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Comment by legitster | Hacker News Reader

Again, I have experience in this market so I have first hand experience.

I understand the cartel allegations here, but I think people are vastly underselling the competitive forces at play. If you are not filling your unit immediately, you are losing thousands of dollars a month.

Cartels break down because of the incentive to undercut (prisoner's dilemma). But in this case, it would be very, very profitable to undercut RealPage's prices and get your units filled before them. So their compliance and enforcement mechanisms of RealPage would have to be extremely robust to get corporations to willingly lose tens or hundreds of thousands of dollars a month to collectively collude on prices.

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> If you are not filling your unit immediately, you are losing thousands of dollars a month.

This is false. If you have 100 units with monthly rents at: 100x$900 = $90000, 90x$1000 = $90000. 85x$1100= $93500. Of course we have no idea how many people will decide to not rent from you at different rates, but it should be obvious that the numbers can work out to it being better to not rent a few units if the price goes higher by enough as a result.

You are correct that a cartel has incentive to defect, but is it enough? You are correct that this is prisoner's dilemma, but it is a multiple round game which has very different incentives from a single round. You are better off in a single round defecting, but you are better off in repeated rounds if everyone plays with the cartel and so they are not defecting. (or at least not too much)

It’s enough if there’s enough inventory. The only reason it functions is because there’s not enough inventory in many of these markets.

> 85x$1100= $93500

And don't forget that you get to write off 15 empty units at the presumption of a $1100/mo rate. Or Airbnb them.

I worked for a public REIT that started using YieldStar when I worked there. Once they changed to YieldStar, all pricing came out of YieldStar. Rental quotes for prospects were only generated from YieldStar. Any deviation from the YS price had to be approved by the regional VP and they were not common.

They did this because RP was able to demonstrate that accepting a bit more vacancy in the very near term meant higher rents (thus higher renewals) which more than paid for the additional vacancy.

How are the forces being undersold here? A large-scale property management company can drastically influence the market without needing to fully capture it or even hold a majority.

Let's say of a given market, 30% of all units are owned by a large-scale property management company using this software.

If the prices of the 30% of those properties was artificially kept high, it would push renters to look at the 70% of other landlords whose prices were kept low as a result of not using this software, causing a demand on that part of the market.

As demand rises in the 70% of open-market-priced apartments, I would expect these property owners to see that there's a bump in demand and would understandably see this as an opportunity to nudge prices up a bit.

If your property only received 10 potential tenant candidates a month a year ago, and you're now seeing 14-15, you might be leaving money on the table.

Removing the cartel claim for a moment:

Say I'm at a farmers market with 4 produce stands. If one stand hikes their prices 40% for whatever reason, presumably people would start to consider visiting the other 3 produce stands.

Why wouldn't the other stands consider raising their prices with the increased attention?

What about the counter incentive, that lowering rents lowers valuations, which affects creditworthiness and financing by lenders?

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