I remember when I was the broker of a large real estate company and I got that dreaded phone call from a Federal Fair Housing Auditor with the message, “One of your sales associates has violated a Fair Housing law.”
Wow! That hit hard! I remember feeling sick to my stomach, wondering,
- “What exactly did my agent do?”
- “What happens now?”
- “What do I need to know to help my agent?”
- “If my agent did violate a Fair Housing law … why?”
In this case, my agent did in fact violate the law. It was unintentional but was still a violation.
Because real estate agents can have such a strong influence over their client’s decisions it is essential for all agents to understand fair housing laws. The National Fair Housing Alliance (NFHA) works to eliminate housing discrimination and to ensure equal housing opportunity for all people through leadership, education, outreach, membership services, public policy initiatives, advocacy and enforcement. They are the voice of fair housing in real estate transactions.
Below are two terms discussed in conjunction with Fair Housing:
Redlining is the unethical practice of making it difficult for residents of certain neighborhoods to get loans to purchase real estate. The reason redlining is such a big issue in fair housing is because property values can go down if an area is redlined. Redlining is a discriminatory practice and is against the law. But did you know that back in the 1930’s the government drew red lines on maps around certain neighborhoods and refused to back loans in those areas? This was when the Roosevelt administration started backing loans to spur on home ownership. We have come a long way since the 1930’s but it is very important to be aware of what redlining is.
One of the most common fair housing violations is steering. Steering occurs when a real estate salesperson encourages, directs or recommends clients towards specific neighborhoods and possibly away from others because of the client’s race, color, ethnicity, sex, familial status, handicap or religion. In 2000 there was a study conducted called The Housing Discrimination Study of 2000 (HDS2000) which revealed that while many areas of discrimination had decreased in the previous 10 years, steering was actually on the rise.
The Department of Housing and Urban Development (HUD) pays groups to test real estate agents to determine if they are breaking this law. It is imperative that you understand what this law is and what your response should be when challenged.
If a buyer asks you to see homes in a specific area you are not in violation of the law by doing that. Steering occurs when the agent directs the buyer to a specific area or avoids a certain area – not when a buyer asks only to see homes in a particular area or neighborhood. Agents are in violation, however, if a buyer asks to see houses in neighborhoods with a specific racial or ethnic population.
How to be safe
When a buyer indicates they do not know where they want to live and they want your help in determining a good area … BEWARE! This is when steering is most likely to happen. Be sure the questions you ask the buyers are not based on factors involving race, religion, sex, national origin, familial status. If you want to be in compliance with Federal Fair Housing laws then ask appropriate questions which may include:
- Are there any specific places you need to be near like employment, schools, medical providers, shopping or recreational areas?
- What price range are you interested in?
- What type of home do you want?
- Do you want new construction or resale?
- Are there particular features in your home that you want?
- Is there a particular size you need?
- What size of land are you interested in?
When working with clients who ask questions you think might violate Federal Fair Housing laws, don’t be afraid to explain why you can’t answer their questions and take the time to explain these laws. These laws are here to protect you and your clients.