That's just normal price-setting. RealPage crossed the line into fixing when it (a) required (or strongly pressured) landlords to adhere to their recommend pricing and (b) achieved high enough market share to use that as market-wide pricing power.
The lawsuit quoted one unnamed witness, a RealPage pricing advisor, saying that some pricing advisors told property management employees that they had to follow the software’s recommendations. A leasing manager at a RealPage client said, “I knew [RealPage’s prices] were way too high, but [RealPage] barely budged” when the manager asked to deviate from the suggested rent.
An update to the software tracked not only clients’ acceptance rate, but also the identity of the landlords’ staff members who had requested a deviation from RealPage’s price, the lawsuit said. Compensation for some property management personnel was even tied to compliance with the company’s recommendations, it said.
This is one of the claims in the California complaint discussed here a while back [0]:
> 50. This data, according to RealPage, spans over “16 million units,” which
is a “very large chunk of the total inventory in the country.” RealPage standardizes
this data to account for differences in the characteristics or “class” of the property in question. RealPage then runs this massive dataset through its pricing algorithm,whereby RealPage sets prices for participating Lessors through application of a common formula to a common dataset.
> 51. Specifically, every morning, RealPage provides participating Lessors
with recommended price levels. Lessors typically must communicate to a RealPage
“Pricing Advisor” that they have “accept[ed]” or “confirm[ed] the “approved
pricing” within a specified time frame. If Lessors wish to diverge from the “approved
pricing” they must submit reasoning for doing so and await approval. RealPage
encourages participating Lessors to have daily calls between the Lessors’ employees
with pricing responsibility and the RealPage Pricing Advisor.
> 52. If there is a disagreement between the participating Lessor and the
RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management
for resolution, and specific reasons justifying a departure from RealPage’s pricing
level are usually required. But RealPage emphasizes the need for discipline among
participating Lessors and urges them that for its coordinated algorithmic pricing to
be the most successful in increasing rents, participating Lessors must adopt
RealPage’s pricing at least 80% of the time. As one example of such encouragement,
Jeffrey Roper, RealPage’s main architect, publicly described the problem as: “If you
have idiots undervaluing [setting prices independently], it costs the whole system.”
> 53. A RealPage employee reported that these instructions are successful,
with as many as 90% (and at least 80%) of RealPage pricing being adopted. As one
Lessor explained, RealPage’s coordinated algorithmic pricing required
counterintuitive changes in their business practices “because[, upon adopting
RealPage’s coordination of pricing,] we weren’t offering concessions nor were we
able to negotiate pricing” like they previously had. That Lessor went on to explain
that RealPage “maximize[s] rents but you have to be willing to strictly follow it,”
and, as a result, “we rarely make any overrides to the recommendations” provided
by RealPage. Another Lessor described RealPage as bringing “discipline” and
“courage to pricing.”
And is still present in the most recent consolidated class-action complaint I could find [1]:
> 18. For RealPage RMS users, including the Owner-Operators and Managing Defendants, to diverge from RealPage’s RMS pricing requires approval from a RealPage Pricing Advisor or an internal RealPage-trained revenue manager, and often approval from senior management within the Owner-Operator and/or Managing Defendant organization, and even from Owner Defendants. Very few justifications are accepted for any requested deviation, and Owners, Owner-Operators, and Managing Defendants routinely reject deviations based on claims that RealPage’s prices were off-market or out-of-step with local property conditions. While RealPage claims that all pricing decisions are ultimately left to its clients, various witnesses confirm that, in their experience, no modifications can be made to RMS recommended pricing without prior approval from either RealPage or the Owners, Owner-Operators, and/or Managing Defendants’ senior management.
