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HousingWire Magazine: December 2021/ January 2022

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Real Estate

Redfin faces “redlining” lawsuit claiming it favors white neighborhoods

The brokerage is being sued by the National Fair Housing Alliance

The National Fair Housing Alliance and nine other housing organizations filed a lawsuit against Redfin on Wednesday, accusing the online brokerage of racial discrimination and favoritism toward predominately white neighborhoods.

“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,” the lawsuit states. “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.”

The complaint also states that Redfin offers its brokerage services to buyers and sellers within a limited range of prices, and claims that no matter what the price range is, “Redfin is significantly more likely to offer its best available service…to buyers and sellers of homes in predominantly white neighborhoods than buyers and sellers of homes in predominantly non-white neighborhoods.”

The complaint continues, stating that “Redfin’s home-by-home exceptions to its own Minimum Price Policy underscore that the policy, as applied by Redfin, exists to serve Redfin’s individual preference or convenience and that it is not required by necessity. Redfin’s Minimum Price Policy is thus arbitrary.”

The lawsuit plaintiffs outline differences in Redfin practices in 10 metropolitan areas between June 2018 and June 2020. The plaintiffs list several of the disparities they found with this analysis as examples, including:

  • In June 2020, Redfin did not offer brokerage services to buyers and sellers in Detroit, a predominantly non-white area, unless the home met a minimum price threshold of $700,000, the complaint said. Elsewhere in the rest of Wayne County, which is predominantly white, Redfin offered its brokerage services to buyers and sellers of homes beginning at a listing price of $250,000.
  • Also in June, the complaint claims that Redfin did not offer its brokerage services and the associated discounts to buyers and sellers of homes in the city of Chicago, a predominantly non-white area, unless the home met a minimum price threshold of $400,000. But in DuPage County, a predominantly white area, Redfin offered its services to buyers and sellers of homes that met a minimum price threshold of $275,000.

Looking at 10 metro areas and the services Redfin offered, the lawsuit found the following. Note, an “extremely white” ZIP code refers to a ZIP code in which 70% or more of the residents were White Non-Hispanic, according to Census data. “Extremely non-white” ZIP code refers to a ZIP code in which 70% or more of the residents were non-white.

Homes that were for sale in Baltimore and Baltimore County on June 11, 2020

  • Extremely non-white ZIP codes: 1,159 homes. 8.71%, were offered Redfin’s best available service. 36.24%, were “No Service” homes
  • Extremely white ZIP codes: 822 homes. 58.39% were offered Redfin’s best available service. 7.66% were “No Service” homes

Chicago Metro area on June 18, 2020

  • Extremely non-white ZIP codes: 5,118 homes. 10.57%, were offered Redfin’s Best Available Service. 53.22% were “No Service” homes
  • Extremely white ZIP codes: 9,698 homes. 55.32%, were offered Redfin’s Best Available Service. 5.18%, were “No Service” homes

Detroit metro area on June 21, 2020

  • Extremely non-white ZIP codes: 2,418 homes. 2.03% were offered Redfin’s Best Available Service. 80.11%, were “No Service” homes
  • Extremely white ZIP codes: 9,761 homes. 39.81% were offered Redfin’s Best Available Service. 18.10%, were “No Service” homes

Kansas City metro area on June 12, 2020

  • Extremely non-white ZIP codes: 218 homes. 7.34%, were offered Redfin’s Best Available Service. 58.26%, were “No Service” homes
  • Extremely white ZIP codes: 4,550 homes. 52.55%, were offered Redfin’s Best Available Service. 14.26%, were “No Service” homes

Long Island on August 20, 2020

  • Extremely non-white ZIP codes: 610 homes. 0.49%, were offered Redfin’s Best Available Service. 74.26%, were “No Service” homes
  • Extremely white ZIP codes: 6,272 homes. 27.06%, were offered Redfin’s Best Available Service. 29.45%, were “No Service” homes

Louisville, Kentucky on June 11, 2020

  • Extremely non-white ZIP codes: 31 homes. None was offered Redfin’s Best Available Service. 90.32%, were “No Service” homes
  • Extremely white ZIP codes: 1,451 homes. 66.44%, were offered Redfin’s Best Available Service. 14.27%, were “No Service” homes

Memphis Metro area on June 20, 2020

  •  Extremely non-white ZIP codes: 605 homes. 1.65%, were offered Redfin’s Best Available Service. 74.55%, were “No Service” homes
  • Extremely white ZIP codes: 434 homes. 28.80%, were offered Redfin’s Best Available Service. 15.44%, were “No Service” homes

Milwaukee metro on June 20, 2020

  • Extremely on-white ZIP codes: 454 homes. None were offered Redfin’s Best Available Service. 94.05%, were “No Service” homes
  • Extremely white ZIP codes: 2,094 homes. 37.20%, were offered Redfin’s Best Available Service. 36.68%, were “No Service” homes

Newark, New Jersey Metro on June 12, 2020

  • Extremely non-white ZIP codes: 1,464 homes. 9.77%, were offered Redfin’s Best Available Service. 48.98%, were “No Service” homes
  • Extremely white ZIP codes: 2,452 homes. 52.81%, were offered Redfin’s Best Available Service. 11.26%, were “No Service” homes

Philadelphia Metro area on June 25, 2020

  • Extremely non-white ZIP codes: 2,020 homes. 20.54%, were offered Redfin’s Best Available Service. 63.86%, were “No Service” homes
  • Extremely white ZIP codes: 2,043 homes. 65.25%, were offered Redfin’s Best Available Service. 12.38%, were “No Service” homes

In a response email to employees, Redfin CEO Glenn Kelman acknowledged the lawsuit and said that Redfin complies with the Fair Housing Act, “which clearly supports a business’s decisions to set the customers and areas it serves based on legitimate business reasons such as price.”

Kelman said that Redfin’s “challenge” is that it doesn’t know how to sell lower-priced homes while paying agents and other staff a living wage, health insurance and benefits.

“This is why Redfin agents aren’t always in low-priced neighborhoods,” the email said. “It’s why Redfin doesn’t serve many rural towns.”

In September, Redfin was named one of the 40 companies that joined the Board Challenge, a pledge to add a Black member to their board of directors within one year. In May, Kelman also spoke out after the death of George Floyd at the hands of police officers, saying “we haven’t done enough.”

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