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It's an interesting area because the line might be fuzzy. It's not reasonable to expect every landlord to become a data analyst or statistician! So naturally t

It's an interesting area because the line might be fuzzy. It's not reasonable to expect every landlord to become a data analyst or statistician! So naturally there's a market for a product that helps landlords make data-driven pricing decisions. I'm sure the big landlords know exactly what they're doing, but I suspect that the smaller landlords don't even realize they are participating in a price-fixing cartel. As an interesting point of comparison, consider that the Zillow "zestimate" is also an algorithmic price recommendation, shared by all market participants. What's the difference there? Is it that buyers and sellers can both use the same algorithm freely? I want to make very clear that I think price-fixing is bad and that I believe extremely high real estate prices are at the root of a large and growing amount of misery in Western economies and societies. But I'm also cautious of pursuing thoughtless regulation that hurts small businesses, to the advantage of the big businesses that are causing all the problems in the first place.

kllrnohj 3y ago
> It's not reasonable to expect every landlord to become a data analyst or statistician! Why not? It's what they did just fine for thousands of years. What fundamentally changed in the last 20 years that makes it impossible for landlords to determine their own price?
- damontal 3y ago
  Sounds like they’re determining their own price with the technology that’s available.
  - kllrnohj 3y ago
    They aren't, they're outsourcing pricing to a 3rd party knowing that the same 3rd party is doing everyone else's pricing decisions as well.
- Geisterde 3y ago
  Specialization, how much time out of my day do I have to worry about the price, if I am dealing with the city trying to get the water fixed, or repaving the driveway, or handling customer complaints? It can be more efficient to pay a modest sum to arrive at the right result, or, more profitable to actively watch the market and adjust pricing, but that costs time/money, so itd better be worth it.
trimethylpurine 3y ago
Analyst or not, the issue is knowing who is willing to underprice you. You can't know that unless you have insider information, in this case provided by a shared database. Scraping public listings doesn't give you that.
colechristensen 3y ago
It’s not fuzzy. When a group of people get together to determine a common price for goods, that’s collusion… price fixing. They are literally selling price fixing as a service openly in public. Yes indeed setting prices is difficult. If you use a service to do it for you, it should be quite illegal, and arguably already is. Also the “big” businesses clearly outsource this too, having lived in many large apartment complexes where it was obvious a third party algorithm was doing it.
- bluGill 3y ago
  The service itself is legal, but you have the difficult task of not using one client's data when working with a different client.
  - tsimionescu 3y ago
    I don't think it's legal at all. If you're making official pricing recommendations, you're essentially trying to convince competing businesses to agree on price fixing, by definition. It doesn't really matter how you arrive at that recommended price. The only way this could work is if you give individualized pricing recommendations based solely on public information + the information of the specific landlord, and if your marketing and contractual agreements and so on make it very clear that different landlords will see completely unrelated prices. Otherwise, even agreeing on the same pricing formula is an illegal form of price fixing (say, if everyone agrees to sell at public average price + 10%, dropping down to public average price + 5% if unoccupied for one month), per the FTC briefs.
    - deleted 3y ago
      [deleted]
    - projektfu 3y ago
      Exactly. If it were just a model, you wouldn't need to ask the cartel to authorize a different price. A model supplier doesn't really care if you use it or not, just that you buy it. But landlords (generally larger owners or operators of large multi-family projects) are paying high fees to the software provider previously because they think it gives them plausible deniability about the cartel behavior.
vineyardmike 3y ago
> It's not reasonable to expect every landlord to become a data analyst or statistician! And it’s not reasonable for every business to succeed. Good businesses get good at being a business and learn skills necessary to succeed. I had a corporate landlord where the leasing agents would go on tours of neighboring buildings in their spare time to build comps. You don’t need a price fixing algorithm or a pay-rolled data analyst. I think Americans have a soft spot for landlords because it’s a common business for the middle class to use to move up in the world. Which is nice, but most Americans also have stories of parasitic landlords that left them in terribly unmaintained homes with big rent increases. Regulation will absolutely hurt middle-class landlords but will increase the average sophistication of the industry.
- nerdponx 3y ago
  Serious question: Would it be illegal to hire a human "price consultant" who was very popular among your landlord friends? Does it matter if the price consultant only serves 5% of the landlords in an area? What if they serve 20%? 50%? Where does the line get drawn between "seeking advice from an expert" and "engaging in price-fixing"? I wouldn't be surprised if that was tried at some point in the past, so there might already be legal precedent for the non-algorithmic variant of this. > Regulation will absolutely hurt middle-class landlords but will increase the average sophistication of the industry. Sophistication is a tool used deliberately and maliciously by large incumbents to suppress competition and to crush smaller firms. And I'm not convinced that middle-class landlords who own a handful of units are the big bad guy we should be going after here. I can only hope that the FTC agrees and is willing to focus their attention to where it will actually help people.
  - tsimionescu 3y ago
    > Would it be illegal to hire a human "price consultant" who was very popular among your landlord friends? Does it matter if the price consultant only serves 5% of the landlords in an area? What if they serve 20%? 50%? Where does the line get drawn between "seeking advice from an expert" and "engaging in price-fixing"? The answer is most likely that it would be illegal, yes, at least if your friends are offering properties in the same area. Even discussing pricing decisions with your friends is likely illegal. Imagine it like this: Coca Cola and Pepsi executives are not going to meet for brunch and casually start discussing what margins they think are reasonable and how they set pricing in different markets and how low they are willing to go with their price. These are some of the most closely guarded secrets of a company. Decision makers who are aware of these aren't even easily allowed to leave one company and join the other, because of the risks of leaking this information. And if they do discuss this things, they would easily be seen as guilty of collusion to fix prices. The fact that two landlords who happen to be friends are not the CEOs of multi-billion dollar companies doesn't fundamentally change the law. You are not allowed to discuss pricing decisions with your competitors. If you want to collobrate, you need to incorporate and pool your resources into a common enterprise. And you can hire a price consultant, but that price consultant can't be working for other landlords in the same area. You could hire different consultants from the same firm, but the firm would have to be very careful to ensure that the consultants don't discuss their clients with each other in any way.

kllrnohj 3y ago

> It's not reasonable to expect every landlord to become a data analyst or statistician! Why not? It's what they did just fine for thousands of years. What fundamentally changed in the last 20 years that makes it impossible for landlords to determine their own price?

damontal 3y ago
Sounds like they’re determining their own price with the technology that’s available.
- kllrnohj 3y ago
  They aren't, they're outsourcing pricing to a 3rd party knowing that the same 3rd party is doing everyone else's pricing decisions as well.
Geisterde 3y ago
Specialization, how much time out of my day do I have to worry about the price, if I am dealing with the city trying to get the water fixed, or repaving the driveway, or handling customer complaints? It can be more efficient to pay a modest sum to arrive at the right result, or, more profitable to actively watch the market and adjust pricing, but that costs time/money, so itd better be worth it.

trimethylpurine 3y ago

Analyst or not, the issue is knowing who is willing to underprice you. You can't know that unless you have insider information, in this case provided by a shared database. Scraping public listings doesn't give you that.

colechristensen 3y ago

It’s not fuzzy. When a group of people get together to determine a common price for goods, that’s collusion… price fixing. They are literally selling price fixing as a service openly in public. Yes indeed setting prices is difficult. If you use a service to do it for you, it should be quite illegal, and arguably already is. Also the “big” businesses clearly outsource this too, having lived in many large apartment complexes where it was obvious a third party algorithm was doing it.

bluGill 3y ago
The service itself is legal, but you have the difficult task of not using one client's data when working with a different client.
- tsimionescu 3y ago
  I don't think it's legal at all. If you're making official pricing recommendations, you're essentially trying to convince competing businesses to agree on price fixing, by definition. It doesn't really matter how you arrive at that recommended price. The only way this could work is if you give individualized pricing recommendations based solely on public information + the information of the specific landlord, and if your marketing and contractual agreements and so on make it very clear that different landlords will see completely unrelated prices. Otherwise, even agreeing on the same pricing formula is an illegal form of price fixing (say, if everyone agrees to sell at public average price + 10%, dropping down to public average price + 5% if unoccupied for one month), per the FTC briefs.
  - deleted 3y ago
    [deleted]
  - projektfu 3y ago
    Exactly. If it were just a model, you wouldn't need to ask the cartel to authorize a different price. A model supplier doesn't really care if you use it or not, just that you buy it. But landlords (generally larger owners or operators of large multi-family projects) are paying high fees to the software provider previously because they think it gives them plausible deniability about the cartel behavior.

vineyardmike 3y ago

> It's not reasonable to expect every landlord to become a data analyst or statistician! And it’s not reasonable for every business to succeed. Good businesses get good at being a business and learn skills necessary to succeed. I had a corporate landlord where the leasing agents would go on tours of neighboring buildings in their spare time to build comps. You don’t need a price fixing algorithm or a pay-rolled data analyst. I think Americans have a soft spot for landlords because it’s a common business for the middle class to use to move up in the world. Which is nice, but most Americans also have stories of parasitic landlords that left them in terribly unmaintained homes with big rent increases. Regulation will absolutely hurt middle-class landlords but will increase the average sophistication of the industry.

nerdponx 3y ago
Serious question: Would it be illegal to hire a human "price consultant" who was very popular among your landlord friends? Does it matter if the price consultant only serves 5% of the landlords in an area? What if they serve 20%? 50%? Where does the line get drawn between "seeking advice from an expert" and "engaging in price-fixing"? I wouldn't be surprised if that was tried at some point in the past, so there might already be legal precedent for the non-algorithmic variant of this. > Regulation will absolutely hurt middle-class landlords but will increase the average sophistication of the industry. Sophistication is a tool used deliberately and maliciously by large incumbents to suppress competition and to crush smaller firms. And I'm not convinced that middle-class landlords who own a handful of units are the big bad guy we should be going after here. I can only hope that the FTC agrees and is willing to focus their attention to where it will actually help people.
- tsimionescu 3y ago
  > Would it be illegal to hire a human "price consultant" who was very popular among your landlord friends? Does it matter if the price consultant only serves 5% of the landlords in an area? What if they serve 20%? 50%? Where does the line get drawn between "seeking advice from an expert" and "engaging in price-fixing"? The answer is most likely that it would be illegal, yes, at least if your friends are offering properties in the same area. Even discussing pricing decisions with your friends is likely illegal. Imagine it like this: Coca Cola and Pepsi executives are not going to meet for brunch and casually start discussing what margins they think are reasonable and how they set pricing in different markets and how low they are willing to go with their price. These are some of the most closely guarded secrets of a company. Decision makers who are aware of these aren't even easily allowed to leave one company and join the other, because of the risks of leaking this information. And if they do discuss this things, they would easily be seen as guilty of collusion to fix prices. The fact that two landlords who happen to be friends are not the CEOs of multi-billion dollar companies doesn't fundamentally change the law. You are not allowed to discuss pricing decisions with your competitors. If you want to collobrate, you need to incorporate and pool your resources into a common enterprise. And you can hire a price consultant, but that price consultant can't be working for other landlords in the same area. You could hire different consultants from the same firm, but the firm would have to be very careful to ensure that the consultants don't discuss their clients with each other in any way.