Eyebrow-raising news from the US, where real estate agents and letting managers have been accused of using third-party software that systematically drives up rental fees to tenants.
The third-party software, YieldStar from RealPage, is accused by the heavy-hitting Department of Justice of enabling collusion between landlords, to maximise rents across America. “Algorithms don’t exist in a law-free zone,” the DoJ says. “Training a machine to break the law is still breaking the law.”
The issue stems from YieldStar’s human-trained recommendation engine. As a landlord – and YieldStar is used to price 90% of apartments in large buildings – you put in some details and it spits out a suggested rental price. This ‘self-reinforcing feedback loop’ essentially forever drives up prices and keeps them consistent across the country – a kind of cartel-like ‘collusion’ between building owners driven by software, rather than handshakes in dark corners, but still (allegedly) collusion nonetheless.
What’s interesting is whether something like this might also apply here in the UK. We’re very used to seeing Automated Valuation Models (AVMs) spit out recommended valuations for properties. Most agents review the same data from Rightmove and others before suggesting valuations of properties for sale or to rent. That data will have been programmed to generate prices based on various dependent information points – but are those information points balanced neutrally, or might they be skewed in favour of maximising the revenue for a seller or landlord, at the expense of a buyer or tenant?
Calculated valuations have been an important part of agency since they were first introduced by Zoopla back in 2008. Advances in proprietary data management – essentially the ability to privilege your own data and experience over generic Rightmove Plus outputs – has made it far easier to prove that your valuations are distinct and more accurate.
This potential to prioritise your own data and experience is being driven by AI. Everything that you’ve ever valued – even paper-based records in dusty filing cabinets in dark basements – can be digitised and used to prove your local expertise and differentiate yourself from competitors.
There’s no sign at present of any similar moves here in the UK to look at the impact of AVMs, including Rightmove Plus, on driving up rents and sale prices collectively. However, if you’re an agent using these tools to help price property – particularly if you’re showing landlords and vendors calculations to underpin your valuations – I’d be using more than one of them and adding in as much proprietary, historical data as you can.
Your unique experience here counts – a lot.
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