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Fair housing groups have accused the brokerage’s pricing mechanism of providing enhanced services in majority-white neighborhoods.
Service divide at forefront of Redfin discrimination suit
Brokerage provides more offerings in majority-white neighborhoods, fair housing groups sayRedfin has long emphasized its commitment to combating systemic inequality in the housing market, but critics say the discount brokerage contributes to discrimination by making it more difficult to buy homes in non-white communities.
As a lawsuit against the company drags on, additional information is being revealed about its alleged practices.
Bloomberg reported that Redfin is in negotiations to settle a lawsuit brought in 2020 by fair housing groups, which accused the brokerage of engaging in a form of redlining for providing additional services to buyers and sellers of homes above specific price thresholds in particular markets.
According to Bloomberg, the fair housing groups allege that Redfin provides sellers of homes above the set minimum prices with professional photos, 3D walkthroughs, data analysis and increased visibility. Homes below the price threshold either get referred to a “partner agent” or receive no services at all, potentially increasing commissions while driving down sales prices.
“While the actual minimum price varies… 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,” the complaint read.
Redfin has pushed back against accusations of redlining, a discriminatory practice in which services such as mortgages are withheld from communities of color.
“Being fair is more important to Redfin than making money,” the company said in a statement to Bloomberg. “We recognize that systemic racism affects who can pay for a broker, a book, or an airline ticket, but using price to determine which homes we can sell is not only legally permitted, it is the only fair way to make that determination.”
The dynamic is particularly noticeable in Chicago, the fair housing groups say.
According to Bloomberg, an analysis detailed in the lawsuit found that in June 2020, Redfin was five times more likely to provide the best services in Chicago areas where at least 70 percent of residents were white, versus where at least 70 percent of residents were not white.
Redfin allegedly made brokerage services available for homes listed at $400,000 or more within Chicago city limits, but $275,000 or more in majority-white DuPage County. In majority-Black Detroit, the threshold for Redfin’s services was $700,000. In majority-white suburbs of Oakland and Wayne counties, it was $250,000.
One former agent, meanwhile, said Redfin would provide services for listings in excess of $225,000 in Chicago’s South Loop, but not for similar properties in more racially diverse Woodlawn.
After the lawsuit was filed in 2020, Redfin CEO Glenn Kelman addressed the allegations in a staff email.
“Our long-term commitment is to serve every person seeking a home, in every community, profitably,” he 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.”
Redfin has not filed a formal response to the complaint.
According to RealTrends, Redfin is the fifth-largest brokerage in the country. In 2020, the company recorded $37 billion worth of sales volume.