New Major Lawsuits Could Create Massive Change In Real Estate & Finance Costs (For The Worse)
A big new lawsuit and investigation could significantly change the costs of buying and financing real estate in the very near future. What’s happening? How is it going to impact you and those you care about?
Redfin & Opendoor
Discount real estate brokerage Redfin is in the hot seat. They are now the target of new fair housing lawsuits claiming they are racially discriminating by limiting their service by minimum home prices. That can be as low as $250,000 in some markets, compared to the national average home price of $350,000. They are being sued in Seattle, and have been asked to stop the service by a city councilperson and mayoral candidate on the east coast in Baltimore.
Opendoor, the big iBuyer and house flipper which has partnered with Redfin and has filed plans to go public with a value of close to $5B, is also the subject of an FTC investigation into its advertising.
While no one should be discriminating, period, and we don’t know the real intentions of these companies, these legal challenges could have the opposite of the declared result and prove counterproductive and harmful for those who need the help the most.
Here’s what it means for others and the real estate industry in general…
Fewer Services & Choices Of Help
It has become clear that through a series of lawsuits like this, that if you have a public website you are a target. Many may need to take their services back to being private, rely on referrals, and other mediums to do business.
These risks and liabilities are also reducing the number of those who will want to try and innovate and change things for the better in this industry, and who will be willing to risk backing them with capital.
Higher Costs
If mortgage lenders and real estate brokers are forced to do away with minimums or must provide their products to every zip code in the nation, then they will have to either end services or dramatically increase the costs of services for everyone.
This would likely end discount real estate services and loans that would help borrowers with less than perfect credit and big incomes. This might seem to be great for the largest companies and Realtors, but will penalize the majority.
More Inequality
Higher costs and less help, means those who need the help most, especially for entering homeownership and investing are going to be sidelined even more, while others can get far better deals from personal connections. It will widen the divide between the uber wealthy and everyone else.
The Bottom Line
The increasing liability of having a public website means the need for real estate investors and business owners to start exploring other alternatives as a plan B and C. Discrimination is bad, but lawsuits like this can be more counterproductive. Be sure you are building your personal network of buyers, sellers and lenders now.
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