One day after Redfin was hit with a lawsuit alleging racial discrimination, agents from across the U.S. have criticized the company, arguing that it should be doing more to promote fair housing.
A coalition of housing advocacy groups filed the suit against Redfin earlier this week. The suit accuses Redfin of “redlining” minority neighborhoods by denying them things like brokerage services. It also argues that Redfin has inconsistent pricing policies that actually make it easier for consumers in predominantly white areas to take advantage of the company’s offerings.
In a blog post Thursday, Redfin CEO Glenn Kelman countered that “we don’t know how to sell the lowest-priced homes while paying our agents and other staff a living wage.”
But in conversations Friday, agents told Inman they didn’t buy that explanation.
“In real estate, your business practices do not absolve you from fair housing,” Shawneequa Badger, a team leader at Intero Real Estate Services, said. “We’re all business owners. At the end of the day we all have an obligation to make sure we create equitable and equal grounds in being able to serve the public. A business model doesn’t remove us from that.”
Badger went on to note that Redfin, and Kelman specifically, have made it a point to talk about race, discrimination and fair housing in recent years. Given those comments, she said, “they should have made it a priority to figure out” how to serve minority communities.
“If anybody can figure it out it should be Redfin,” she added. “I would expect them to figure that out.”
The news of the lawsuit prompted a robust discussion Friday in various online real estate forums and online communities. And there were a number of industry members who shared the perspective of Redfin and Kelman, which was that the company hasn’t broken the law and that the need to pay agents a living wage was an adequate justification for the company’s policies.
Inman reached out to Redfin Friday requesting an interview with Kelman, but had not heard back by the time this story was published.
But Inman reached out to more than a dozen agents Friday with varying perspectives, about half of whom responded. And all of those who ultimately went on the record more or less agreed with Badger’s critique.
For example J. Philip Faranda, who owns a self-named brokerage outside of New York City, compared the lawsuit to the high-profile racial discrimination investigation on Long Island last year. He explained that in his state, discrimination can technically be in the form of “disparate treatment,” which is easy to spot, or “disparate outcomes,” which is more subtle and what he believes is going on in the Redfin case.
“Any time you draw a line at an economic border, you are excluding service to people,” Faranda told Inman. “Redlining does not occur geographically only, it occurs economically. And that is what Redfin has done with this price limit.”
Like Badger, Faranda also argued that a company’s financial needs do not outweigh fair housing concerns.
“The business model ends where people’s housing rights begin,” he concluded, adding that Redfin’s ability to offer discounted services depends on volume, which means he might have expected the company to jump at the opportunity for more number of transactions.
“Kelman’s whole argument for the rebate and the reduced commission is, ‘we’ll make it in volume,'” Faranda said. “Well, the highest volume home is the starter home.”
Mitchell Hall, a Compass agent in New York City, also compared the situation to the Long Island discrimination cases.
“I think it’s a problem and they were caught,” he told Inman, speaking of Redfin and the lawsuit.
Referring to Kelman’s argument that Redfin has yet to figure out how to pay agent wages while working with lower-priced homes, Hall suggested the company’s business model may be flawed compared to the more traditional commission model. And he argued that consumers working with lower-priced transactions might actually be the ones who could benefit the most from a discount brokerage.
Brandon Kekich made a similar point.
Kekich, a team leader with RE/MAX, works in the Detroit area, which happens to be one of the markets in which the lawsuit accuses Redfin of having discriminatory pricing policies. Specifically, the lawsuit accused Redfin of offering services in the mostly white suburbs for homes costing just $250,000. Within the city limits, however, Redfin set a minimum price threshold of $700,000, the suit states.
“To me the numbers, they should be flipped,” Kekich argued. “The guy buying the million house in the suburbs probably doesn’t need a $1,000 rebate.”
Kekich went on to say that sometimes companies also have to make short term sacrifices. As an example, he cited a local grocery store chain that opted to build a new store in an underserved community, even though the store wouldn’t ultimately rake in much cash.
“They basically said, ‘we know we’re going to lose money on this for the foreseeable future, but it’s the right thing to do,'” he recalled.
Redfin could make a similar decision, Kekich said. He also noted he and his team specialize in, among other things, working with first-time homebuyers. Many of those clients are minorities who lack a history of homeownership in their families, and he said that “some of our most rewarding transactions are those small homes and the first-time homebuyer.”
Emotional rewards are hard to quantify, but Kekich ultimately added that he and other agents in the area earn good money working with clients in all of the market’s neighborhoods. And that’s why he didn’t buy Redfin’s explanation for its policies.
“If we can still afford to make a really good living,” he added, “they can too.”