# Our Daily Bleg: The Old Roommate/Rent Dilemma

Conor Hunt, an I.T. consultant in Chicago, writes with a dilemma that, while common, seems to be always unsatisfactorily solved.

Two friends — a merchandising analyst and a law student — and I are attempting to split up rent of a three-bedroom apartment with two common bathrooms. All rooms have their pros and cons, with the major differentiators being closet space and sheer square footage:

Room No. 1: 15 ft. x 15 ft.
Room No. 2: 12 ft. x 12 ft.
Room No. 3: 20 ft. x 8 ft.

Rent is \$2,200 per month and the apartment is approximately 2,200 square feet.

Simple math would show that one would pay per square foot, but that goes out the window with the ranking intangibles, and the fact that no one necessarily wants the big room.

The roommates threw out these prices:

No. 1: \$800/month
No. 2: \$710/month
No. 3: \$690/month

So given their prices over the course of a year, Room No. 1 would have to yield \$1,080 and \$1,320 more in value than room Nos. 2 and 3, respectively. That’s an insanely high premium for a little more square footage and a closet! It is still just a bedroom, after all.

How do you recommend solving this situation?

I am sure Conor and his friends will welcome any suggestions you have. I am not sure why Room No. 3 is considered worse than Room No. 2 even though it is larger, but I’m sure there’s a reason. In advising Conor, feel free to consider a few of our own suggestions:

1. Just settle it on a coin flip or, better, Rock Paper Scissors.

2. Rotate rooms every three months.

3. Price all rooms equally but tax Room No. 1’s occupant higher for household goods, or cooking/cleanup chores.

4. Give the smallest room to the guy least likely to have sleepover guests.

5. All three roommates hold hands over open flame; whoever lasts longest gets room of his choice.

#### Justin

I always like using the method where you divy up price by space. So room one has 225 sq ft plus the 1671 sq ft for common areas. Thus they owe \$225 for their room plus the \$557 which is one third of the common area cost. Apply this to the rest of the rooms and you get room 1 \$782, room 2 \$701, and room 3 \$717. Once room might be much better but this method splits by pure square footage.

#### bluemoose

While in grad school, we had a similar dilemma. Three tenants, three bedrooms in three sizes. We ended up splitting rent equally. As I was the one who found the apartment, with little help from the other two roommates (who were not in town), I got the room of my choice (larger on the ground floor). With the other two rooms, one on the ground floor and small, the other the large former attic space, we divided by need. One roommate had tons of stuff, so she got the bigger room. The third roommate had next to nothing, furniture-wise, and got the smallest room.

It worked out based on household contributions, too, as the furniture in the common areas of the house was mostly mine, and they all shared. The kitchenware was mostly the roommate's with the largest bedroom, and we shared that, too. The roommate in the smallest room also contributed least to shared household goods.

Seems to me that this is mostly an issue if someone feels slighted by choice of room.

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#### travis ormsby

Seems to me that a bidding strategy would be the fairest way to allocate these scarce resources.

Each roommate submits a blind bid price for each room. Whoever bids the most for room # 1 gets it. High bid for #2 gets that one. Highest bid for #3 gets that room.

In case one person has the highest bid on more than one room, they can pick which one they want, and the right to the other room(s) goes to the second highest bidder.

Subtract the total of the 3 winning room bids from the rent total, and split the remainder equally.

#### JYK

When we were in this situation, basically what we did was take the rooms out of the equation and auction off the order of choosing the rooms. So, if I wanted to be more assured of getting the room that I wanted, I could bid to increase the amount of rent I would pay in order to pick before someone else who I thought wanted the same room.

#### Anon

Or agree to divide everything equally and draw rooms out of a hat.

#### Donna

Divide everything equally! Life is not always completely fair. Are we really paying taxes for exactly what we use? How many hairs can you split? Who takes longer showers? Who uses more refrigerator space? It sounds like among the three rooms, no one particularly stands out.

Divide by three!

Donna

#### sanders

I've got

Room 1
Sq. ft 225
Room 2
Sq. ft 144
Room 3
Sq. ft 160
Shared(remaining sq)
1671

each person share of the house if split equal is
557

So room 1
225+557 = \$782

room 2
144+557 = \$701

room 3
160+557 = \$717

Why did the roomates price room 3 less then room 2 even tho it has more sq ft. Is it because it's awkward?

#### erik

Auction two of the rooms, with the third room being charged the balance of the total.

#### john in hanover, nh

i ran into this situation years ago. everyone individually sets the price of each room so that the person would be indifferent to whether or not they were forced to take it. finding this "indifference" point means that you won't complain if you were forced to take the room. average every roommate's prices per room. draw straws to pick a draft order. since everyone had a hand in setting the indifference point, no one should have reason to complain about the price and room they were forced to take. setting prices beforehand reduces the "gaming" of prices for the room, since you don't know which draft order spot you get. this is a take-off of the two people, one piece of cake problem, where one person cuts the cake into two pieces and the other person gets first pick of which piece of cake to take.

#### Michael

6. Keep rents split equally. Make the medium room the Overnight guest room (e.g. you have a guest you get the room), put 2 beds in the large room and the smallest room the communal closet. Do that for 3 months, see how long until someone caves just to say they'll take the smallest room for their privacy's sake.

#### East Coast Phil

Stop being petty and split the rent equally? If someone's unhappy with their room, talk it over in three months and switch if necessary.

#### Will C

1) Find who is interested in room #1, and have them bid for it, with the minimum bid at 1/3 of the rent. Highest bid gets the room forever.

2) If the remaining two both want the same room of the two that are open, they bid for the room, starting amount being half of the remaining rent. Otherwise they split the remaining rent.

3) The law student -- oops, I mean the last roommate -- gets the least desirable room, but for the lowest price.

#### Josh S

This seems easy. Lower the price of Room #1 until someone wants it.

#### RachelE

I would have thought it was a simple auction situation?

Firstly assume that the rent will be split equally and each of you rank the rooms. It may be that there is one room that only one of you wants the most (of course it may be that you all prefer different rooms in which case problem solved!).

If that is the case the remaining two sharers (call them A and B) write down how much they are willing to pay the other one to give up the room. If A is willing to pay more to B than B is to A, A pays to B the excess amount that B has writen down plus some agreed figure (between \$0 and the whole excess). C, the odd bod pays 1/3 of the rent.

If there is one prefered room you all write down the maximum premium you are willing to pay to occupy the prefered room. Again the 'winner' pays the premium writen by the next highest bidder plus between \$0 and the whole excess.
The remaining two then follow the arrangement above.

I would think this should lead to the optimum room allocation/rent share. It's a matter of equity how you split the differences? My instinct is to go 50-50, but even if it was only \$1 everyone should be happy.

Or have I missed something?

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#### Ciaran McNulty

Everyone gets 30 points, and each has to allocate their points between the three rooms. Nobody sees each other's scores.

The rents of each room are determined by the total number of points allocated to it. (There are 90 points in total so effectively each point adds \$25 to that room's rent). Therefore each person will try to not make the room they want too expensive.

However for each room, the person who's allocated the most points to that room gets the right of first refusal. That way each person will want to put as many points towards the room they actually want as possible.

I think those two factors would balance out and establish a fair price for each room.

#### Petteri

1. Draw straws, three lengths. The shortest straw is roommate A, the middle one is roommate B, the short straw is roommate C.
2. Roommate A assigns a rent to each room.
3. Roommate B picks a room.
4. Roommate C picks a room.
5. Roommate A picks a room.

#### jf

Easy. Auction the rooms.

#### Tristan

When I have had to figure out this kind of split in the past, I would just use a rough estimate of how much square footage every roommate would be using to get a quick and dirrty starting ratio for how much everyone would pay.

In this case, whoever gets room 1 would be using 225 sqf of their bedroom, plus 1671 sqf of the rest of the apartment (the amount left over after subtracting the three bedrooms), so a total of 1896 sqf. Comapred to 1815 and 1831 for the other two, I'd throw out a starting point of \$753, \$720 and \$727 just based on square footage, or a premium of \$385 a year for the best over the worst.

Of course some kind of auction would probably be better at assigning value to all the other intangables.

Auction them.

#### alex

I had a similar situation with 7 people living in a house with 5 bedrooms. My suggestion then was an auction. Set the base price for each room @ \$734/mo and "bid" on each room. Get the maximum willingness to pay (well, \$1 more than the 2nd largest willingness to pay) for the best room, same for the 2nd room, and the third guy gets off easy.

This way really assigns rooms to the person who wants them the most, and no one will complain about rent.

In my situation, I wound up being one of 4 with a roommate. Giving up the premium made my rent virtually ignorable, and common space is shared by all at equal cost. This method is also good at valuing common space appropriately (in fact, it takes into account all variables).