“Machines quickly learn the only way to win is to push prices above competitive levels,” said University of Tennessee law professor Maurice Stucke, a former prosecutor in the Justice Department’s antitrust division. In particular, RealPage’s creation of work groups that meet privately and include landlords who are otherwise rivals could be a red flag of potential collusion, a former federal prosecutor said.Īt a minimum, critics said, the software’s algorithm may be artificially inflating rents and stifling competition. The software’s design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation’s largest landlords to indirectly coordinate pricing, potentially in violation of federal law.Įxperts say RealPage and its clients invite scrutiny from antitrust enforcers for several reasons, including their use of private data on what competitors charge in rent. One of the algorithm’s developers told ProPublica that leasing agents had “too much empathy” compared to computer generated pricing.Īpartment managers can reject the software’s suggestions, but as many as 90% are adopted, according to former RealPage employees. RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money. To arrive at a recommended rent, the software deploys an algorithm - a set of mathematical rules - to analyze a trove of data RealPage gathers from clients, including private information on what nearby competitors charge.įor tenants, the system upends the practice of negotiating with apartment building staff. In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage. The move helped the Texas-based company push the client base for its array of real estate tech services past 31,700 customers. RealPage became the nation’s dominant provider of such rent-setting software after federal regulators approved a controversial merger in 2017, a ProPublica investigation found, greatly expanding the company’s influence over apartment prices. Greystar uses RealPage’s software to price tens of thousands of apartments. The nation’s largest property management firm, Greystar, found that even in one downturn, its buildings using YieldStar “outperformed their markets by 4.8%,” a significant premium above competitors, RealPage said in materials on its website. “The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it,” said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage’s software in a testimonial video on the company’s website.
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