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Opening Acts: October 29, 2020

Redfin Redlines

NATIONAL REAL ESTATE FIRM SUED FOR POLICIES THAT DISCRIMINATE AGAINST BUYERS AND SELLERS OF HOMES IN COMMUNITIES OF COLOR

On October 28, the National Fair Housing Alliance (NFHA), New York City’s Fair Housing Justice Center (FHJC), Fair Housing Center of Metropolitan Detroit, Fair Housing Rights Center in Southeastern Pennsylvania, Hope Fair Housing Center, Lexington Fair Housing Council, Long Island Housing Services, Inc., Metropolitan Milwaukee Fair Housing Council, Open Communities and South Suburban Housing Center filed a federal lawsuit in the Western District of Washington (Seattle Division) alleging that the Redfin Corporation has a minimum home price policy that makes it far less likely buyers and sellers of homes in communities of color will receive Redfin’s services and financial discounts than buyers and sellers of homes in white areas.

The lawsuit alleges that Redfin does not offer the same services to homebuyers and sellers of homes in the markets where Redfin operates. Redfin offers its brokerage services at lower fees than traditional real estate brokers, including lower sales commissions for sellers and a partial refund of fees at closing for buyers, if permitted by state law. However, Redfin does not offer its best available service to everyone. Redfin has a minimum home price policy, below which it offers no service – it will not list the house, it will not show a buyer the house, and it will not process offers or handle closings for the house. Redfin’s minimum home price varies from area to area, from city to county, and throughout the year. Such discriminatory policies were the subject of a new policy paper published by the FHJC, Ending Racism in Residential Real Estate.

The complaint alleges that Redfin illegally redlines by disproportionately providing little or no service or economic benefits in areas based on race and national origin. Redlining, often applied to discriminatory lending or insurance practices, involves refusing to serve or providing less favorable service to neighborhoods based on the racial composition of the area. In this case, Redfin is alleged to be disproportionately failing to provide services and economic benefits to non-white communities. The complaint alleges that Redfin’s policies and practices redline communities of color and operate as a “stranglehold on housing in the very communities that have been battered by over a century of residential segregation, systemic racism, and disinvestment.” By disproportionately withholding its services to homebuyers and sellers in these communities, the complaint points out that Redfin disincentivizes homebuying, reduces housing demand and home values, and perpetuates residential racial segregation. The full complaint can be read here.

NFHA conducted a two-year investigation into Redfin’s practices in the following ten areas, Baltimore, MD; Chicago, IL; Detroit, MI; Kansas City, MO/KS; Long Island, NY; Louisville KY; Memphis, TN; Milwaukee, WI; Newark, NJ; and Philadelphia , PA.

Lisa Rice, President and CEO of the National Fair Housing Alliance (NFHA) stated “Redfin’s policies redline communities of color and will further exacerbate the racial wealth and homeownership gaps. We must ensure that all neighborhoods are treated fairly and have access to the full range of services provided by real estate companies. We must also ensure that companies do not use their technologies, including digitally-based platforms, to deny people the housing opportunities and services they deserve.”

Long Island, NY

The Redfin minimum price policy discriminated against communities of color on Long Island. For instance, the lawsuit alleges that in areas that are 70% or more white (non-Hispanic), buyers and sellers of homes are over 55 times more likely to reap the benefits (including economic benefits) of Redfin’s best available service than homebuyers and sellers of home in areas that are less than 30% white (non-Hispanic). Further, buyers and sellers of homes in areas that are less than 30% white (non-Hispanic) are also more than two and a half times more likely to receive no service from Redfin than buyers and sellers of homes in areas that are 70% or more white.  Click here for more information about Redfin’s services on Long Island.

FHJC’s Executive Director Fred Freiberg stated, “The Redfin policy perversely incentivizes homebuying and increases demand for predominantly white communities with housing markets less in need of stimulation, while depressing demand and providing no services or economic benefits to buyers and sellers in Black and Brown communities. Redfin’s policy reinforces a dual and discriminatory housing market and perpetuates racial segregation on Long Island.”

Among other things, the plaintiffs seek a court order ending Redfin’s minimum housing price policy and other practices that violate the Fair Housing Act. The plaintiffs are represented by Diane L. Houk and Samuel Shapiro of the New York-based law firm of Emery Celli Brinckerhoff Abady Ward & Maazel LLP and Jeffrey L. Taren of the Seattle-based firm MacDonald Hoague & Bayless.

The mission of the FHJC, a nonprofit civil rights organization, is to eliminate housing discrimination; promote policies and programs that foster open, accessible, and inclusive communities; and strengthen enforcement of fair housing laws in the New York City region.