Robert Galbraith/Reuters

Instead of a traditional application process, a startup called Rentberry wants potential tenants to bid on apartments, eBay style.

Landlords and tenants both know certain things about a property before they commit to a lease together. Location, for example: Both parties can get a clear sense of an apartment’s relative desirability in terms of location right off the bat. But landlords and tenants walk into a contract blind on other issues. A landlord can’t say for sure that a tenant isn’t going to flake on the rent.

Same story for the renter. Only after a tenant signs a lease and the refrigerator stops working can he find out how good his landlord is at getting around to maintenance and repairs. Information asymmetry abounds in the housing market, and it cuts both ways. Sometimes it’s the landlord doing the exploiting; sometimes it’s the landlord being exploited.

Good news for landlords in San Francisco: There’s a new tool designed to eliminate any uncertainty about who’s getting screwed by the rental housing market.

Rentberry is a startup that turns rental listings into an online marketplace. Landlords list their properties, which prospective renters then bid on, auction style. The service aims to bring rents up to the real market value for a unit by introducing bidding into the process. It also works to eliminate risk for landlords by placing prospective tenants’ credit scores front and center, saving landlords time and fuss in weighing renters. Rentberry turns Craigslist into eBay.

Here’s how it works: After tenants attend an open house, they may then fill out an application via the service. Users build out their rental profiles with photos, credit score (provided via Experian), and even (optional) links to their Facebook and LinkedIn accounts. (I wasn’t able to get very far into the process, because the system does not recognize Washington, D.C., as a state.)

Leah Simon-Weisberg, legal director for Tenants Together, a nonprofit dedicated to tenant advocacy across California, doesn’t mince words about Rentberry. She compares the startup to Martin Shkreli, the founder and CEO of Turing who raised the price of life-saving AIDS drugs from $13.50 to $750. “I think it’s incredibly arrogant and incredibly concerning in light of the fact that we have highest number of homeless families since the Great Depression,” Simon-Weisberg tells CityLab. “For them to do something to increase the rents seems really callous.”

Rentberry bills itself as a “fully closed loop application process,” according to The San Francisco Chronicle. But renters might be more likely to think of it as a fully closed circle of hell. The service does promise to save renters money on blind application fees, as renters only pay a $25 fee if they successfully sign a lease. However, Rentberry also assures Bay Area landlords rent increases of 5 percent, per the story.

Rentberry is sending shocks through San Francisco’s already-brutalized renter community. (A good indication that renters will not use it.) But the auction service is legit. Christina Varner, the acting deputy director for the San Francisco Rent Board, says that nothing in the rent code explicitly forbids an auction for rents. The question has never come up before, she says.

“Whatever crazy ideas landlords use to come up with the initial rent is up to them,” Simon-Weisberg says.

An auction poses some troubling fair-housing scenarios. A landlord could decline to close an auction if the only prospective tenants were people of color, for example. A renter who relies on housing vouchers wouldn’t get very far in an auction. Rentberry would also seem to entirely preclude access to renters who don’t have access to the Internet—they wouldn’t even be able to fill out an application. (I called the Housing Rights Committee of San Francisco and the San Francisco Tenants Union with legal questions; I will update this story with any answers I receive.)

It’s too bad, really. Renting an apartment is a pain for both landlords and tenants. A better system could alleviate some of the minor irritations of the rental process. Or even address some of its huge problems, such as housing discrimination. But the problem in San Francisco housing is hardly that the rents are too cheap.

Ultimately, it’s good for renters when landlords are able to maximize their property value. That makes residential property more profitable, which spurs owners to rent out and maintain their properties, and incentivizes investment in apartment buildings. (At least, that’s how it works in places that aren’t San Francisco.) It’s also helpful to consider that pricing isn’t a tool designed exclusively to exploit consumers. Everyone wants a good deal, and everyone has a different idea of what a good deal means.

Rentberry, on the other hand, seems designed to exploit renters, offering them not a lot of upside in return. It may wind up working like a dating site with a pitch so skewed that it attracts a base of only straight men but no women. Expect a lot of missed connections.

Correction: This story originally cited a detail from The San Francisco Chronicle about Rentberry’s plans to implement a new pricing scheme, one that would change its one-time fee to a percentage of the over-list price. After first declining to speak with CityLab, Rentberry has now explained that it was not planning to change its one-time fee. The post has been updated to remove the incorrect information.

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