RealPage still denies doing anything wrong, according to statements by Stephen Weissman, a lawyer representing RealPage, according to The New York Times. The company was pleased that the government was willing to “bless the legality of RealPage’s prior and planned product changes,” Weissman said, adding that “there is a lot of misinformation out there about how RealPage’s software works and what value it provides for both housing providers and tenants.”
RealPage, founded in 1998, is a multi-faceted tool for landlords, not just pricing assistance. Its set of features, according to press coverage and the federal charges that led to the settlement, have been an invisible looming presence in tenants’ lives for years, making life generally more miserable while most tenants had no idea of its existence. For example, according to a 2020 investigation by The New York Times and The Markup, RealPage was using flawed algorithms to conduct background checks, and landlords were refusing homes to people based on non-existent criminal charges.
When it came to rents, RealPage itself claimed at one point that the landlords who used it honestly were “using every possible opportunity to raise the price even in the most downward trends or unexpected circumstances.”
Then in August last year, the Justice Department filed an antitrust lawsuit against RealPage along with eight state attorneys general. The legal filing makes for extremely gratifying reading, especially when you learn that RealPage has reached a settlement after being accused of:
“At bottom, RealPage is an algorithmic arbiter that collects, combines, and exploits landlords’ competitively sensitive information. And in doing so, it enriches itself and keeps landlords compliant at the expense of renters who pay inflated prices and honest businesses that otherwise compete.”
The price recommendation system at RealPage, called YieldStar, and AI Revenue Management asked users—landlords—to enter non-public data on rental real estate that typically only landlords have access to. This includes personal data from applications, rent amounts, renewed leases, vacant units and other numbers of this nature that can be used to gauge market conditions in extremely detailed detail. Not all of this data is part of the latest version of RealPage’s software, but that’s how it has historically worked.
All this market information was piled into one pile and combined with data piles from other landlords, who are theoretically their competitorsThe system will process all this with an algorithm, and generate special price recommendations for all homeowners in an area, using all each other’s data,
According to the DOJ, it had an 80 percent market share, making its data more comprehensive. That alleged monopoly position theoretically meant that landlords paid higher prices for RealPage, the benefit of which was passed on to renters.
And this obviously increased the fare. A 2022 ProPublica investigation found widespread adoption of RealPage and accompanying widespread rental growth. In Nashville, prices recently rose 14.5%, and ProPublica found that homeowners were thrilled. In a testimonial, according to ProPublica, a real estate revenue manager said, “The beauty of YieldStar is that it inspires you to go places you wouldn’t go if you weren’t using it.”
So instead of competing with each other to earn rent from people who needed housing, the lawsuit claims, landlords joined with other landlords, and ran competitive campaigns against their tenants. They never actually set foot in a room with each other to engage in horrendous price-setting meetings. The software reportedly took care of everything for them.
If the settlement is approved by a North Carolina judge, RealPage will no longer be allowed to use information from current leases to train its algorithms, or mix together non-public data from different landlords when making price recommendations.
DOJ Antitrust Division Leader Gail Slater was quoted in a government news release as saying, “Competing companies must make independent pricing decisions, and with the rise of algorithmic and artificial intelligence tools, we will be at the forefront of vigorous antitrust enforcement.”
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