Accused of using algorithms to fix rental prices, RealPage goes on offensive
![Accused of using algorithms to fix rental prices, RealPage goes on offensive Accused of using algorithms to fix rental prices, RealPage goes on offensive](http://cdn.arstechnica.net/wp-content/uploads/2022/10/rent-apt-760x380.jpg)
RealPage says it isn’t doing anything wrong by suggesting to landlords how much rent they could charge. In a move to reclaim its own narrative, the property management software company published a microsite and a digital booklet it’s calling “The Real Story,” as it faces multiple lawsuits and a reported federal criminal probe related to allegations of rental price fixing.
RealPage’s six-page digital booklet, published on the site in mid-June, addresses what it calls “false and misleading claims about its software”—the myriad of allegations it faces involving price-fixing and rising rents—and contends that the software benefits renters and landlords and increases competition. It also said landlords accept RealPage’s price recommendations for new leases less than 50 percent of the time and that the software recommends competitive prices to help fill units.
“‘The heart of this case’ never had a heartbeat—the data clearly shows that RealPage does not set customers’ prices and customers do what they believe is best for their respective properties to vigorously compete against each other in the market,” the digital booklet says.
But landlords are left without concrete answers, as questions around the legality of this software are ongoing as they continue renting properties. “I don’t think we’re seeing this as a RealPage issue but rather as a revenue management software issue,” says Alexandra Alvarado, the director of marketing and education at the American Apartment Owners Association, the largest association of landlords in the US.
Alvarado says some landlords are taking pause and asking questions before using the tech. Software like RealPage “has made it much easier to understand what is happening in the market,” Alvarado says. “Technology has helped us in so many ways to make all these processes more efficient. In this case, it’s now borderline too efficient.” And members of the AAOA are asking questions about the legality of revenue management, she says. “The first thing landlords typically think is, what is the legal repercussion? Am I going to be in trouble for using this software? If the answer is maybe, it’s usually off the table.”
Dana Jones, president and CEO of RealPage, said in a statement released alongside the booklet that “the time is now to address a number of false claims about RealPage’s revenue management software, and how rental housing providers operate when setting rent prices.” RealPage did not respond to WIRED’s queries asking what prompted the lengthy statement in June. Officials appear to be narrowing in on RealPage, as the Justice Department is allegedly planning to sue the company, according to a report from Politico last week. The company declined a request to comment on the latest in the ongoing Department of Justice probe.
Allegations of price-fixing that may constitute antitrust violations have dogged the software company since late 2022, when ProPublica published an investigation alleging that RealPage’s software was linked to rent rises in some US cities, as the company used private, aggregated data provided by its customers to suggest rental prices. (In response to ProPublica’s reporting, RealPage commented that it “uses aggregated market data from a variety of sources in a legally compliant manner.”)
RealPage’s software is powerful because it anonymizes rental data and can provide landlords and property managers with nonpublic and public data about rentals, which may be different from that advertised publicly on platforms like real estate marketplace Zillow. The company contends that it’s not engaging in price-fixing, as landlords are not forced to accept the rents that RealPage’s algorithm suggests. Sometimes it even recommends landlords lower the rent, RealPage claims. But antitrust enforcers have alleged that even sharing private information via an algorithm and using it for price recommendations can be as conspiratorial as back-room handshake deals, even if landlords don’t end up renting apartments at those rates. The reported antitrust investigation is ongoing.
RealPage’s algorithmic pricing model is among one of the first subject to scrutiny, perhaps due to its involvement in housing, a necessity that has ballooned in price as housing supply languishes. Typical rent in the US is just under $2,000, according to Zillow, up from around $1,500 in early 2020. “Housing affordability is a national problem created by economic and political forces—not by the use of revenue management software,” RealPage says. But renters can’t tell whether their rates are rising because of algorithms or not.
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