www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2000/12/04/BU126539.DTL&type=tech_article
Hoping to be chosen ahead of the other applicants, they offer the landlord gifts or cash. Now, a few companies are trying to formalize such clandestine apartment sweepstakes. They are auctioning apartments online to whoever offers to pay the highest rent, but few people so far seem willing to participate, and tenant advocacy groups criticize the exercise as disturbing. The most recent apartment auctioned online is a three-bedroom unit in Pleasanton. It was available until yesterday through the Web auctioneer EBay for a minimum bid of $2,491, with the sky the limit on the flip side. Someone identified as Gypsy 1043 bid the minimum amount and was soon declared the winner. But it was unclear who that person was and whether he or she would actually lease the unit because auction participants are not obligated to do so. Two other people did make bids, but they quickly withdrew them, saying they had thought the apartment was for sale, not for rent. That two-bedroom, furnished apartment, offered on EBay until Wednesday, has a minimum rent of $4,700. Campbell said online apartment auctions make the most sense in cities with especially tight rental markets. That, of course, would increase the likelihood of competing bidders and escalating rents. Apartments in the San Francisco region are already the second most expensive in the nation and are among the top five in terms of occupancy. The average monthly rent is $2,136, up 26 percent from last year, with only 1 percent vacancy, according to M/PF Research, a real estate industry research firm in Dallas. Tenant rights activists said they knew of no laws prohibiting apartment auctions, even in cities like San Francisco that have rent control. Apartment owners can charge what they like in San Francisco as long as it is for a new, incoming tenant, the tenant advocacy executives said. Potential tenants, though, must be prudent when bidding for rentals online. The Pleasanton apartment complex that was auctioning the three-bedroom unit had several identical units available for a flat fee of $2,491, according to a leasing representative. In other words, there was no need to bid any more than the $2,491 starting price for that same property online. A few online apartment auctions have been tried in other parts of the nation with varying degrees of success. At first, the effort seemed successful after the apartments got several bids over the minimum rent. However, those bidders never signed the leases because they were not required to put down a deposit to participate. Smith Realty, said it has carried out a successful auction for another client near Boston. Brian Shanley, managing director for Qrent, said that his company auctioned an apartment that drew 32 bidders, one of whom beat out the competition with an offer of $1,400. Shanley, though, had somewhat of a contrarian explanation for when online apartment auctions may be most logical. Rather than in tight market conditions, he said online auctions probably make most sense during normal or slow times, when apartment owners want to fill a lot of vacant units even if it means accepting lower-than-normal rent. Landlords who expect online auctions to reap significantly higher rents will mostly fail, Shanley said. He also said apartment auctions are probably not best suited for all-purpose Web auction sites like EBay because apartment hunters do not know to look there and because those sites do not offer extras like tenant credit checks.
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