How Does VRBO Work?

By: , Contributor

Published on: Dec 28, 2019

If you own an income property, here’s what you need to know about this popular rental site.

If you own a home you use as a vacation rental, you probably know all too well that finding tenants to stay on your property is easier said than done. That's why sites like VRBO and Airbnb have become so popular for property owners. Here, we'll review how VRBO works so you can decide whether it's the right listing site for your home. We’ll also talk about why VRBO is a good choice for short-term renters.

How VRBO works

Short for Vacation Rentals by Owner, VRBO is a listing site that matches folks in need of vacation rentals with property owners who have vacation homes to rent. Both individual property owners and management companies use VRBO to attract short-term tenants.

When you list a home on VRBO, you'll get to set your own rates for that property. You can choose to offer a nightly rate or weekly rate -- whatever you feel is most appropriate for the home you're trying to rent. And, listing on VRBO gets your property placed on all of its affiliated sites, thereby upping your exposure. These sites include big names like Expedia and its distribution brands (Travelocity, CheapTickets, and Orbitz), as well as Trivago, KAYAK, CanadaStays, and TravelMob.

What's the booking process like for renters?

Once you list your home on VRBO, prospective renters will have the option to search for your property by location or zip code. Booking on VRBO is easy -- renters just input their information, pay an initial deposit, and you're all set. Renters also get the opportunity to email property owners with questions about the homes they're interested in.

Renters also get certain protections when booking through VRBO, like fraud protection to ensure that their deposits wind up in the right hands. But in exchange, they're charged a service fee that can vary based on the cost of the reservation at hand.

Now if you’re a renter, you may be wondering if VRBO is your best source for a vacation rental or if you should book via Airbnb instead. Both sites charge a varying service fee when you book, but one disadvantage (or advantage, depending on what you’re looking for) with VRBO is that it only lists entire homes. If you need a single room in someone’s home, you won’t find it on VRBO. But if you’re booking a family trip or want a private space all to yourself, VRBO can meet your needs.

Furthermore, VRBO does a good job of explaining how your costs break down. It clearly tells you what your nightly rate for your rental is, what your security deposit entails, what your cleaning fee looks like, and what your service fee amounts to.

How much does a VRBO listing cost?

VRBO has a couple of different pricing models. If you buy an annual subscription, you'll be charged $499. That gives you access to a number of helpful features, including VRBO's reservation manager and calendar -- tools that help you keep track of who's staying in your property, and when.

If you don't expect to rent your home all that often (say, the season that makes your home an appealing place is limited, as with a beach house), you can use VRBO's pay-per-booking model instead, which charges you a 5% commission on your booking amount. If you expect to collect more than $10,000 in rental income via your VRBO listing on an annual basis, then the annual plan makes more sense. You should also note that with the pay-per-booking plan, there's a 3% payment processing fee you'll need to pay. And, an additional 2% fee may apply if the credit card being used to book your property originates outside the U.S.

Furthermore, with the per-booking model, you'll pay a fee on any additional services you charge for, like a property cleaning fee. Taxes and security deposits, meanwhile, aren't charged a commission-based fee, but you'll still pay the 3% processing fee.

Also, you can have more than one listing associated with your VRBO account. But you can't use a single annual subscription for multiple homes.

What are the benefits of listing my vacation rental on VRBO?

When you list your vacation rental on VRBO, you get instant exposure. Renters know to come to sites like VRBO, and because the site offers certain protection, it allows them to book with confidence. The result? More rental income for you.

VRBO also makes receiving and processing payments easy. The same holds true for managing bookings -- as a property owner, you get access to your personal dashboard to manage your listings.

How can I attract renters on VRBO?

Though there tends to be a lot of competition on the vacation rental front, a few savvy moves could help give your property an edge. For one thing, choose your rates wisely. See what other properties are charging in the area, and make sure your rates are in line with theirs. Of course, if your home offers extra amenities, you can charge for them accordingly.

If your property is new to VRBO, offering a new-listing discount to renters is a good way to generate some initial foot traffic, which, ideally, will lead to positive reviews. And that brings us to another important point: Positive reviews are a property owner's best friend on sites like VRBO, so encourage guests to leave feedback when you know they had a good experience.

And also, take steps to ensure that they have a good experience. Be responsive, and provide as much helpful property information as you can to those who book your home.

Another key thing to do: Take lots of quality pictures of your home. Renters don't want surprises; they want to know exactly what they're getting into. Therefore, be sure to include a photograph of each room in your home. Also, be very clear when describing your home's details. That means listing not only the number of bedrooms you have but the sleeping arrangements in each one (twin vs. full vs. queen bed, for example).

Finally, consider investing in a few features or upgrades that could make your vacation rental stand out. A hot tub or fire pit, for example, could spell the difference between a renter choosing your home over another down the road.

Is VRBO right for you?

There are a number of listing sites you could choose to place your property on. Before paying for VRBO, explore your options on Airbnb and similar sites to see which allow you to list your home in the most cost-effective manner.

But if you do decide on VRBO, remember that it's been a trusted name in the vacation rental business for quite some time and that it's a good way to drive guests to your property without having to spin your wheels marketing your home.

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