Fair housing advocates on Friday announced a settlement agreement to resolve a lawsuit against real estate brokerage Redfin that will expand housing opportunities for consumers in communities of color in numerous major cities.
Under the agreement, Seattle-based Redfin will change its minimum housing price policy, alter other practices, and pay $4 million to settle the suit brought against it by the National Fair Housing Alliance and nine other fair housing organizations in 2020.
The changes will increase access to Redfin's real estate services across the country and help counter redlining and residential segregation that NFHA and the other plaintiffs alleged Redfin's policies perpetuated. Redlining is a now-illegal practice in which banks would refuse to make home loans to someone because they live in an area deemed to be a poor financial risk.
"Our goal was to ensure that all neighborhoods are treated fairly and have access to the full range of services provided by any real estate company," said Lisa Rice, president and CEO of NFHA. "The steps Redfin has agreed to take are a positive move toward stamping out some of the nation's most harmful practices, like redlining and appraisal bias."
The lawsuit alleged Redfin's minimum home price policy violated the Fair Housing Act by discriminating against sellers and buyers of homes in communities of color. NFHA and the other plaintiffs alleged that policies that limit or deny services for homes priced under certain values can perpetuate racial segregation and contribute to the racial wealth gap.
Redfin said in a statement that it preferred to spend money on advancing fair housing rather than on litigation, and that the settlement was not an admission of liability.
"Our commitment to broadening the price range of the homes we can sell is why, every year, by design, we lose money selling low-priced homes," the company said. "As part of the settlement, we will increase our investment in serving buyers interested in low-priced homes in communities that have historically been underserved by the real estate industry ... Redfin hasn't broken the law and we continue to stand behind our business practices."
Redfin has agreed to make changes that will stand for at least three years after an initial implementation period. The company also will seek to increase racial diversity in its workforce, advertise its services to reach non-white consumers, and require agents and local partner realty firms to attend fair housing training.
The lawsuit alleged that Redfin's minimum home price policy had an adverse impact on buyers and sellers of homes in predominantly non-white communities based on race and national origin. The complaint alleged that Redfin offered no services in non-white ZIP codes at a disproportionately higher rate than in white ZIP codes in Baltimore; Chicago; Detroit; Kansas City, Missouri; Kansas City, Kansas; Long Island, New York; Louisville, Kentucky; Memphis, Tennessee; Milwaukee; Newark, New Jersey; and Philadelphia.
The lawsuit was filed in the federal district court in Seattle.
Other plaintiffs included the South Suburban Housing Center; HOPE Fair Housing Center; Fair Housing Center of Metropolitan Detroit, Fair Housing Justice Center Inc., Long Island Housing Services Inc., Lexington Fair Housing Council, Metropolitan Milwaukee Fair Housing Council, the Fair Housing Rights Center in Southeastern Pennsylvania and Open Communities.
Redfin operates in 95 markets in the U.S. and Canada and has generated $195 billion in home sales.
In the lawsuit, Redfin was accused of systematic racial discrimination by offering fewer services to homebuyers and sellers in minority communities — a type of digital redlining that has depressed home values and exacerbated historic injustice in the housing market.
The housing organizations said that during a two-year investigation they documented the effect of Redfin's "minimum price policy," which requires homes to be listed for certain prices to reap the benefits of Redfin's services.
The company was vastly less likely to offer realtor services, professional photos, virtual tours, online promotion or commission rebates for homes listed in overwhelmingly minority neighborhoods than it was in overwhelmingly white ones, the investigation found.
That meant homes in minority neighborhoods were likely to stay on the market longer and sell for lower prices than they otherwise might have, the lawsuit said.
"Redfin's policies and practices operate as a discriminatory stranglehold on communities of color, often the very communities that have been battered by a century of residential segregation, systemic racism, and disinvestment," the lawsuit said.
Under the minimum price policy, Redfin didn't offer its full services unless homes were listed for certain prices, which vary by market. When potential buyers clicked on homes that fall below those minimums, they received a message saying, "Redfin is currently unable to show this property."