According to CNN Money, rental prices may soon be determined using a type of Priceline.com for landlords. This new type of system will enable landlords to determine what to charge their tenants based on the supply and demand of the real estate market.
With rental housing on the rise, this new system will allow landlords to ask for higher rent on vacant apartments when the demand is high, and if it is low, will tell them to lower their rates.
According to the National Multi Housing Council's website, or NMHC, about 35% of U.S. households are occupied by renters. Including about 95,00 residents, this system will dramatically affect the means of renting for this portion of society.
It will allow many larger management companies to set their rents more efficiently. According to Andrew Rains, president of Rainmaker Group, this "dynamic pricing" system is now used to determine the rent of about 5 million apartments, about 30% of rentals that are handled by professional property managers.
With the decisions made by pure statistics, this new software will take the emotion out of pricing, says Bryan Pierce, director of revenue management at Holland Partner Group. The program will keep pricing objective.
How does it work? Basically, unlike when a manager overprices a unit and hold onto that price, this software will automatically lower the rent, based on day-to-day market conditions until a tenant takes it. It will also be used to manage lease renewals by spacing out when next year's renewals would be due.
This software will also help landlords to comply with the Fair Housing Act, which was designed to prevent discrimination. The system will enable two people to be offered the same apartment, at the same time, at the same price.