Propmodo Daily

By Franco Faraudo · Mar. 1, 2024

Greetings!

RealPage has already been fighting a number of accusations that its rent optimization software, YieldStar, is unlawfully helping landlords raise rents. Now the Attorney General of Arizona has filed a lawsuit on behalf of the renters in her state state. We take a look at the language in the complaint in today’s email.

Also published today, don’t miss a great op-ed about how to overcome the many obstacles to achieving a “net zero” building.

This week, Propmodo Technology is taking a deep dive into Building Operations & Controls! We explore HVAC automation, the strategies property managers are using to maximize results with less resources, and the potential future of robots in the office. Be sure to check out "The State of Commercial Real Estate Property Management for 2024," a new report from our sponsor Building Engines.

Now, let's dig in!

Arizona Turns up the Heat on RealPage

RealPage, already facing numerous lawsuits, including one from the Washington D.C. Attorney General, now faces a new challenge from Arizona Attorney General Kristin Mayes. Her recent complaint echoes those in other lawsuits, alleging that RealPage's shared data and rent optimization algorithm facilitate unfair price increases for landlords, amounting to collusion.

The new lawsuit does have some interesting new facts. It claims that approximately 70% of multifamily apartment units listed in the Phoenix metropolitan area are owned, operated, or managed by companies that have contracted with RealPage for “Revenue Management.” It also claims that RealPage’s use of the word “outpace” in its marketing “is code for charging higher prices than what would be charged in a market untainted by collusion.”

As with other lawsuits, the Arizona case draws upon RealPage's own marketing materials, earnings reports, and even a Facebook Live video. It further asserts that RealPage is “policing the conspiracy” by pressuring users to accept suggested prices, monitoring compliance, and threatening removal from the platform for non-compliance.

Several major RealPage clients are named as "lessor defendants" in the Arizona suit, including BH Management Services and HSL Properties. The claim acknowledges that other conspirators may exist, emphasizing RealPage's potential liability for their actions. It says, “Defendants are jointly and severally liable for the acts of their co-conspirators whether or not named as defendants in this Complaint.”

Regardless of the outcome, this lawsuit will be costly for RealPage. It could also motivate other Attorneys General with political ambitions to pursue similar cases against a corporation accused of worsening the housing shortage. While RealPage hasn't yet altered its YieldStar program, changes seem inevitable to avoid further legal woes. But, as the National Association of Realtors has discovered in its own legal battles, rule changes alone may not satisfy plaintiffs or prosecutors.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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