(Bloomberg) -- Online real estate brokerage Redfin Corp. agreed to stop refusing to provide service to lower-priced homes and will pay $4 million to settle a lawsuit brought by fair-housing groups who claimed the company's “minimum price policy” disadvantaged non-White buyers and sellers.
The Seattle-based firm also agreed to be monitored by the groups, led by the National Fair Housing Alliance in Washington, and to make other changes to ensure it provides equitable access to real estate services, according to the settlement agreement filed Friday. Redfin didn't admit liability or wrongdoing.
“This settlement sends a strong message to those throughout the real estate industry,” Morgan Williams, general counsel at NFHA, said in an interview. Minimum-price policies “create an unjustified discriminatory impact and are a violation of federal civil-rights law.”
The fair-housing groups filed the lawsuit in federal court in Seattle in October 2020, alleging that Redfin was more likely to provide its best services and discounts to customers in predominantly White neighborhoods. The groups described the practice as “redlining in the digital age,” harking back to the days when lenders and brokers drew boundaries that restricted service to non-White areas.
The allegations were based on an analysis over two years of how Redfin offered its services in markets including Chicago; Detroit; Baltimore; Memphis, Tennessee; Kansas City, Missouri; and Long Island, New York. In predominantly White ZIP codes, the fair-housing groups found, people were anywhere from 2.5 to 69 times more likely to be offered the company's best services compared with those in predominantly non-White ZIP codes.
A Bloomberg Businessweek investigation published in January found that some of Redfin's own employees shared the groups' concerns and had pushed the company to provide more service in minority neighborhoods.
Read more: Progressive Real Estate Firm Faces Accusations of Discrimination
In a statement Friday, Redfin said it will still be able to use home prices to determine whether to serve a customer with its own agents or to refer the person to a partner at other brokerages.
Fair Housing
“Redfin hasn't broken the law and we continue to stand behind our business practices,” the company said. “We recognize there is much to be done to make housing fair and to reverse decades of inequality and we will continue to do our part.”
Redfin is best known for its home-shopping website and app, visited by more than 40 million people a month. The company also employs agents in dozens of markets across the U.S. who use technology to streamline the process of buying and selling homes. This allows them to charge fees that are less than the industry average. The company also has a network of “partner agents” who work at other brokerages and get referrals from Redfin when its own workforce are too busy or unable to work with customers.
Among other changes, Redfin agreed to establish objective criteria to determine which areas would be served by its own agents. These include housing density, the number and type of properties for sale in each market and estimated travel times for agents.
Previously, mid-level market managers had been entrusted with some discretion to set the service areas themselves -- a process the fair-housing groups contended could lead to bias. Under the settlement, those managers now must seek approval from higher-level executives using objective criteria before making changes.
To increase opportunities within its own workforce, Redfin agreed not to assign agents to certain territories based solely on where they live. Agents in predominantly Black neighborhoods, for example, would have the ability to work in predominantly White neighborhoods, where prices tend to be higher.
“It's an important standard for other real estate companies to consider,” said Diane Houk, a lawyer for the NFHA.
As part of the settlement, Redfin must also advertise its services in non-White areas and present the NFHA with a written plan to increase the racial diversity of its real estate agents -- both at the company and at local partners.
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