Housing advocates have accused Redfin of “redlining” minority neighborhoods with a price policy that can make it harder for people of color to sell their homes.
Redfin will only act as a real estate broker for homes if they’re above a minimum price that varies for each housing market — meaning the company is less likely to offer its full range of services in predominantly non-white neighborhoods, according to the National Fair Housing Alliance.
The Washington, D.C.-based group brought a lawsuit against Redfin asking a court to put an end to the practice, which it likened to the racist redlining policies that shut black families out of the housing market for decades.
A two-year investigation by the National Fair Housing Alliance found that Redfin offered no real estate services to non-white ZIP codes at a disproportionately higher rate than white ZIP codes in 10 metropolitan areas, including Long Island, Baltimore, Detroit and Philadelphia.
Not having access to those services can cause homes in those neighborhoods stay on the market longer, which can make the area look less desirable and drive down property values, according to the group’s lawsuit accusing Redfin of violating the Fair Housing Act.
But Seattle-based Redfin said it follows the Fair Housing Act, which supports businesses’ decisions to determine the areas and customers they serve based on “legitimate business reasons” such as price.
In a statement, Redfin CEO Glenn Kelman acknowledged that the company’s agents don’t work in some rural towns or low-priced neighborhoods because “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.” He also noted that Redfin hasn’t turned an annual profit in 16 years as a brokerage.
“Even though the suit is wrong about the law, the issues it raises are important to Redfin, to our society and to me,” Kelman said. “We have a long history of expanding into lower-priced communities; we want to expand faster.”
Redfin offers several “perks” to buyers and sellers who use its real estate agents to sell their homes, including professional photos of the property, premium placement on Redfin’s website and even discounts on the agent’s commission in some cases, according to the suit.
But such services aren’t available for homes that don’t hit Redfin’s minimum price threshold, which varies widely even within major metro areas, the complaint says. For instance, the minimum for brokerage services in the city of Detroit was $700,000 this June but just $250,000 outside the city limits in Wayne County, the suit alleges.
“Redfin’s policies and practices amount to separate and unequal treatment of communities based on the racial composition of the area,” the alliance said in its 76-page complaint, filed last week in Seattle federal court. “In short, Redfin’s policies and practices constitute real estate redlining in a digital age.”
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