Hacker News Reader

Comment by vel0city | Hacker News Reader

> There is approvals team that that has to press the button in addition to management.

I agree the article is very clear. The approvals team is the management of the property.

From the article:

> 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.

This snippet is in the "..." from the above comment. Funny they snipped out this extremely critical part of the quote to show who does the approval.

Where does it say RealPage employees need to approve the price?

View on HN

Wrong paragraph, look at the one above it:

> 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.

So every day an employee at the Lessor must tell a Pricing Advisor -- a flesh-and-blood RealPage employee -- that they accept the pricing provided by RealPage. Further, to reject the pricing, they must explain to the Pricing Advisor why they are rejecting the pricing in writing.

It IS confusing because it goes on to say in the following paragraph that said requests also require further approval from a manager at the Lessor.

This is a bit vague, but "wait for approval" here doesn't necessarily mean its the Pricing Advisor that's approving it. I definitely take it to mean its the management approval as mentioned later. Which makes sense, you'd normally want deviances from established prices to be approved by management.

Given that it says "If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor..." I'd say the Pricing Advisor isn't able to just wholesale deny it or delay it. As the leasing agent, you'd just choose to deny that price, put in a comment about how its a unit that we haven't been able to move in forever and every tour over the last six months leads to people saying the unit is way overpriced", and then that comment would get sent to your manager for approval or rejection.

How is it vague?

> Lessors must communicated to a RealPage pricing advisor that they have accepted or confirmed the approved pricing

Okay, so the Lessor is directly communicating with a RealPage employee.

>If Lessors wish to diverged from the approved pricing they must submit reasoning for doing so and await approval

How could this same Lessor be getting approval from anyone other than that employee?

> How could this same Lessor be getting approval from anyone other than that employee?

Because it tells you who the dispute gets escalated to in that next paragraph, and it's not that RP employee.

> 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

If the employee has permissions to just set the price, they can just set the price. If they don't, which a lot don't, the dispute gets sent to their manager who does have the rights to set the prices.

RP knows there's a disagreement on the price, so they can update their models and understand why the property disagrees with the generated prices, but they're not directly enforcing their generated prices. They do strongly encourage the generated prices though and do pressure the property to stick to the price, but ultimately it does not require approval from the RP employee.

...but that's still not approval by Realpage employees. The employees of the property management company do not need realpage approval to change prices from the suggested prices. They need management approval from their own company to do so.

> 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.

Sure, I'm not trying to make any argument here that this is a good system or that it isn't afoul of any antitrust/price fixing or anything along those lines.

I'm just stating this idea that many seem to have here that these prices are being enforced behind RealPage support agents manually approving price changes is incorrect. In fact, property managers can choose to just not use this price tool at all, and manually set their prices, which can also require employees to submit approvals for price changes.

The whole "await approval" thing isn't the problem, that's just normal for lots of places. Lots of places require some kind of management approval to adjust prices.

The rub is that the suggested pricing is the default that doesn't require extra layers of approval with an included reasoning for deviating. All the pressure is for using the price derived from the proprietary information of other companies-that would be price fixing. It's not the process, so much as the source except that the process is set up to encourage as universal adoption as possible to keep the scam going.

As mentioned elsewhere, chances are even if the property management manually set prices for every unit these same leasing agents would still have to submit approvals for changes to these prices. Its just that those with actual price authority for the building chose to set the prices for those units to be whatever the algorithm suggests by default.

Just like the person at the checkout counter can't just arbitrarily sell me a PS5 for $5.

I'm not saying they are DOING anything or a "real" team. It could just be a queue that creates a delay. The objective is to increase the friction to the maximum degree when deviating from the algorithmic pricing.

Still, the impression given to the property's management team is that a person (possibly a customer service grunt) is doing some kind of "final review," manually clicking a box or even just making sure they don't drop below 80% acceptance.

> Still, the impression given to the property's management team is that a person (possibly a customer service grunt) is doing some kind of "final review," manually clicking a box or even just making sure they don't drop below 80% acceptance.

Or making sure their leasing agents aren't issuing leases that will lose the company money.

If the building's budgets are based around leasing apartments at at least $2/sqft, and leasing agents start issuing leases at $1.50/sqft without anyone else knowing or approving, there's going to be a problem. Those leasing agents aren't always privy (or even care to know) about the budgets of the building.

If a waiter starts selling the $5 hamburgers for $1, do you think the business is going to do well? Should the waiter have the ability to arbitrarily decide menu prices?

That isn't at all the same. You could handle that by ensuring the leasing agent's manager sees all the leases going through.

This is a cartel going around making sure that all the businesses are playing ball, so they can set prices for everyone how they see fit.

Yeah and you could have the manager at the restaurant inspect everyone's checks or you can just standardize price strategies for the location and auto-approve leases which meet established criteria.

Both the article and the court filing are unclear about who "the Lessor's management" is, but the Lessor is quite clearly defined as the party which is making property available for lease

It's difficult to imagine a reason why a property owner should have to appeal to "management" to vary the prices of their own asset that doesn't involve "management" being an cartel body.

Yeah, its unclear because the Lessor's management could be a property management company, the ownership of the property, a leasing team supervisor, etc. There's a lot of ways you can set up your property ownership/management/leasing teams, so there wouldn't be a single point to say "the lessor's manager". However, that management is not RealPage.

But, according to the filing, there is a person called a "RealPage Pricing Advisor" who is typically the only party in the loop with the ability to settle the disagreement without seeking further approvals. And it's not exactly a normal arrangement for the "Lessor's employees with pricing responsibility" to have prices dictated to them by a third party company which also sets the Lessor's competitors' prices.

Similarly, if that store manager at Walmart you mentioned had to seek approval from the same advisor that does prices for K-mart and Target to adjust the amount on the till, I don't think one could argue that this wasn't price fixing so long as he was still able to get you the discount by petitioning the Walton Family...

> Lessor's employees with pricing responsibility

Nowhere in here did it say these people needing to submit the approvals had pricing responsibility. Even if you did have people manually create the prices you'd probably still require your front line leasing agents to submit approvals for listed prices. In this case, those with the pricing responsibility configured their tool to use the algorithmic pricing to automatically set the price instead of manually setting the prices, and deviating from that automatic price requires approval.

> who is typically the only party in the loop with the ability to settle the disagreement

This is not true as well. If the person does have pricing responsibility, they can just set the price to whatever. If they don't, it gets set to approvals for whoever does, which would probably be someone in that employee's management chain. And by management I mean the leasing company or management company or ownership. Not RealPage.

> Similarly, that store manager at Walmart you mentioned should have to seek approval from the same advisor that does prices for K-mart and Target

Once again, this isn't requiring approval from the RealPage Pricing Advsior. Nowhere does this article actually state the approval has to come from RealPage or that RealPage actually has the power to block price changes. This is requiring approval from whoever at the property actually has pricing responsibility, whoever that may be. Chances are it isn't the front of line leasing agent though.

> Nowhere in here did it say these people needing to submit the approvals had pricing responsibility.

It's right there in the text of the lawsuit:

>> ...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

Now you can reasonably dispute whether the Lessor employee carrying out day to day responsibilities actually has pricing responsibility if they're unable to vary prices by themselves, but what is not normal is that the higher pricing authority which usually doesn't need an approval process appears to sit with employees of what is notionally a third party software vendor for a lot of notionally competing landlords

[nb I edited my previous post slightly whilst you were replying. Slight change of phrasing but I don't think it materially affects your reply]

> Now you can reasonably dispute whether the Lessor employee carrying out day to day responsibilities actually has pricing responsibility

I do dispute it, because it even suggests later that "the dispute is often elevated to the Lessor’s management for resolution". It implies some percentage of these disputes don't bother getting elevated, probably because that user actually did have pricing authority and could just change the price. Most users of the system would not have this permission. Just like most employees at the checkout counter can't change the price without approval.

Do I agree this market is a bit strange for having these algorithmically generated prices? Sure. Should it be investigated for potentially illegal business practices? Sure. Is requiring a manager approval for changing the price from what those with pricing authority originally set it to, even if that price is essentially "auto", strange? No.

> It implies some percentage of these disputes don't bother getting elevated, probably because that user actually did have pricing authority and could just change the price

Or it implies that when the Pricing Advisor won't change the model, they are persuaded to back down and accept the prices given, by a company that insists its valuation model will only work if clients adhere to its prices >80% of the time[1]. Or that sometimes the "Pricing Advisor", notionally a customer success employee of an ISV, has some sort of executive authority to adjust the price which that Lessor's own employee doesn't. Certainly those two outcomes are those the drafter of the lawsuit intended to imply, regardless of which is actually the most frequent.

It'd be odd if a company put the equivalent of a checkout operative on the call with a third party "Pricing Advisor" to discuss the price (both in general and in the context that RealPage supposedly encourages daily calls with employees "with pricing responsibility").

[1]I sold an algorithmic valuation model once. It's something of an understatement to say that this is not how valuation models ordinarily work or the sort of feedback a valuation professional behind the model would ordinarily give to clients...

Your argument is quickly drifting away from what you were originally suggesting, which was that RealPage had some power to arbitrarily block their customers from changing their prices and truly enforce their suggested prices (see your statement "is typically the only party in the loop with the ability to settle the disagreement"). Now its just that they have a lot of persuasion to those with pricing authority. Which sure, investigate that, I agree.

So yeah, investigate those calls. Investigate how the pricing algorithm comes up with its price. Investigate how much the marketing is pushing cartel-like behavior. Smash it with a hammer if they're breaking the law.

But the fact that requiring front of line employee pricing changes to be approved by someone in management at the property management/ownership as something wrong or needing investigation, that's pretty normal. Most users of RealPage wouldn't have pricing authority! They're front of house salespeople. Its these kinds of requests to change the prices that would come under review, and that approval wouldn't be at the decision by RealPage. Sure, maybe RealPage has a lot of persuasion over the person making that final decision, but ultimately whoever has pricing authority at that property (not a RealPage employee) isn't the one that clicks "Approve" either way.

Awaiting approval from your manager to change the price is not evidence of price fixing, which is what I originally replied to.

Your argument is quickly drifting away from the actual process described in the document

>> 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

There is nothing remotely normal about someone having the executive decision making authority to authorise a price variation a third party is trying to make to their inventory but not the executive authority to keep prices as they were. Nor is there anything remotely normal about a person seeking approval to retain or change price contacting a third party company's "Pricing Advisor" in the first instance rather than the approver within their own company. If the "Pricing Advisor" didn't have greater ability to resolve this "dispute" than the staff member who has the ability to "approve" a price change but apparently not to hold prices as they are, why would they be contacted?

Nobody has argued there isn't some ultimate beneficial owner of a property with the power to tell RealPage to bugger off, they're arguing that as described this resembles a normal chain of authority and consultation of third party experts in roughly the same way an MLM resembles a regular sales team. Now if you want to argue that this is deceptive wording on the part of the firm drafting the lawsuit stitching lots of discrete elements together into the appearance of a single process of questionable legality, I'll agree that may be possible (putting the worst possible spin on things is a class action lawyer's job) but then, some evidence of that would be nice...

My argument hasn't drifted away from what this process is. Combining the logic here in an easier to follow workflow:

Ownership/management chooses to buy RealPage for their property management solution for a building. They decide to configure it and contract out Pricing Advisor services. They've now established the default prices are whatever RealPage suggests it should be.

They then hire a lot of leasing agents (or they hire a leasing agency who hires these people). These are front of line sales people. These people are getting the day to day updates on changes to these prices, which are supposedly algorithmically generated. These are the people you'd want to review these prices, because these are the people who are actually dealing with the day to day of trying to sell these units. If these prices that the advisor is suggesting are unreasonable, they should probably push back and make a recommendation to change the price. They're the ones hearing customers argue the prices are overpriced and what not, they're a bit closer to the ground truth of the price in many ways.

However, those front line workers probably should not have arbitrary pricing powers. They're just focusing on signing leases, not necessarily broader picture of the building's business.

So talking about the approval process (which was the whole point I was originally replying to, not the algorithmic pricing or the whole weird relationship of RP to lessors which I've agreed should be investigated), lets just remove the whole algorithmic side of things. Upper management said units lease for $2/sqft. Front of line leasing agent decides to start signing leases for $1.75/sqft. Should that front of line leasing agent have been able to change the price from what upper management wanted without seeking an approval? Should they have probably given a written reason for going against the established pricing structure upper management chose?

So now lets enter back the idea of the algorithmic pricing. Upper management likes this dynamic algorithmic pricing. They say, whatever the algorithm sets, that's the price today. Algorithm says $2/sqft. Front of line leasing agent thinks a more realistic price is $1.75/sqft. Should that front of line leasing agent just be able to arbitrarily decide what the price is without seeking some approval? Ultimately, that review isn't some RP agent; that review is the same manager as before.

I think you're conflating the people with pricing authority on the call with the Pricing Advisor and the people who would often be submitting pricing changes for approvals. If they're having to get the pricing change approved by their management, then by definition they didn't have pricing authority. The people with pricing authority are the ones who made the decision to use this whole Pricing Advisor system, and are continuing to allow the Pricing Advisor use their black box to tell them what the price is today. The ones on that call are the ones that can tell RP to bugger off, as by definition they have pricing authority.

I do agree the algorithmic pricing is weird, and a lot of markets don't behave this way. I do think there's some bad relationships what with the pricing advisors and the large market presence of RP. These things should be investigated and potentially have judgements against. The fact its literally saying "coordinated algorithmic pricing" is a major red flag there's something bad happening here. The "coordinated" part is the part is the thing that's bad, not that front of line employees need approvals to change prices or even just the basic idea of using algorithms to set prices.

Sure, if you remove the features which are problematic, the process ceases to be problematic!

But the actual process as described involves an algorithm operated by a third party varying an organization's price, a representative of that company being required to communicate their acceptance or disagreement with reasons to the third party, the staff member with that executive responsibility being encouraged to speak to a representative of the third party, and escalate to unspecified management only in the case a "dispute" is not resolved by that third party.

That's not at all similar to how a regular approval process works with even the most junior staff members, and the idea it applies only to front of house staff is entirely your invention.

Every member of every unlawful cartel ever had senior decision makers who chose to sign up to the cartel and could tell it to bugger off or make the odd exception. That doesn't mean they can't be accused of price fixing in the event they take the decision to delegate day to day pricing to an organization also setting their competitors' prices, or even worse involve them in the review/approval chain for exceptions to those prices.

> Awaiting approval from your manager to change the price is not evidence of price fixing, which is what I originally replied to.

This is ultimately all I'm arguing. I'm entirely in agreement the relationship between RP and a significant chunk of the market, and the fact they're naming the pricing strategy as coordinated sounds exactly like price fixing.

But, requiring a manager to approve a change in pricing, that isn't odd. That singular thing, that's all I'm talking about, because that's what I originally replied to here.

> > await approval

> Sure seems like RealPage is price fixing then

Awaiting approval from your manager to change the price is not evidence of price fixing. Do you disagree with this basic premise?

I disagree with the basic premise that what is actually described in the situation described - a third party called a "RealParty Pricing Advisor" does not need approval from a manager to change prices, whilst an employee tasked with the responsibility of confirming the day's prices is presented with the options of either confirming the change (to the third party) or entering into a dispute resolution process (involving the third party) even just to keep one of the prices the same - represents a normal process of price changes being signed off by a manager.

Usually the owner of the building is the one who insist on using the pricing software, because it increases rents. The management company usually prefers lower rents, because it is less work to fill units.

specific reasons [...] are usually required.

By whom? It's rather ambiguous (as is so oftent he case with the passive voice), I can see how you and the other person drew different interpretations.

From what I gather, this was training for a leasing sales agent. So this would be the reasons why that sales agent thinks this person that's trying to get the lease should get the lease for something other than the list price. Those reasons would then get sent to that agent's management team for approval. Which is good to have those reasons, like "we've been having trouble leasing that corner unit as people are often concerned about road noise, it has been vacant for over six months at current pricing."

Reply on news.ycombinator.com