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Apartment auctions hit LA's tight rental market
A for-rent sign is posted on a Los Angeles apartment building in February. Startups are developing digital tools that create auctions for potential renters to bid on apartments.
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Apartment auctions hit LA's tight rental market
Auctioning off an apartment to the highest bidder may sound like a nightmare to those struggling to find a home in Los Angeles' tight rental market.
But landlords and property managers can do exactly that with the help of digital tools from tech startups. Companies like Rentberry, Biddwell and the L.A.-based Property Connect have created websites and mobile apps that allow prospective tenants to place bids on apartments.
Rentberry co-founder Alex Lubinsky said the company waives renters' application fees to get a big pool of possible tenants for landlords to choose from. He said landlords aren’t always looking to get the highest possible rents. Sometimes he said they want a tenant who has the best credit score or one willing to sign a longer lease.
"Landlords, they are not after money," Lubinsky said. "They are after quality tenants."
At first blush, rent-bidding sounds like it exists to serve the property owner. Initially, Lubinsky said landlords using Rentberry could raise their rents by 5 percent. But Lubinsky now says that tenants using the service can save that much.
Lubinsky said the company may decide later this year to charge more fees to renters who save money and landlords who get more rent than they asked. Right now, when a match is made, the renter pays Rentberry $25.
Housing advocates said companies such as Rentberry shouldn’t be profiting off the tight rental market at all. Elizabeth Blaney with the L.A. Tenant's Union likened rent auctions to "selling body parts."
"All of us need housing," Blaney said. "It’s horrendous that such a basic need would be turned into that type of competition."
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But more startups are looking to popularize the trend of apartment auctions. Property Connect is entering the California market in a couple months. Founder and CEO Timothy Manson said managers of multi-family buildings will be asking prospective tenants to apply for apartments through the company's "Live Offer" platform.
Manson said his company's bidding system is not intended to drive up rents, but to formulate the best offer.
"It's about getting a fair-market approach and giving the control back to renters," Manson said.
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