A startup that pits apartment hunters against each other could create upheaval in the rental market

A startup that lets renters compete in apartment auctions is about to grow a lot bigger.

Rentberry is an online auction site for long-term property rentals - think Craigslist meets eBay. It aims to streamline the rental negotiation process for both tenants and landlords by bringing the process online.

Rentberry expands nationwide later this year, from about 100,000 property listing across a handful of US cities (including New York, Miami, and Los Angeles) to more than 1,000 cities. As it grows upwards of 50,000 users, the startup has the potential to raise prices and create upheaval in the rental market.

To get started, a landlord lists a property on Rentberry and includes a suggested price, photos, and a description. Interested tenants submit a credit score, a completed background check, and a custom offer on the apartment. The seller selects a winning applicant from the pool.

On April 2, Rentberry announced plans to start charging 25% of the difference between the posted and negotiated rent to whoever gets the better deal ― the landlord or tenant ― every month. The startup currently charges a one-time fee of $25 for every signed lease agreement.

Rentberry debuted last summer to the anger of affordable-housing advocates and desperate renters. Its auction-based model pins urban dwellers (in already precarious housing markets) against each other, driving prices ever higher. Alex Lubinsky, CEO of Rentberry, said landlords using the service could expect to see an increase in rental income of 5% on average.

Nine months later, Lubinsky found the opposite to be true. He tells Business Insider that tenants on Rentberry saved 5.1% on rent on average compared with what landlords originally asked. That's because the site lets users place bids that are lower or higher than the posted rent.

Eventually, Rentberry will take a cut of those savings when it starts charging the monthly 25% finder's fee. Lubinsky doesn't expect the new fee to hurt business, because landlords and tenants could still save by using the site. They also save time, by applying and signing rental agreements through a web form, and eventually paying rent on Rentberry's website.

Though landlords may end up leasing an apartment for less than the posted rent, Lubinsky says it's a fair trade-off for the visibility that a listing on Rentberry provides. They attract a greater number of applicants and can be choosier about picking the most reliable candidate.

Lubinsky calls his company a "middleman" for the rental market, for better or worse.