Jay Thompson is a former brokerage owner who spent six years working for Zillow Group. He retired in August 2018 but can’t seem to leave the real estate industry behind. His weekly Inman column publishes every Wednesday.
Redfin recently got sued. The National Fair Housing Alliance (NFHA) and nine other fair housing-related organizations filed the suit last week after a two-year investigation into Redfin’s pricing practices.
If you boil the 76-page lawsuit down and look at it from a 35,000-foot level, this fair housing coalition claims Redfin is in violation of fair housing laws because they don’t provide services in areas with lower-priced homes — areas that tend to be mostly populated by minorities. Hence Redfin is accused of redlining.
Slow your roll
Unsurprisingly, many agents have already tried and convicted Redfin in the court of public opinion. Let’s be honest, though; most of those folks got their doctor of jurisprudence degree from Facebook University. That doesn’t invalidate their views, but they shouldn’t be swinging a gavel and shouting, “Guilty!” Let’s hold off on the summary judgment and subsequent execution of Redfin until we have all the facts.
Besides six hours of undergraduate “business law” classes and a couple of run-ins with the cops for doing stupid teenage things, I have zero legal experience, training or education. Therein lies my lack of desire to delve into the merits of this lawsuit. Simply put, I’m not qualified to discuss it.
To that end, I’m not going to discuss the merits of the case, or Redfin’s business model, in this column. There’s plenty of reading material out there — from mainstream media, trade publications, social media comment streams, prognostications in Facebook groups — all sorts of chatter, thoughts and opinions are available for a lifetime of reading pleasure.
Where I do have extensive experience is as a corporate employee, manager and human resources professional. From slinging burgers at McDonald’s as a 16-year-old to decades working for large semiconductor manufacturing companies, to a six-plus-year stint at Zillow Group, I’ve spent a significant portion of my life in Corporate America.
Somewhere in a box is my liberal arts degree with a concentration in human resource management. HR education and training, along with my experience and relative corporate-speak fluency, have led to a lifelong interest in business-worker interactions — both within their industries and the outside world.
The big question
To read about this lawsuit and the swift reaction to it piques my curiosity. I can’t assimilate any of the news without having a question rattle around in my brain. A question that is hard to answer but is an essential part of development such as this lawsuit.
That question is: Is it a company’s job to make money or be a force for positive change in the world?
The simple solution, I suppose, would be to say, “a publicly traded company (like Redfin) is beholden to its shareholders.” That mantra has been espoused in business school since time immemorial.
Far more recently, however, a mantra of “corporate citizenship” has surfaced. Business schools, always laden with acronyms, are now talking about CSR, ESG, SDG and TSI.
Not familiar with this family of TLAs (three-letter acronyms)?
- Corporate social responsibility
- Environmental, social and governance
- Sustainable development goals
- Total societal impact
All of these go well beyond the need for the beholding of shareholders in a publicly traded business. Private enterprises, which most real estate agents and brokers fall into, are also expected more and more to be good “corporate” citizens.
“What nonsense!” some readers are thinking. “It’s all about the profit!”
Maybe, maybe not. Studies abound show that many people put a premium — and are willing to pay a premium — on companies that practice good social responsibility. In the real estate business, your reputation is critical. One needs to look no further than some socially inept agents’ actions to see the career-limiting damage that can occur for acting like a fool.
At this moment in time, the National Association of Realtors (NAR) is proposing changes to the Code of Ethics to crack down on hate speech. These changes would extend some of the code to apply to your life outside of real estate.
The always-on, 24-hour news cycle; social media; and the ability to capture anything and everything on a cell phone and post it to the internet in real-time has amplified the need for good citizenry at both the corporate and individual level.
Long gone are the days where accountants in green visors huddled together, spinning bravado about a business’s financial performance, only to publish these reports once a quarter to interested shareholders and potential investors.
Times have changed, my friends, and the undeniable fact is: People care that you care. Not just about the profit line, but about society and the world in general.
Back in my Zillow days, the Zillow Cares initiative was announced, complete with a $5 million donation to The Home Project to help fight homelessness. I remember sitting in meetings being asked my thoughts on the potential industry reaction.
“The Hateraide drinkers aren’t going to like it. We’ll get, ‘corporate pandering!’ and ‘They’re trying to buy forgiveness,'” comments was my initial assessment. Honestly, although I knew the intent was right, I thought we’d get slaughtered from on high.
I was wrong. Yes, some people made those exact comments, but only by a handful of the most devout and tenacious brand detractors. The vast majority of the industry, even those with real disdain for all things Zillow, applauded the effort. The consumer reaction was overwhelmingly positive. Even the investor reaction moved the stock price needle further into the green.
Look, I’m not stupid, and neither are you. Yes, there were good people, ultimately wanting good change to come from Zillow Cares. But there was a component of, “We need to do this to reflect good corporate citizenship” behind the decision. Of course, there was. Welcome to capitalism and understanding the current consumer mindset. In addition to doing good things, being a decent citizen can and does help a company’s bottom line.
A ripple effect
Back to Redfin and this fair housing lawsuit: Glenn Kelman, Redfin president and CEO, is on the record showing strong support for equal rights and being opposed to housing discrimination. Redfin is arguably one of the industry leaders in this matter.
As Kelman said in the very blog post he penned in reaction to this lawsuit, “Every business has to balance employee and customer needs.” And a tricky balancing act that is. Compounding that difficulty is the need for “corporate citizenry” and “social responsibility.”
This lawsuit will likely take months, maybe years, to resolve. If you think it only affects Redfin, think again. Agents target luxury buyers all the time. They advertise based on ZIP codes. Entire brokerages cater to the needs, wants and desires of certain income levels, certain locations and certain cities. This lawsuit has the potential to impact everyone in this industry.
Watch it closely.
Jay Thompson is a real estate veteran and retiree living in the Texas Coastal Bend, as well as the one spinning the wheels at Now Pondering. Follow him on Facebook, Instagram and Twitter. He holds an active Arizona broker’s license with eXp Realty. “Retired but not dead,” Jay speaks around the world on many things real estate.