real estate software company hid available units to constrict supply and inflate stated fair rent price calculation.
Richardson-based RealPage Is Facing a DOJ Investigation Into Its Rent Pricing Software
The real estate software company RealPage has been accused of using its rent pricing software to help landlords inflate market rents. Now it faces 11 lawsuits and an investigation by the U.S. Department of Justice.
YieldStar uses data analytics to suggest appropriate pricing based on apartment availability. But property managers can let units sit vacant and off the market, which the algorithm interprets as a supply crunch that warrants higher prices. The program allows landlords to see anonymized, aggregated data showing competitor pricing. Many property managers that use the software control thousands of apartment units in individual markets, and the ProPublica story alleges that RealPage executives and developers were aware of the impact YieldStar had on pricing.
“We are concerned that the use of this rate setting software essentially amounts to a cartel to artificially inflate rental rates in multifamily residential buildings,” said the letter, which was also signed by Sen. Richard Durbin (D-Illinois) and Sen. Cory Booker (D-New Jersey).
Citing an unnamed source, ProPublica said the matter has also renewed questions regarding the merger between RealPage and its largest competitor, Rainmaker Group, in 2017. That source said that some DOJ staff flagged the merger for further scrutiny then but were overruled by Trump appointees who chose not to challenge the merger in court.