Dynamic pricing in real estate rentals, I hate it!
My particular chosen occupation is working as a rental property marketer, and in recent months, dynamic pricing, in this case Spherexx has been the bain of my life, to the point of me reevaluating whether I want to continue in real estate marketing if this is what we are trending towards in property management.
Let’s start with the reasons I dislike dynamic pricing software. It creates more work for marketers and managers, to keep pricing up to date, I have to log into our property management system to check the current prices, then go to the property websites, apartments.com, rentable.co etc. to update prices daily.
Secondary, this particular property has an online leasing system, which I pull into the website via some JavaScript, and I have seen as much as a $100 range for a single unit, and pricing for each lease length is all over the place, I have seen a 10-month lease be offered for $20 less than a 12-month lease, what sense does that make? Short-term leases should incur an added premium, not the other way around.
Some lease lengths are not available at all, and it was explained to me that the reason for this is to not have a lot of leases expire in a particular month, which I assume is why a 10-month lease is less than a 12-month lease, to deter people from signing a 12-month lease. And the price can change significantly if you change your move-in date a day or two forward or back, which in my view would drive people away.
This dynamic pricing model, amongst other things, has contributed to a vacancy crisis. I said at the time that I found out that the owners switched to dynamic pricing, this was going to cause issues at lease renewal time. Note, that I was not informed of this change, I found out when I logged into the property management software on a Monday morning, having to email around to find out what was going on.
This kind of software might work better in a larger city, but not in Wichita, Kansas.
RealPage, who is the dominant property management software provider has its own dynamic pricing software and is facing investigations into allegations of price fixing, keeping prices artificially high. RealPage, with dominance in the market, has access to pricing for hundreds, if not thousands of properties in a given area, and sells its dynamic pricing software with the incentive of maximizing rents, effectively killing competition. So it is facing multiple lawsuits for anti-competitive behavior.
I really hope that the government reigns in these systems, companies like RealPage should not be able to control the market in this manner, price fixing is extremely illegal in the United States. But, it is, the good ol’ US of A, so some palms will be greased and it will be swept under the carpet.