Digital ‘redlining’ swimsuit accuses Redfin of racial discrimination | US & Canada Information
Several fair housing associations on Thursday accused Redfin of systematic racial discrimination in a lawsuit, saying the online real estate agent is providing fewer services to home buyers and sellers in minority communities – a type of digital redlining that has depressed house values and exacerbated historical injustice in the housing market.
In a complaint filed in the US District Court in Seattle, the organizations said that during a two-year investigation they documented the implications of Redfin ‘s “floor price policy” requiring homes to be listed at certain prices in order to take advantage of Redfin’ s services to be able to.
The company was far less inclined to offer brokerage services, professional photos, virtual tours, online advertising, or commission discounts for homes listed in predominantly minority neighborhoods than in predominantly white ones.
That meant minority homes were likely to stay in the market longer and sell at lower prices than they otherwise could have, the lawsuit said.
“Redfin ‘s policies and practices act as a discriminatory stranglehold on color communities, often the very communities that have been plagued by a century of residential segregation, systemic racism and divestment,” the lawsuit reads.
As the nation expects generations of systemic racism, the lawsuit comes into real estate as well. Mortgage lenders and brokers have long been discriminated against by drawing lines on maps – known as redlining – and refusing to provide services to homes outside white areas, thereby preventing minority residents from building wealth through home ownership. Although banned decades ago, the practice had serious consequences for maintaining poverty and limiting access to good schools, health care and other facilities.
Litigation in the 1990s and 2000s helped wipe out similar minimum value policies in the insurance industry where companies would offer substandard homeowner policies or no policies based on the age and market value of a home.
Founded in 2006, Seattle-based Redfin provides real estate brokerage, mortgage, ownership and other services in more than 90 markets in the United States and Canada. The company said it would issue a statement later Thursday in response to the lawsuit.
Lisa Rice, president and CEO of the National Fair Housing Alliance in her Washington office, said the Fair Housing Groups did not share their findings with Redfin before filing the lawsuit [File: Patrick Semansky/AP Photo]Redfin appears to be an unlikely target for such a lawsuit: it has already been said that it is dedicated to eliminating systematic discrimination in the industry and that people of color are able to find listings online rather than relying on one Agent shows you which houses are available. could help end segregation. Two years ago, CEO Glenn Kelman hosted a symposium on racial prejudice in real estate.
The company once experimented with awarding brokerage commissions based on customer satisfaction, rather than sale price, to encourage the sale of cheaper homes. However, it has been difficult to find agents who expected to make more money selling more expensive homes.
According to the National Fair Housing Alliance, a Washington, DC-based nonprofit dedicated to eliminating discrimination in housing, and nine of its affiliates, Redfin’s minimum price and other policies have the opposite effect. With financial support from US Housing and Urban Development, they studied the effects of policies in Baltimore, Chicago, Detroit, Kansas City, Long Island, New York, Louisville, Kentucky, Memphis, Tennessee; Milwaukee, Newark, New Jersey; and Philadelphia.
As part of the reserve price policy, Redfin does not offer all services unless properties are offered at specific prices that vary by market. When prospective buyers click on homes that are below these minimums, they will see the message, “Redfin is currently unable to view this property.”
In Chicago last June, the company didn’t offer any services unless homes were listed for at least $ 400,000, the lawsuit said. In the adjacent, mostly white DuPage County, however, the reserve price was only $ 275,000.
In Detroit that same month, the minimum was set at $ 700,000. In the surrounding, mostly white, areas outside the city limits, it was $ 250,000.
Redfin appears to be an unlikely target for such a lawsuit, having previously stated that it is dedicated to eliminating systematic discrimination in the industry and that allowing people of color to find listings online could help end segregation [File: Lucas Jackson/Reuters]Since Redfin charges a minimum commission regardless of the selling price of a home, the practice cannot be justified by business motives, the lawsuit says.
In addition, Redfin sometimes did not provide services even when the price of a home exceeded the minimum. This is far more common in areas with predominantly minority groups, including the South Side of Chicago, the organizations said.
Using census data to compare postcodes that are at least 70 percent white with postcodes that are at least 70 percent minority, the organizations compared listings for which Redfin offered its “best available service” with those for which Redfin was offered Offered no service on several dates in the past two years.
For example, on June 12, there were 218 homes on Redfin in non-white neighborhoods in the Kansas City area. Of them, 16 Redfins had best service and 127 were given no service.
People visit a house that is being auctioned in Detroit, Michigan [File: Joshua Lott/Reuters]In contrast, there were 4,550 homes in mostly white boroughs of Kansas City. More than half received the best service available and only 14 percent had no service, the lawsuit said.
Similar differences were found in other cities, it said. On Long Island on Aug. 20, white zip code entries were 55 times more likely to receive the best service from Redfin.
In the Louisville minority zip codes, none of the 108 homes published on November 21, 2018 or the 31 homes listed on June 11, 2020 received the best service from Redfin.
The lawsuit calls on the court to block any Redfin policies that violate federal fair housing law and seek punitive damages.
Lisa Rice, president and CEO of the National Fair Housing Alliance, said the groups did not share their findings with Redfin before filing the lawsuit, as previous experience with the industry sometimes resulted in long, unsuccessful negotiations that made the problems tedious did.
“We have decades and decades of discriminatory practices in real estate,” she said. “Real estate agents are some of the best trained professionals in the industry. You know what redlining is. “