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DOJ sues realpage for algorithmic pricing scheme that harms renters

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Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#481

Post by ZeoVII »

tqi wrote: post #470
jasode wrote: post #19

>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. I think the "private prices" + "autoaccept" + "compliance" is the key misbehavior that gets RealPage into legal trouble. If competitors want to converge on prices in a legal manner , they have to do…

What I'm having a hard time understanding is why RealPage cared about "compliance" in the first place - do they charge as a % of rent? That seems nuts, I would imagine landlords hate that. If not % of rent then I can't understand why the company would want rents to be higher across the board.

IMO, because that way they can claim to landlords they get target ocupancy rates with the higher price; if one landlord in the area knows the price others get, he could try to get higher occupancy rate by lowering his price, aka "competition", by requiring "compliance" to RealPage prices, they are effectively coordinating and price fixing the market, which is the ilegal part. After all, landlords could see regular posing on other channels and adjust their prices in the "normal" way.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#482

Post by lobsterthief »

tqi wrote: post #470
jasode wrote: post #19

>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. I think the "private prices" + "autoaccept" + "compliance" is the key misbehavior that gets RealPage into legal trouble. If competitors want to converge on prices in a legal manner , they have to do…

What I'm having a hard time understanding is why RealPage cared about "compliance" in the first place - do they charge as a % of rent? That seems nuts, I would imagine landlords hate that. If not % of rent then I can't understand why the company would want rents to be higher across the board.

Because then they can say “hey landlord, on average if you list through us you can charge X% higher rents than our competitors”

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#483

Post by codedokode »

tqi wrote: post #470
jasode wrote: post #19

>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. I think the "private prices" + "autoaccept" + "compliance" is the key misbehavior that gets RealPage into legal trouble. If competitors want to converge on prices in a legal manner , they have to do…

What I'm having a hard time understanding is why RealPage cared about "compliance" in the first place - do they charge as a % of rent? That seems nuts, I would imagine landlords hate that. If not % of rent then I can't understand why the company would want rents to be higher across the board.

Maybe they want to attract landlords to sign up, and making rent raise works better than any advertisement.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#484

Post by codedokode »

pixl97 wrote: post #469
tmoertel wrote: post #131

Earlier quoted context omitted.

The classic way that businesses openly coordinate their pricing is via price matching. Businesses advertise their preferred prices but also promise that they'll match lower prices from competitors. Competitors see these advertisements and set their own prices to approximately match. The FTC does not consider this type of open signaling to be price fixing: > Q: Our company monitors competitors' ads, and we sometimes o…

Price matching was something that really worked in the past, again in the days before mass digitization and cheap storage/printing. Add in there are only a few major retailers left, it becomes easy to make a product for each of them. CostCow will have product 0ICU812a WalWart will have product 0ICU812b Then they don't have to actually price match because they are "different products"

Online stores seem to match prices; when I google for some electronic equipment (like headphones or MIDI controllers), many stores have almost equal prices for the same item. Of course there is a chance that all they are owned by the same entity, but it is not very plausible.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#485

Post by mannyv »

FYI the way you get around this legally is to set up a nonprofit and funnel all your pricing information to that nonprofit.

Then everyone uses the non-profit's data to set prices.

You can also use aggregator websites to check pricing. I know of a bunch of small hotels that use expedia/booking.com/etc to do this.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#486

Post by andrewmutz »

tqi wrote: post #470
jasode wrote: post #19

>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. I think the "private prices" + "autoaccept" + "compliance" is the key misbehavior that gets RealPage into legal trouble. If competitors want to converge on prices in a legal manner , they have to do…

What I'm having a hard time understanding is why RealPage cared about "compliance" in the first place - do they charge as a % of rent? That seems nuts, I would imagine landlords hate that. If not % of rent then I can't understand why the company would want rents to be higher across the board.

I built software for this industry (not at realpage) for 10+ years and can explain why price compliance is a big deal.

The reason is that there is a fundamental principal vs. agent problem in the fee-based property management industry.

Usually an investor buys a building and then hires a separate corporation called a fee-based property management company to manage the property. The management company gets to keep 8-10% of the rents that come in exchange for doing all the management work. (there are situations where the owner and the manager are the same corporation but they are less common and are called owner-operators)

The fee-based management company and the building owner have different interests. The building owner wants to maximize net operating income, which usually means maximizing revenue. The fee based manager wants to maximize their earnings, which is the 8-10% of the rents minus paying for all the management work to happen.

On first glance you might think these are similar interests, but when it comes to choosing the price they are not the same. If a rental price is optimal, it takes a bit of work to rent it out. The housing unit will sit on the market for a little bit and be shown to a lot of people before you find someone willing to pay the price. If, on the other hand, the price is 10% below the optimal price, it will take very little work to rent out and will be taken by the first person who comes to look at it. In this case "little work" means the management company can save money by paying fewer staff members.

So, property owners want optimal prices and property managers want prices that are slightly lower than that.

Revenue management algorithm compliance is a solution to this principal agent problem. The building owner insists on it being used by the management company because he doesnt trust the management company to choose prices. He doesnt trust the management company to choose the price because they are motivated to lower the price in order to reduce their workload.

High price algorithm compliance is important to realpage because it is how the owner makes sure the manager is choosing prices that maximize the owners interests, rather than the management company's interest. And the owner is the person who chooses to enforce the pricing algorithm, and thus the true customer of realpage when it comes to revenue management algorithms.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#487

Post by leafmeal »

Manuel_D wrote: post #93
kelnos wrote: post #72

Earlier quoted context omitted.

> This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. Not sure what "price controls" you're talking about, but the reason it's expensive to build in SF (which reduces the appeal for builders) is zoning, the byzantine planning process, the ability of local residents to effectively block or delay projects, and weaponized en…

Policy restricting housing is indeed another factor impeding housing. The price controls I'm referring to are rent controls (which applies to ~70% of apartments in SF, and the threat of reintroducing rent controls looms) and affordable housing mandates. The affordable housing mandates require that a certain percentage of units are rented at set prices. Again, if housing isn't an investment opportunity, then why would…

In San Francisco, rent control doesn't apply to new construction as I understand.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#488

Post by jacobgkau »

tqi wrote: post #470
jasode wrote: post #19

>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. I think the "private prices" + "autoaccept" + "compliance" is the key misbehavior that gets RealPage into legal trouble. If competitors want to converge on prices in a legal manner , they have to do…

What I'm having a hard time understanding is why RealPage cared about "compliance" in the first place - do they charge as a % of rent? That seems nuts, I would imagine landlords hate that. If not % of rent then I can't understand why the company would want rents to be higher across the board.

RealPage's customers are landlords who want to maximize their rent prices. If some landlords look at the data and offer lower prices, that takes business away from the rest of RealPage's customers-- it makes RealPage less valuable for landlords and makes buying into RealPage essentially paying to give up valuable data that other landlords will use against you.

Forcing compliance ensures all of RealPage's customers get to raise their rents while retaining their renters, which means landlords are making a safe bet when using RealPage-- and the only downside is real people paying higher rent.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#489

Post by dev1ycan »

There needs to be serious consideration on actually enforcing and even straight up shutting down companies if found guilty regarding these topics that harm the lives of millions of people.

I don't think this particularly will fix housing prices however (even though they're scummy), I think housing prices are a bubble that will eventually burst Japan style, even in the best case scenario you have a new population that is historically earning less than the population they (due to birth rates, not some conspiracy) are replacing, so while it won't crash as much as Japan's (out of tokyo), it will certainly not hold its million+ pricing when nobody is able to afford that anymore, and rents are based on salaries just like property pricing, if renters cannot afford to pay anymore what is asked for then prices will fall, it'll take ~10-15 years more but the market will inevitably start falling.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#490

Post by perihelion_zero »

ndesaulniers wrote: post #417

Companies are culluding to suppress wages by algorithm, too. Look up a company called Aon, and their product called Radford Data & Analytics.

This is why I love jobs where you get paid based on a sales commission rather than in mystical dollar-hours. Get 10x the results, get 10x the pay.
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