The National Fair Housing Alliance (NFHA) announced a settlement agreement today to resolve a fair housing lawsuit that will expand housing opportunities for consumers in communities of color in major cities throughout the United States.

Redfin, one of the nation’s largest real estate brokerages, will change its minimum housing price policy, alter other practices and pay $4 million to settle the suit brought against it by NFHA and nine other fair housing organizations.

The changes will increase access to the Seattle-based company’s real estate services across the country and help counter the decades-old housing policy known as redlining that NFHA and the other plaintiffs alleged Redfin’s policies perpetuated. The settlement proceeds will be used to conduct monitoring and compliance programs that expand homeownership opportunities in the cities covered by the lawsuit and cover litigation and investigation expenses.

“Our goal was to ensure that all neighborhoods are treated fairly and have access to the full range of services provided by any real estate company,” said Lisa Rice, president and CEO of NFHA. “We must also ensure that companies do not use their technologies, including digitally-based platforms, to deny people the housing opportunities and services they deserve. The steps Redfin has agreed to take are a positive move toward stamping out some of the nation’s most harmful practices, like redlining and appraisal bias.”

The lawsuit was brought after NFHA and the nine other fair housing organizations conducted a lengthy investigation. The fair housing organizations alleged that Redfin’s minimum home price policy violated the Fair Housing Act by discriminating against sellers and buyers of homes in communities of color. NFHA and the other plaintiffs alleged that policies that limit or deny services for homes priced under certain values can perpetuate racial segregation and contribute to the racial wealth gap.

“This case sends a strong message to real estate agents and the housing-tech industry that the use of minimum home value thresholds and other proxies for race long-challenged in the insurance and lending industries may run afoul of federal civil rights laws,” said Morgan Williams, general counsel for the National Fair Housing Alliance. “The resolution is a step in the right direction in the effort to dismantle the systems in our housing markets that lock in place the persistent racial wealth gap and residential segregation.”

The settlement is expected to serve as a caution to others in the real estate industry that they must exercise care to ensure that their policies and practices, including how they use technologies, do not lead to discriminatory outcomes.

Redfin has agreed to make changes that will stand for at least three years after an initial implementation period. The company also will implement an outreach and recruiting plan to increase racial diversity in its workforce, advertise its services to reach non-white consumers, and require agents and local partner realty firms to attend fair housing training.

“Redfin and NFHA both have long standing commitments to fair housing, and we’d rather spend money to advance fair housing rather than litigation,” the company said in a statement today. “Our commitment to broadening the price range of the homes we can sell is why, every year, by design, we lose money selling low-priced homes. As part of the settlement, we will increase our investment in serving buyers interested in low-priced homes in communities that have historically been underserved by the real estate industry.”

“Since we can’t afford to have our employees sell an unlimited number of homes at money-losing prices, Redfin will continue the general practice of using price to decide whether to serve a customer via a partner or an employee,” the company noted in the statement. “Redfin hasn’t broken the law, and we continue to stand behind our business practices. The settlement does not include an admission of liability. 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.”

The legal complaint filed by NFHA and the other fair housing organizations alleged that Redfin’s minimum home price policy had a substantial adverse impact on buyers and sellers of homes in predominantly non-white communities based on race and national origin.

The complaint alleged that Redfin offered no services in non-white Zip codes at a disproportionately higher rate than in white Zip codes in Baltimore; Chicago; Detroit; Kansas City, Missouri; Kansas City, Kansas; Long Island, New York; Louisville, Kentucky; Memphis; Milwaukee; Newark, New Jersey; and Philadelphia.

The lawsuit was filed in the federal district court in Seattle by the New York City-based law firm Emery Celli Brinckerhoff Abady Ward & Maazel, LLP, and Seattle-based firm MacDonald Hoague & Bayless.

Other plaintiffs included the South Suburban Housing Center; HOPE Fair Housing Center; Fair Housing Center of Metropolitan Detroit; Fair Housing Justice Center Inc.; Long Island Housing Services Inc.; Lexington Fair Housing Council; Metropolitan Milwaukee Fair Housing Council; the Fair Housing Rights Center in Southeastern Pennsylvania; and Open Communities.

Redfin operates in 95 markets in the U.S. and Canada and has generated $195 billion in home sales. The company averaged nearly 47 million monthly users on its mobile apps and website in 2021.

The investigation, in this case, was supported, in part, with funding from a Private Enforcement Initiative grant received from the Fair Housing Initiatives Program administered by the U.S. Department of Housing and Urban Development.