The New York Times - Landlords Used Software to Set Rents. Then Came the Lawsuits.

OMI legal director Sandeep Vaheesan was quoted in an article in the New York Times on algorithmic price-fixing by companies like RealPage, which helps landlords collude to set rent.

Vaheesan said the government can utilize their legal advantage over private attorneys through civil investigative demands that “pop open the hood” on RealPage’s software, analyzing how its algorithm works before going to court. 

Imagine a system that lets big landlords in your city work together to raise rents, using detailed, otherwise-private information about what their competitors are charging.

Such a system is already underway, according to a series of lawsuits filed by tenants and prosecutors across the country. The plaintiffs argue that real estate software from a company called RealPage is being used by apartment owners to increase rents.

Through the Texas-based company’s YieldStar product, plaintiffs say, landlords share rental pricing data and occupancy rates — information the company funnels through algorithms to spit out a suggestion for what landlords should charge renters. Those figures are often higher than they would be in a competitive market.

In a vast majority of cases, landlords adopt the suggested prices, passing the costs on to tenants, the plaintiffs assert. RealPage, owned by the private equity firm Thoma Bravo, advertises its software to landlords as a tool that can help them outperform the market by 3 to 7 percent.

Read full article here.