U.S. Accuses Software Maker RealPage of Enabling Collusion on Rents
www.nytimes.com
The Justice Department filed an antitrust suit against the real estate software company, accusing it of creating an illegal pricing scheme to charge tenants more.

RealPage, maker of YieldStar, is almost singlehandedly the ones causing rent to skyrocket across much of the United States.

One of the algorithm’s developers told ProPublica that leasing agents had “too much empathy” compared to computer generated pricing.

You can learn more about them here and why this antitrust case is so important:

https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent

  • dhork@lemmy.worldEnglish
    0·
    3 months ago

    The software vendor does have a point: the software doesn’t set prices itself, it just makes suggestions based on the metrics it sees, and ultimately the property owners are the ones that raise rents. But I don’t think the developer realizes the role it is playing in the feedback loop.

    Landlords pay for this software to help them set “fair” rents. But if the software consistently sets rents that the landlord sees as too low, they will question whether the software is worth paying for, and the software vendor goes bust. On the other hand, if the software sets rents that are too high, landlords will see that software as working well, and will continue to use it. So the developer is incentivised to goose the numbers up a bit, knowing that landlords are free to set their rents lower…

    … except we all know that’s not what actually happens, particularly for these large real-estate conglomerates whose tenants are just lines in a spreadsheet. Some pencil pusher is just using these numbers from the software as-is, because there is probably more paperwork involved in justifying a rent change to their boss, while if they just accept the computers’ numbers they can make it to Happy Hour a bit early.

    It gets even worse when most of the real estate in an area is owned this way, because then the additional “the computer told me to charge this” surcharge gets “baked into” the overall market, and gives landlords who don’t use the software a reason to raise rates, because of “the market”. Then next year, it all rises again, because the software sees the overall increase in rates and thinks it’s because of “the market” and not because of its role in the increase last year.

    The incentives in this system benefit everyone but the renter. This may be a appropriate place for the government to step in and force change. Government is accountable to voters, and there are more voters who are renters than landlords.

    • kibiz0r@midwest.socialEnglish
      1·
      3 months ago

      In one news release, Realpage offered its property management clients the ability to outsource daily rent-setting and revenue oversight. “We believe in overseeing properties as though we own them ourselves,” the company said in a presentation that plaintiffs’ lawyers referenced in the lawsuit.

      A leasing manager at a RealPage client said, “I knew [RealPage’s prices] were way too high, but [RealPage] barely budged” when the manager asked to deviate from the suggested rent.

      An update to the software tracked not only clients’ acceptance rate, but also the identity of the landlords’ staff members who had requested a deviation from RealPage’s price, the lawsuit said. Compensation for some property management personnel was even tied to compliance with the company’s recommendations, it said.

      The Washington lawsuit alleged that the system was designed to police compliance of the cartel. It cited RealPage training documents that urged clients to have the “discipline” to enact the software’s pricing suggestions 90% of the time or more. Training documents encouraged regional rental managers to beware of “‘rogue’ leasing agents who too frequently override” the software’s recommended prices. Rejections would also often trigger outreach from a RealPage pricing advisor, the suit said.

    • TrickDacy@lemmy.world
      0·
      3 months ago

      No, they don’t have a point. The software is clearly created explicitly for the purpose of collusion for maximizing rent.

      • NegativeInf@lemmy.world
        11·
        3 months ago

        The purpose of a system is what it does. So I agree.

        (RealPage isn’t the only problematic software that does this either. Check up on how rental rates are set and then jacked up in storage facilities, owned predominantly by 2/3 companies)