Settlement reached in federal housing complaint
Suit against Redfin alleged violations of Fair Housing Act
The settlement of a federal housing complaint against real estate services company Redfin could expand homebuying opportunities in communities of color in the south suburbs, according to one of the housing centers party to the action.
The Homewood-based South Suburban Housing Center and HOPE Fair Housing Center in Wheaton are among plaintiffs in the federal court complaint that accused Redfin of business policies discriminating against sellers and buyers of homes in communities in violation of the federal Fair Housing Act.
In the settlement, announced Friday, Redfin admits to no wrongdoing, but will make changes to its business practices and appoint a fair housing compliance officer.
Both sides said the out-of-court settlement is meant “to avoid protracted expenses and litigation.”
Redfin will make an initial payment of $4 million, with much of it being used by the National Fair Housing Alliance to monitor changes to Redfin’s business practices. Also, within a year of the settlement agreement, Redfin agrees to make an additional payout of $1 million.
In a joint statement, the housing organizations and Redfin said they “recognize that these changes advance their commitment to equitable real estate services and that much work needs to be done in the industry to eradicate the historical impact of systemic racism on people and communities of color.”
John Petruszak, executive director of the south suburban center, said the resolution provides for continuing cooperative monitoring and interaction by Redfin with the National Fair Housing Alliance and the local fair housing agencies, ensuring an increased number of buyers and sellers in communities of color can benefit from Redfin’s full services.
Michael Chavarria, HOPE’s executive director, said the settlement “brings much needed financial relief to communities harmed by Redfin’s policies while changing those policies to prevent future harm.”
Beyond that, however, Chavarria the settlement “is a call to action for the industry and all its innovators to ensure the new tools they create disrupt the status quo, not perpetuate it.”
The complaint had been filed in October 2020 in federal court in Seattle, where Redfin is headquartered, and came after an investigation by the national housing group and regional organizations.
The lawsuit alleged that Redfin’s minimum home price policy violated federal fair housing laws by discriminating against sellers and buyers of homes in communities of color.
In the settlement, Redfin said that its price thresholds policy is a “dynamic home-price-based system for managing demand and profitability” in markets it serves.
Redfin said as part of the settlement it will do away with that policy in certain markets covered by the agreement for five years.
Under the practice, based on the market, Redfin would refer homebuyers to other real estate partners for homes under a certain selling price, but has agreed to new price targets.
For instance, in the south suburbs, the settlement sets a minimum target price of $150,000, while the minimum target of $250,000 will apply to homes in Chicago’s northern suburbs and DuPage County, according to Petruszak.
Redfin will need to extend real estate services to 11% of buyers seeking to purchase homes under those target home sale prices, Petruszak said.
The company noted the target price can be adjusted, either up or down, annually based on median sale prices in a particular market.
Redfin said as part of the settlement it will establish a price threshold monitoring system and corrective plan, which will be presented to and monitored by the national housing organization.
The goal, according to the company, is to create a system in which buyers seeking homes in communities of color “have an equal opportunity to obtain service from a Redfin employee as buyers seeking homes of the same price in predominantly White Service Regions” in the same market.
Redfin will also implement an outreach and recruiting plan to increase racial diversity in its workforce, and adopt an advertising and marketing plan to promote its services in communities of color, according to the settlement. Also, the company’s employees, including executives, will be required to take part in fair housing training.