “Are they digging down into the methodology? I doubt it. Before this report, I would venture to guess a large percentage of people in the apartment industry were unaware of the different methodologies.”
Until now, Batdorf says, a multifamily firm’s degree of interaction with review sites usually depended on its size. A small company might not have the resources to contact review sites or figure them out, while large companies might have senior executives entirely devoted to their web presence.
Conclusion
While the differences between the dozens of sites and services available might be invisible or even irrelevant to apartment prospects, Batdorf believes these data are important for property managers to consider, especially if they're in the market for an ILS. This insight can help them determine which site will be best for their property—where they can get the most “bang for the buck.”
The ORA Power Rankings aim to provide this insight on a quantifiable level, using a statistical model that adjusts for differences in methodology and for a property’s relative strength in the market.
“My hope is that there will be a system set up that residents and prospects looking for an apartment can [use to] get a very good feel for how properties are treating residents in an authentic way,” Batdorf says. “The best system will be the one that’s the most authentic about how residents really feel about that property. And I think you can do that statistically.
"At the end of the day, a rating system that's portraying how residents really feel about that property is going to be a golden key for one simple reason: Prospects will rely on that more than anything else,” Batdorf continues.
The Mechanics of Online Review Sites will be updated within the next three months, after which time a new edition will be released on a quarterly or twice-yearly basis.
About ORA Power Rankings
ORA Power Rankings is powered by J Turner Research in association with media partner Multifamily Executive. Each month, MFE publishes a new ranking of apartment properties and management companies based on different parameters.
To learn more, or to find your ORA™ score, visit www.jturnerresearch.com/about/what-is-ora-score.
ORA Methodology
The ORA score is an aggregate compilation of a property's ratings across various review sites. Each month, J Turner Research monitors the online ratings of more than 64,000 properties nationwide. Using a statistical model, a single score based on a scale of 0 to 100 is assigned to each property. This score serves as a benchmark to compare and contrast a company’s individual properties and portfolios nationally, regionally, and with competition.
Questions? Please contact the J Turner Research team, at [email protected].
