Catch up on stories from the past week (and beyond) at the Slashdot story archive

 



Forgot your password?
typodupeerror
×
United States Government

US Goverment Investigating Real-Estate Tech Company Accused of Helping Landlords Collude (propublica.org) 132

The anti-trust division of America's Department of Justice "has reportedly opened up an investigation into RealPage, the real estate technology company accused of contributing to higher-than-normal rent prices," reports the Verge.

ProPublica writes that the investigation explores "whether rent-setting software made by a Texas-based real estate tech company is facilitating collusion among landlords, according to a source with knowledge of the matter." *The inquiry is being launched as questions have arisen about a 2017 merger between RealPage and its largest pricing competitor.... Congressional leaders have pushed for an investigation into RealPage in three letters to the DOJ and the Federal Trade Commission, which were sent after a ProPublica report on the software's use in mid-October.

The letters raised concerns that RealPage's pricing software could be pushing rents above competitive levels and allowing big landlords to coordinate their pricing in violation of federal antitrust laws. "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," three senators said in a letter in early November. They included Sen. Amy Klobuchar, the Minnesota Democrat who chairs the Senate Subcommittee on Competition Policy, Antitrust and Consumer Rights....

In addition to the letters from congressional lawmakers, renters have filed three lawsuits in federal court in Seattle and San Diego since mid-October, alleging RealPage and a slew of large landlords are engaging in anticompetitive behavior through the company's software.

They note Capital Forum's report with additional details — but the Verge nicely summarizes the issue: ProPublica's report states that the algorithm's design has "raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation's largest landlords to indirectly coordinate pricing, potentially in violation of federal law." These experts have also raised concerns with the RealPage user group, an online forum that lets apartment managers who use the service communicate — and potentially coordinate — with one another.
This discussion has been archived. No new comments can be posted.

US Goverment Investigating Real-Estate Tech Company Accused of Helping Landlords Collude

Comments Filter:
  • *Yawn* (Score:5, Insightful)

    by SeaFox ( 739806 ) on Sunday November 27, 2022 @07:58PM (#63084068)

    "Investigating" is just taking a look at something. Let me know when actual actions and punishments happen. I'm expecting about the same amount of meaningful change here as I am the investigation of Ticketmaster.

    • I understand your thought process here; however, before they can get to "actions and punishments", they actually do have to investigate. This is a "new" thing, so it is unhelpful to assume nothing will be done about it until you start hearing the justifications and equivocations about whether or not there is actually a problem and how to deal with the problem.

  • by gurps_npc ( 621217 ) on Sunday November 27, 2022 @08:00PM (#63084072) Homepage

    It is illegal for x group to secretly discuss setting a specific price.

    The software collects non-public (aka 'secret' ) "current" rent prices, then advises them on what to pay. That sounds exactly to me like it is a secret discussion about setting prices.

    I cannot see anyway for RealPage to fix this issue, the company's business process is illegal.

    • by AmazingRuss ( 555076 ) on Sunday November 27, 2022 @08:31PM (#63084120)
      They could could make a tax deductible donation to a charitable entity....
    • Re: (Score:2, Insightful)

      by kenh ( 9056 )

      When I recently sold a house, I looked at the prices being asked for comparable houses in my community and priced mine accordingly. Does my use of Zillow implicate me in some illegal cabal trying to maximize the price paid for my home? No, of course not.

      As best as I can understand it the way this secret organization has colluded is by each landlord uploading their rental rates into a central database that other landlord can review and use to determine the maximal price thiey could collect in rental rates...

      • If it's collusion, then it's illegal. Even if they use a third-party intermediary. Unfortunately,

        the definition of "collusion" in the law is vague enough that it's unclear whether the company is doing something illegal or not.

      • by whoever57 ( 658626 ) on Sunday November 27, 2022 @11:31PM (#63084338) Journal

        The key difference, which you seem strangely keen to ignore is that the rental data is only available to other landlords, unlike the house sale data and the gasoline price data, which are available to all.

      • If the landlord want to share what his tenants are paying, why is that wrong? Why would a renter assume their anonymized rental agreements are "secret"?

        Indeed there should be no secrets. Landlords can indeed share just with their friends, so long as renters can share in an open public database as well. Sharing for everyone is transparency.

      • by suutar ( 1860506 ) on Monday November 28, 2022 @12:19AM (#63084400)

        The "Rent going up?" link in Related Stories has a little bit more info; it's not that they put info in a database and search it, it's that they feed their info into an algorithm that takes it and a lot of other info that they can't see and spits out a number. It's not sharing between landlords (and that fact might tend to make it not collusion, in my not-a-lawyer opinion), it's a consulting service that will tell you what the highest rent you're likely to find a renter for is.

        • That's what makes it interesting. It may not be collusion as the law is written, but it may produce an outcome that's indistinguishable from if collusion were occurring. It also just shows why making a law against something you don't like rarely works because legislating intent is practically impossible (never mind all the unintended consequences that typically result from trying) to achieve and if any end is valuable enough, someone will try to find a means to arrive at it.

          The solution to high rent is t
          • "It may not be collusion as the law is written"

            The punch line is that the chief scientist at RealPage when they were developing this system, who claims to have had no idea that this would constitute price-fixing, had previously been in the airline industry developing a system which was investigated by the DoJ for anti-competive practices and subsequently subject to a consent decree to stop engaging in price-fixing.

            The same guy did the same thing expecting a different outcome.

      • You answer yourself. What you did was market research - however, if you went into some kind of local sellers' group and agreed not to sell under 400k, it would be a textbook example of a cartel.

        What's even better here is that it wasn't even offers but contained "anonymized contracts data" in other word, a verified "I milked a person X for this much", as a price-setter, which is even more of a low blow in terms of negotiation. The business involved should be fined to hell and back.
        • Re: (Score:2, Interesting)

          by Luckyo ( 1726890 )

          I don't understand the difference you're claiming between "I looked at a system online that told me prices that homes sold in my region and set my price at at least that much" and "I looked at a system online that told me prices that homes rented for in my region and set my price at at least that much".

          Because if looking at price levels in region is illegal collusion, then pretty much everyone who sold a home in last decade is guilty and "should be fined to hell and back".

          Because there's no "seller's group"

          • The difference is indeed the commodity that is prices here.

            Doing research (or pay a company for it) on the current market price of something and setting your price at that point is legitimate.

            Of course a service that gives providers of a commodity a valid market price means that no one will price their good below market price. That covers the "offer" side of the housing market. As a consequence, prices will only go down when demand goes down. That will happen with almost everything when prices go up too hig

            • The market doesn't function well when it's largely prohibited from increasing supply or has been so heavily discouraged from doing so through legislation that it only tends to supply the high-end of the market where it's financially viable to do so.
              • Yes, but when the service in question recommends landlords to hold back listings, the problem is not a lack of supply, it's price gauging by creating scarcity.

                And again, while you may be correct, this shouldn't be as relevant that housing is a basic human need. Any market that is supposed to work requires for both sides the equal option to NOT buy or sell. While it is easy to hold back an offer (temporary losses from not selling will probably be set off for when the price rises) not buying/renting any housi

            • by Luckyo ( 1726890 )

              So there are two problems with "housing in urban centers" that have been there for as long as I've been alive.

              First one is geography. Urban centers by definition are horisontally constrained. Most popular once are also often in historic position that both had access to water or even an ocean (divider or a hard limit on spread) as well as some kind of a defensive potential (is in a valley in between mountains, or limited by a really wide river).

              All of these put constrains on how much space there is to spread

            • Once everyone prices above the average, the average will only go up. If you don't have rent control or long term leases you quickly find things get gentrified very quickly. Doing this all with computer just accelerates this push, to the point where rental prices can change hourly and everyone in an apartment building is paying a different rate depending upon when they first signed an agreement.

              Now imagine this happens elsewhere? Your pay-per-view price for a streaming movie will have a variable cost and

          • The difference is that the pricing information is only available to the vendors.

            Believe it or not, western capitalism is based on the idea that competitive markets allocate resources in the most efficient way through a price discovery mechanism. If you give one group (in this case, vendors) special insight into how the market is functioning, then you can distort the pricing mechanism which can lead to inefficient resource allocation.

            Just like in any sports games, most markets break down into cartel/monopoly

            • Let's just call so-called neo-liberals what they are: fascists. They are neither new nor liberal.

            • by Luckyo ( 1726890 )

              I'm genuinely confused how you can make this wide sweeping argument on the basis of "special insight" which in this case merely means "one party has invested much more into understanding of how market works than the other".

              This is an advantage that goes back to the first time a member of homo genus realized that they can trade. You can no more argue that this is about "capitalism" than argue that species like Homo Habilis from some two million years ago were capitalist. If not longer that is, there's now so

              • There are a few differences than your single seller of a home example.

                1) Ability to negotiate price - landlords using their system are discouraged to negotiate at all on price.

                2) Lack of competition - they remove "competition" by bringing more real estate rental companies in. Rather than 100 companies each setting their prices and competing against each other for tenants, now it's 100 companies using 1 company to set prices given knowledge of all 100 companies. Essentially this makes them into a single acti

                • by Luckyo ( 1726890 )

                  Let's assume for a moment that we allow for both #1 and #2.

                  This still has no actual connection with your final claim to which those numbered points seem to attempt to lead. "Software" is not the same thing as "company", and in this case "software" is nothing more than a tool for data collection. "Companies", cooperatives or individual suppliers can use that tool, any other tool or no tools at all in their negotiations. Just like renters, those who want the supply can use "software", any other tool or no too

          • Looking at a secret database of prices accessible to the selllers only, and making decisions not just to control prices but to control supply based on it is a textbook example of a cartel. All you need to do to make it really obvious is to remove the AI element and just have a big landlord discord/zoom/IRC server for the same purpose, with the same data and the same deals.
          • I don't understand the difference you're claiming between "I looked at a system online that told me prices that homes sold in my region and set my price at at least that much" and "I looked at a system online that told me prices that homes rented for in my region and set my price at at least that much".

            This guy said it better than I could have:
            https://news.slashdot.org/comm... [slashdot.org]

            The key difference, which you seem strangely keen to ignore is that the rental data is only available to other landlords, unlike the house sale data and the gasoline price data, which are available to all.

    • Had a temporarily visiting coworker looking for apartments to rent. At one place the price was really high, and then the leasing office refreshed the browser and the price had already gone up. They clearly had their rents tied to some larger source setting the prices.

  • by rsilvergun ( 571051 ) on Sunday November 27, 2022 @08:11PM (#63084088)
    We gave trillions of dollars, around 60 trillion all told, to the top 1% in the last 40 years. Around 6.5 trillion of that was during covid. When you're dealing with that much money you're not talking about money anymore you're talking about power. And they used that power to collude so they could eliminate competition and raise prices.

    If you ever want to see inflation go down you're going to have to stop voting for The corporate candidates. I think we all know who they are but they're really good at pushing our buttons and we like having our buttons pushed. It's going to be tough to give that up just for the sake of our pocketbooks
    • Re: (Score:3, Insightful)

      by whoever57 ( 658626 )

      We have to keep voting for the lizards!

      • by rsilvergun ( 571051 ) on Sunday November 27, 2022 @10:03PM (#63084236)
        No, you have to show up to the Democratic primary election and vote for the better candidates that keep losing out to the corporate candidates because, and I can't stress this enough, you didn't show up.

        Your vote in a Primary election counts 10x the general because so few vote in it.
        • It was a joke, a reference to HHGttG by Douglas Adams.

          I do vote in the Democratic primaries.

    • Creditor revolt. Stop paying all your debts. The Bankruptcy laws let you keep your home and car and personal belonging. If a critical mass of people stop paying the pyramid scheme that is the US financial sector will collapse.
      • by Luckyo ( 1726890 ) on Monday November 28, 2022 @01:17AM (#63084460)

        And then catastrophic recession and inability to buy even the basics because everything functions on credit including food, fuel and electric supply systems will mean that you'll have to abandon that home and car and become a refugee elsewhere if you like eating.

        Can't even take a car with you when you don't have anything to fuel it with. Gonna have to learn how to walk to nearest border. At least obesity will go away as a problem.

    • If you ever want to see inflation go down you're going to have to stop voting for The corporate candidates.

      Hmm. Sustained inflation is actually hugely beneficial to poor people in the medium-long term, because they are more than likely net debt holder. Rich people are the owners of those debts. In most cases where we have had high inflation (including now), the inflation rate has outstripped interest rates. This makes real interest rates deeply negative - it's a form of soft default on debt obligations.

      That's not to say the inflationary road is not bumpy, but I guarantee you the 'solution' - which will ultimatel

    • by Merk42 ( 1906718 )

      ... stop voting for The corporate candidates. I think we all know who they are ...

      Yeah! It's everyone on {other team}, no one on {my team} is like that!

    • If you ever want to see inflation go down you're going to have to stop voting for The corporate candidates.

      But that would mean we couldn't vote for Trump or Biden! Actually, we couldn't vote for anyone but write-in candidates because to get your name on the ballot, you have to be beholden to corporates.

      I thought you wanted us to vote Democrat? What gives? Do you think Democrats are not in the grips of the corporate folks? Your words confuse me sir.

  • just post a link, i know i've sure as hell been overcharged on my rent - the managers literally told me 'we don't have any control, we just price what the software tells us'
  • by Anonymous Coward

    A big trick they do is buy up a bunch of apartments and leave many of them unoccupied --and then rent them out serially. So if they collectively own 100 apartments, they collude with each other to only make one available at a time. So let's say there are 10 people looking for apartments, that reverses the supply demand equation. The 10 people will fight to outbid each other for each apartment since there is only one available. So they will offer the highest amount they can afford for the one available apart

    • Re: No shit (Score:5, Interesting)

      by NagrothAgain ( 4130865 ) on Sunday November 27, 2022 @09:01PM (#63084170)
      They also will require you to submit your personal info and sign in before getting exact details on open units. Look today, rent says $1k. Look again tomorrow it says $1050 or $1100. Create a fake login it says $1k. Go back to real login now it says $1150. Call manager they shrug and say "we don't know how much that unit is until the software rents it."
      • by kenh ( 9056 )

        Because, as we all know, the real estate market is almost completely static, with prices rarely increasing unless, of course, the land lord is using software that tells them what other landlords are getting for their comparable units across town...

      • Re: No shit (Score:4, Interesting)

        by ghoul ( 157158 ) on Sunday November 27, 2022 @11:47PM (#63084360)
        Write a bot to keep visiting and keep raising the price. The software probably will not rent to another person while it thinks its got a fish on the hook. Run the bot with diiferent IDs for each apartment in a complex. After 15 days when no apartment gets rented the manager will switch off the algorithm. DDOS the shit out of these colluding algos.
        • Write a bot to keep visiting and keep raising the price. The software probably will not rent to another person while it thinks its got a fish on the hook. Run the bot with diiferent IDs for each apartment in a complex. After 15 days when no apartment gets rented the manager will switch off the algorithm. DDOS the shit out of these colluding algos.

          Wow, this is like the new crypto. Massive AI rigs battling against each other to try to out-scam the other one.

          You just wonder what humanity could achieve if all this tech was aimed at things like, you know, building more house, rather than finding more complex ways to rent seek using the existing ones.

        • You just reinvented the stock market.
    • What is the advantage of renting something over owning it? Just curious?
      • Some people cannot pay the down payment, and others are not eligible for financing as they arrived in the US not so long ago... Oh, and sometimes you need to work in a place where acquiring is simply not an option, especially if you are around California.

      • Not sure what kind of property market you have been exposed to, but in the countries I have lived in there are several advantages to renting over owning the same property:

        1. You cant get a mortgage - this ones a common but difficult one, because often the rent is equivalent or even more than a mortgage payment, but unfortunately a mortgage payment is not the test of whether you can get a mortgage - do you fit the long term affordability criteria, do you have the right deposit etc. Many reasons why someone

        • Re:No shit (Score:4, Informative)

          by whoever57 ( 658626 ) on Sunday November 27, 2022 @11:47PM (#63084358) Journal

          I am a landlord, with properties in the UK and my comments are:

          1. You cant get a mortgage - this ones a common but difficult one,

          That's not an advantage.

          2. In many countries, renters have decent protection - in the UK, if you sign an "assured short term rental agreement" then you are protected from rent increases for the duration

          Where "the duration" is usually 6 months in the case of an Assured Shorthold tenancy in the UK. They can be longer, but usually are not. After 6 months, the tenant and landlord have the option of re-upping for another 6 months or simply rolling over to a month-to-month rental. A re-up may result in a rental increase.
          In the USA, buying gives you a fixed cost in the way rental does not: with a 30-year mortgage, my costs are fixed. My costs have changed: I have taken advantage of decreasing interest rates and now my mortgage is much less than when I bought my house.

          3. Again, in many countries renting means you dont have to worry about a lot of the basic property upkeep costs, the landlord is responsible for them - is the roof weathertight, are any appliances provided working,

          That's mostly true. In the UK, landlords often do not provide alliances that are not fixed (refrigerator, washer, etc.), leaving the tenant with the costs of buying and maintaining these.

          4. If you move around a lot for your employment, an AST of 6 months can be perfect for your needs.

          OK, that's a genuine advantage to renting.

          • Re:No shit (Score:4, Insightful)

            by suutar ( 1860506 ) on Monday November 28, 2022 @12:26AM (#63084408)

            Having a roof over your head isn't an advantage over not having a roof over your head?

            • by bidule ( 173941 )

              It's a constraint, not an advantage.

            • by suutar ( 1860506 )

              After rereading and some more thought, I think what whoever57 was trying to say was more along the lines of "We're supposedly talking about comparing renting to buying, but if a mortgage isn't an option then we're comparing renting vs homelessness, which is a different discussion, so it doesn't belong in this list", which makes sense.

      • by kenh ( 9056 )

        You can be out of the unit in a moments notice if your job changes - own a house and you have to market it, then wait 2 months for the sale to close, and give 6% of the value to a guy that has access to the MLS listings.

        • You can be out of the unit in a moments notice if your job changes

          You may be out of a unit, but you are still on the hook for the rent for rest of the term, or some part of it.

      • Financially it is usually worth it. The main reason to buy vs rent is if you are planning to live somewhere for a really long time so you can lock in monthly housing costs.
        Reasons to rent are:
        1) I can take that money I would have spent on a down payment and invest it, in most places you will make more money from the market then the house will appreciate.
        2) I don't have to worry about upkeep, lawn care, repair, and maintenance.
        3) Easy to leave, not locked down into a house ownership.
      • Depending on the market, renting can be cheaper for comparable housing than a mortgage. If you take the money you save from a mortgage and invest it wisely (index funds or anything that outperforms them), your investment gains will far outstrip the increasing value of the home.

        That's not even considering the abysmal state of housing stock where everything is built for a family of five people. If you only want a single bedroom home, the available inventory will be so limited that you will pay a 60% per squar

    • by kenh ( 9056 )

      That makes no sense. If I have 100 apartments I can't afford to keep 90 empty to maximize the rent on 10 apartments. Sitting on an empty apartment doesn't lower your property taxes on the 100 apartments you own.

      if I only rent out 10% of my apartments, that means each unit generating rent payments have to support 9 additional apartments tax obligations.

      • by Anonymous Coward

        You can still have all of them occupied. You just only list 10% at a time.
        So, after you've found renters (for a 12+ mo agreement), you put the next 10% on the market, etc.

        This is actually what the software/website does (well, in addition to other things). It recommends that some people leave their rentals fallow (temporarily) to increase the going-rate, so those renters can then charge more in a few months.

      • Well when you bring property tax into the equation it muddles things up a bit but the logic is still the same. There is an advantage to colluding to reduce the supply temporarily. The only solution is to significantly tax unoccupied housing units. But no property owner would want their local government to do that.

  • Although I am not going to rune out true collusion among larger rental organizations, I have to say that rent-setting software that merely looks at what market rates are is something that does not really seem to be a problem - if renters can see what rent rates around a city, so can landlords and they can set rates according if rates rise or fall around where they have properties.

    Anyone could do that and it seems - again I say seems - like this software just makes it easier to see what rates are.

    I mean I gu

    • by Anonymous Coward

      This software also tells renters "don't put your place on the market yet, you'll get more for it next week".

      Which definitely seems like more than just "checking what everyone else is charging".

      • This software also tells renters "don't put your place on the market yet, you'll get more for it next week".

        That could just be advising based on historical data. If it tells everyone to wait it seems OK.

        If the software is directing some to wait and some not to wait but there's no communication between companies, that's not collusion but is market manipulation on behalf of the software maker. Not sure how that would be treated, but it should not be the landlords at fault, only the software maker.

        • That's essentially what everyone is saying. That the software maker is illegally colluding as a service. No one thinks there's some mustache-twisting landlords out to gild their pockets through backroom deals. They just don't think "the software told us to" is a valid defense against illegal market collusion.

    • It's not a problem as long as the landlords use the same channels as the renters do.

      When someone makes a secret database of anonymized contracts based on size and geography and "advises" others what to charge and when, it's a textbook example of a cartel.
      • When someone makes a secret database of anonymized contracts based on size and geography and "advises" others what to charge and when, it's a textbook example of a cartel.

        I'm not sure I agree on that one, are you saying for example an AI model advising landlords should be illegal?

        If all that data is anonymized and the service doesn't for instance issue specific and varied instructions to each landlord, then I don't really see the issue.

        If it's telling all landlords "wait a week to rent out a unit" because o

        • If the AI is using data sources from other vendors, but that data is not available to the customer, then the AI should be illegal.

          You can either build an AI from public data. Or you can build one from your own private data.

          What you can't do is collude with others in your industry to build a data set for learning that you all then use to fuck the customer by maximizing prices.

          • Exactly. Something illegal doesn't magically become legal by using an AI as an intermediary.

            There's a great analogy here. Constructing an AI that is fed market information by certain individuals within the stock exchange, and then its services are sold to certain specific individuals who are interested in buying and selling stock, since it can make eerily accurate guesses about price trends.

            Because of course, by passing through an AI, it's no longer insider trading, don't you know?
  • Because if the republicans win office, you know they are going to side with the landlords against the bottom 98%.

    • by Luckyo ( 1726890 )

      You think that bottom 98% in US don't own a home?

      This isn't Soviet Union.

      • by zlives ( 2009072 )

        what does owning a home have to do with being able to affect regulations about housing crises?

        • The only housing regulations homeowners generally support are those that limit building any new homes. Mostly they don't want any restrictions placed on how you profit from property.

          Even if it doesn't always make sense, it's a wedge point that the market liberators will hammer on to kill any bill that tries.

          • by Luckyo ( 1726890 )

            It actually makes perfect sense. When you're invested in a functional system, you want the system to continue function.

            Also known as "why sane people stop being socialists and communists after they grow up and get a marketable skill or two".

  • Free enterprise based on competition is GREAT.
    The problems come in when you get too few companies that regularly become an oligarchy, or will be backed by governments.

    Here in America, we have allowed our competitive approach to die off. Why? Partially by large companies controlling (IBM, microsoft, amongst others), or by allowing foreign companies backed by their government to dump on America (china anybody?).
    We need to get it back. Ideally, it would mean breaking up a number of our 'too-big-to-fail'

"Look! There! Evil!.. pure and simple, total evil from the Eighth Dimension!" -- Buckaroo Banzai

Working...