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Texas-based RealPage facing lawsuit for allegedly using software to raise rent prices

Five people are suing RealPage and leasing companies, saying they've been raising rent prices since as early as 2016.

RICHARDSON, Texas — A Richardson, Texas-based company is being accused of helping multiple leasing companies raise their rent prices, according to a lawsuit filed in federal court.

RealPage is now listed in a Class Action Complaint, along with some of the businesses they've allegedly helped, according to documents filed in the U.S. District Court for the Southern District of California.

In a copy of the complaint obtained by WFAA, the plaintiffs say RealPage has provided software and data analytics to leasing companies, or lessors, since around 2016 to help them avoid competition and raise prices. The complaint says the company "openly boasts" about how they help "'balance supply and demand to maximize [Lessors'] revenue growth.'"

The complaint says lessors would "outsource daily pricing and ongoing revenue oversight" to RealPage. The company allegedly took that data, created a standard based on the properties' "class" or characteristics, and used a common formula to set the prices. In short, RealPage created an instant monopoly on price setting, allowing rents to be pushed artificially higher.

The plaintiffs say RealPage bragged about setting the lessors' prices "as though we own them ourselves." The lawsuit also says that the company helped apartments across a market stagger leases so there would never be a downturn.

The lawsuit comes after a ProPublica report stated the company was using YieldStar to help set apartment prices across the country. A RealPage representative sent a statement to WFAA denying the allegations, saying the article "contains inaccuracies and is misleading."

"Rent prices are determined by various factors including supply and demand as well as each property owner’s unique circumstances," the statement read. "The ProPublica article repeatedly takes information out of context and ignores key facts to craft a distorted picture of how revenue management software works."

Attorney and Texas A&M Law antitrust professor Randy Gordon believes the key will be if the plaintiffs can prove an agreement between the companies.

“It’s the agreement to use that data and what it’s predicting that’s illegal," he said. “That’s always a significant challenge.”

The suit mentions RealPage told landlords to follow their pricing at least 80% of the time.

“There’s a lot of smoke and what the plaintiffs will have to show is that there is actually fire there," Gordon said.

The lawsuit also claims RealPage also told landlords to not negotiate and push prices higher even if it meant vacancies. It's unsurprising to Sandy Rollins, the executive director of the Texas Tenants Union. 

“It’s disturbing. It’s very disturbing to see this industry operate in this way," she said. “Tenants are just at the mercy of the markets and of their landlords and their landlords don’t have mercy.”

The nine lessors named in the complaint include a company headquartered in Dallas. According to the complaint, Lincoln Property Company is the second largest manager of multifamily rental real estates in the U.S. They're said to own over 210,000 units nationally and make "billions of dollars per year."

Outside of Lincoln, the other lessors named are headquartered in states like Tennessee, California and Washington. The plaintiffs named in the complaint are said to be from California and Washington. They include major landlords like GreyStar and the ProPublica story mentions the software was initially tested by Houston-based Camden.

The plaintiffs said in the complaint that the alleged deal with RealPage mainly affects the military community.

"With respect to men and women on active duty, military bases often do not provide “on-post” housing, or have no available housing, requiring personnel to rent apartments," the complaint reads. "Many veterans depend upon residential leases for their housing, often spending over half of household income on rent. Rising rents increase levels of homelessness."

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