What Landlords Need to Know About the RealPage Lawsuit: What Happened and Why It Matters

If you’re a landlord or property manager, you may have heard of RealPage — a company that offers software to help landlords set rental prices. But recently, RealPage has been in the news because the U.S. Department of Justice (DOJ) filed a lawsuit against them. The lawsuit accuses RealPage of using a pricing algorithm that harms renters and could lead to unfairly high rents across the country.

Let’s break this down so you can understand what’s going on and why it matters to you as a landlord.

What Is RealPage Accused Of?

At the heart of the DOJ’s lawsuit is a practice known as "algorithmic pricing" — essentially, using software to set rental prices. RealPage offers a tool called Revenue Management that helps property managers automatically adjust rental prices based on market conditions, supply, and demand. It’s meant to help landlords maximize their profits.

However, the DOJ claims that RealPage’s system isn’t just helping landlords set prices. They argue that RealPage’s software encourages landlords to collude with each other — without even having to talk. The software allegedly facilitates coordinated price hikes across the rental market, which could lead to artificially high rent prices for millions of renters.

In simple terms, the lawsuit accuses RealPage of creating an environment where landlords, without directly communicating, are all using the same software to charge similar or higher rents, harming renters and reducing competition.

Why Is This a Problem?

1. Higher Rents for Renters: The most obvious concern is that this system could lead to unfairly high rents. When many landlords across an area are using the same algorithm to set their prices, it could prevent rents from being as competitive as they would be in a truly free market.
2. Lack of Competition: The software could reduce the natural competition between landlords. If everyone is using the same pricing system, it becomes harder for renters to find affordable options, because the market is essentially being manipulated to keep prices high.
3. Limited Choices for Renters: Renters could end up paying more than they should, with less room to negotiate or compare prices. This could also mean fewer affordable options, especially in cities with a lot of rental demand.

How Does This Affect You as a Landlord?

If you’re a landlord using RealPage’s system or considering using similar software, you may be wondering how this lawsuit could impact you:

• Legal Risk: If the DOJ’s case succeeds, it could change the way pricing algorithms are regulated. It could lead to more rules about how landlords can use these tools, possibly limiting how much you can raise rent or forcing more transparency.
• Reputation: Regardless of whether you’re involvement in the lawsuit, being linked to RealPage or similar systems could affect reputation.
• Market Shifts: As the lawsuit progresses, there may be pressure for other software providers to change how their tools work. 

What’s Next?

The lawsuit is still ongoing, and it’s not clear yet how it will end. But the main takeaway is that landlords need to be aware of how their pricing practices are being shaped by software tools like RealPage. If you’re using algorithmic pricing tools, it’s important to stay updated on the legal landscape, as the outcome of this case could set important precedents.

In the meantime, consider whether the pricing strategies you’re using are transparent and fair to renters. At the end of the day, keeping rents reasonable and competitive is not only good for your tenants — it’s good for your long-term success as a landlord too.

(Disclaimer: This article was written by ChatGPT based on this original source: https://www.justice.gov/opa/pr/justice-department-sues-realpage-algorithmic-pricing-scheme-harms-millions-american-renters)