Seattle-based real estate company Redfin agreed to pay $4 million and implement a new internal monitoring system to settle a lawsuit that alleged its practices discriminated against communities of color.
The settlement, filed April 29 in U.S. District Court in Seattle, resolves a suit filed in 2020 by the National Fair Housing Alliance and other organizations. The suit focused on Redfin’s practice of setting a minimum home price in each market to determine whether it will offer its services for specific properties.
Under the settlement, Redfin will stop using home price thresholds when referring business to partners.
Redfin will continue using home price thresholds to determine whether its employee agents will offer services for specific homes. At the same time, it will implement a system to monitor and report on the impact of these thresholds on predominantly non-white communities, and take corrective action as needed.
NFHA wanted to “ensure that companies do not use their technologies, including digitally-based platforms, to deny people the housing opportunities and services they deserve,” said Lisa Rice, the group’s CEO and president, in a statement. “The steps Redfin has agreed to take are a positive move toward stamping out some of the nation’s most harmful practices, like redlining and appraisal bias.”
However, even with the settlement, Redfin says it’s incorrect to call its pricing thresholds redlining.
When the suit was filed, Redfin CEO Glenn Kelman said the company complied with the Fair Housing Act, using minimum price thresholds in an effort to ensure it could pay its employees a living wage.
“Throughout our history, we’ve made progress in broadening the price range of properties we could profitably sell, expanding from Seattle and San Francisco to cities across North America,” Kelman wrote at the time. “We’ve built a network of over 5,000 partners in an effort to serve customers for every home on our site, but our own agents still can’t make a decent living selling the lowest-priced homes.”
The company admitted no wrongdoing as part of the settlement.
“We do not make service determinations based on race or the demographics of the neighborhood,” a Redfin spokesperson said in a statement to Fast Company. “Home price is the only fair and objective way to make that determination because home price determines the fees we earn.”
Update: Here is Redfin’s full statement as provided to GeekWire:
“Redfin and NFHA both have long standing commitments to fair housing, and we’d rather spend money to advance fair housing rather than litigation. Our commitment to broadening the price range of the homes we can sell is why, every year, by design, we lose money selling low-priced homes. As part of the settlement, we will increase our investment in serving buyers interested in low-priced homes in communities that have historically been underserved by the real estate industry. Since we can’t afford to have our employees sell an unlimited number of homes at money-losing prices, Redfin will continue the general practice of using price to decide whether to serve a customer via a partner or an employee. Redfin hasn’t broken the law and we continue to stand behind our business practices. The settlement does not include an admission of liability. 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.”