Tech can displace middlemen if the tech itself fully substitutes for what the middlemen are doing, and the market dynamics support replacing them.

So there are two parts of this: can tech fully substitute what the brokers are currently doing, and if so, if doing so is sufficiently profitable for the disruptor.

What to the brokers do?

For owners:

- Manages the day to day operations of a rental unit for small-time absentee investors (rent collection, maintenance, even paying taxes and condo/co-op fees, heck, some of them even attend co-op board meetings for you to lobby for your interests)

- Screens new tenants to eliminate all the unrealistic candidates (low credit, broke, no job, etc)

- Handles the operational aspects of renting a unit (arranging showings, turning the key, salesmanship)

- In uncommon cases: kicks back money to owner if unit is off the market for prolonged periods.

For tenants:

- Knowledge of available inventory, because there is no central listings database.

There are a couple of major thoughts about this:

- The benefits of broker representation accrue to the owner, but the owner does not pay for these services. This makes this middleman hard to displace, because it has no cost to the primary beneficiary in this system, so they are completely not incentivized to make any improvements whatsoever.

- The information asymmetry is by far the biggest chokehold brokers have on the system. Almost all of the benefits provided to owners can be substituted, but the information asymmetry cannot.

Unlike the sales market there is no equivalent to the MLS for rentals, so sites like Trulia and Zumper are consistently at an impossible-to-overcome disadvantage, since must rely on what users submit. There is literally no database that contains a reasonably complete snapshot of all available inventory (one can argue that Streeteasy is the closest, but even then, not realy).

In this environment brokers thrive on insider information. Many represent apartments exclusively (especially true for small-time landlords) and through brokerage and social connections have access to apartments that are not generally known. This is the primary chokehold - without them renters wouldn't even be aware of these units, much less access them.

I think policy can help a lot here - if rentals had to go through a centralized database, it erases the information asymmetry between landlord/tenant/broker and eliminates a very critical inefficiency in the market, not to mention it gives the listing sites a dramatically more even playing field. From this efficiency you can achieve cost reduction, but this is not within the power of a startup to pull off (especially with REBNY lobbying actively against this exact thing).

As for profitability, that's one thing that prevents any real disruption from happening, and time and time again would be "disruptors" live long enough to see themselves become the villain. There's so much money in collecting brokerage fees in NYC, companies that start out fighting brokers more often than not wind up joining them. Hauling home a 8-15% take for every transaction is ultimately much more profitable than, say, selling $50/month subscriptions to some platform.