Seattle-based real estate tech company Redfin is facing allegations of discriminatory pricing practices and “redlining” in a lawsuit filed by the National Fair Housing Alliance (NFHA) and other fair housing organizations.
The NFHA said in a news release that after a two-year investigation, it had determined that Redfin’s minimum home price policy discriminates against sellers and buyers of homes in communities of color in many metropolitan areas.
“Redlining, and the residential segregation it causes, represents America’s oldest racist and discriminatory real estate policy,” said Lisa Rice, president and CEO of NFHA. “The fact that these actions are still occurring, let alone by a major corporation, demonstrates why we need strong civil rights protections now more than ever. Redfin’s policies redline communities of color and will further exacerbate the racial wealth and homeownership gaps.”
The lawsuit (at bottom of story) was filed in United States District Court in Seattle on Wednesday.
Redlining refers to the presumed practice of mortgage lenders drawing red lines around portions of a map to indicate areas or neighborhoods in which they do not want to make loans.
NFHA, a Washington, D.C.-based nonprofit dedicated to eliminating housing discrimination, filed the suit with nine of its member organizations after investigating the effect of Redfin’s policy in Baltimore, Chicago, Detroit, Kansas City, Long Island, N.Y., Louisville, Kent., Memphis, Tenn., Milwaukee, Newark, N.J. and Philadelphia.
In the complaint, the plaintiffs argue that Redfin policies perpetuate “the stark patterns of housing segregation.”
Redfin redlines communities of color in this digital age by setting minimum home listing prices in each housing market on its website under which it will not offer any real estate brokerage services to buyers or sellers. These minimum price limits serve no legitimate purpose. Redfin’s rules guarantee that it will receive a set minimum commission regardless of the price of a home.
While the actual minimum price varies from one metropolitan area to another, between counties, and between cities within counties, its impact is always the same — buyers and sellers of homes in non-white areas are far less likely to be offered Redfin’s services and discounts than buyers and sellers of homes in white areas.
Redfin’s policies and practices operate as a discriminatory stranglehold on communities of color, often the very communities that have been battered by over a century of residential segregation, systemic racism, and disinvestment.
Redfin CEO Glenn Kelman responded Thursday in an email that was sent to all employees and shared on the company’s website.
“Our long-term commitment is to serve every person seeking a home, in every community, profitably,” Kelman wrote. “The challenge is that we don’t know how to sell the lowest-priced homes while paying our agents and other staff a living wage, with health insurance and other benefits. This is why Redfin agents aren’t always in low-priced neighborhoods. It’s why Redfin doesn’t serve many rural towns.”
The plaintiffs are seeking a court order ending Redfin’s minimum housing price policy.
Kelman said the suit is wrong about the law but that the issues it raises are important to Redfin.
“Certainly no one can complain that Redfin itself has been greedy about our income as a corporation when, in our sixteen years of being a brokerage, we’ve never made an annual profit,” he wrote.
Read the complaint here:
