Redfin settles digital redlining case out of court

The online real estate brokerage Redfin has agreed to pay $4 million to settle a discrimination lawsuit out of court. The lawsuit alleged that the company failed to provide its brokerage services to homes that were listed below a specific price, a practice known in the industry as “digital redlining”.

By settling out of court, Redfin officially admits no wrongdoing. However, the company has agreed to take action to address discrepancies between the white and nonwhite areas it serves.

The complaint by the National Fair Housing Alliance was lodged in 2020. In it, the NFHA said Redfin was guilt of providing fewer services and discounts to “communities of color” compared to buyers and sellers who live in predominantly white areas.

Redfin reportedly established a “minimum price limit”, and homes that were valued below that would not be eligible to receive its full range of services. That includes access to its real estate agents, professional photos and property marketing services.

The NFHA said that Redfin’s limit disproportionately affected homeowners in nonwhite communities.

A spokesperson for Redfin told Fast Company in a statement that it was wrong and sensationalistic to describe its price-based policy as redlining. “Redfin serves all neighborhoods in the metro areas where we operate,” he said. “We do not make service determinations based on race or the demographics… Home price is the only fair and objective way to make that determination become home prices determine the fees we earn.”

Despite the denial, Redfin not only agreed to settle but has also said it will end its minimum price limits policy and provide fair housing training developed by the NFHA to its employees and agents. However, the company will instead use “price thresholds” to determine whether or not to offer its services to home buyers and sellers.

A spokesperson told The Real Deal this will allow it to manage capacity, as it generally fields more requests than it’s able to meet.

The company also will launch a “monitoring and alert system,” which will identify when minimum price points in communities of color exceed those in majority-white neighborhoods. It will then take corrective actions based on any discrepancies found.

“Redfin hasn’t broken the law and we continue to stand behind our business practices,” the company said in a statement. “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.”