Fair Housing: Are You Unconsciously Steering Clients?

How much do you really know about fair housing rules?

Bill Dedman

Pulitzer Prize-winning reporter Bill Dedman talked about Newsday’s three-year investigation, which found widespread, unequal treatment of potential homebuyers in Long Island, New York, during a webinar yesterday.

PAR President Christopher Raad and Dedman began by discussing Dedman’s Pulitzer Prize-winning investigation into mortgage lending practices in the 1980s, in which lenders were redlining, or doing business on one part of the map but not another, Dedman explained.

“The customer would have no way to know where the banks don’t make loans. The customer would have no basis for making a complaint. But we looked at how the banks operated. We found differences in branch locations, in which real estate agents the banks marketed to, where customers could put in a loan application, where branches had been opened and closed. The lesson we learned there was how small actions, perhaps unintentionally, could have a huge impact in perpetuating a segregated system,” explained Dedman.

For the Newsday real estate investigation, Dedman explained how heavily segregated Long Island is, with Black residents living primarily in only eight of the 200 communities.

“We long heard anecdotes from Black homebuyers encountering problems trying to buy a home in white or integrated areas, even from our own colleagues at the newspaper,” said Dedman.

The Newsday team used hidden cameras for visual and audio, sending first-time homebuyers of various races with identical circumstances to the same agents to see the outcome. Each agent saw a minority client and a white client, who presented the same financial background. The results showed agents giving unfair treatment in 40% of cases, or 19% of Asian buyers, 39% of Hispanic buyers and 49% of Black buyers.

The most common types of difference were steering, different treatment, like asking for identification from minorities but not white clients, and inappropriate comments. Dedman described steering as “making unsolicited comments about the race or ethnicity or religion of people who live in an area or the schools or crime or resale values, as a way of encouraging or discouraging someone from living there, while giving contrary information to someone else. We heard agents tell white buyers to avoid an area because of poor resale values, while encouraging minority buyers there.”

“One of the patterns that startled us was that agents, time and again, began their presentations to the buyers, to new customers, with inappropriate comments or information that violates the Fair Housing Act,” added Dedman.

Schools are the hardest part of fair housing, Dedman said. “If it’s OK to share websites with objective information, is it OK to talk about school test scores?” Dedman argued that test scores don’t tell one how good a school is, rather how educated and wealthy the parents are.

“So, can you talk about school test scores and refer parents to websites listing them? Yes, you can. But is it right to do this, in a country as segregated as ours? That’s a moral question, not a legal question,” said Dedman.

“If an agent is treating one person better than another similarly situated person, and the difference between them is one of the seven categories in the Fair Housing Act, the agent has violated the law,” added Dedman.

What can Realtors® do to combat unequal treatment?

NAR introduced Fair Housing Action Plan, also known as ACT, in response to this project. A stands for accountability, c for culture change and t for training. For accountability, NAR is working with state associations to point out where state licensing laws fail to support fair housing. For culture, NAR acknowledges it will take a long time, Dedman said. But encouraging segregation in housing has to stop.

For training, NAR will be offering a course for brokers on implicit bias this spring and also launched Fairhaven, the simulation tool, in the fall. Finally, NAR will begin presenting fair housing champion awards to brokerages who are doing fair housing correctly.

For agents, they should provide customers with listings based on their objective criteria, like home size, instead of terms like “safe,” and agents should be aware of their unconscious biases.

“The best way to stop illegal steering may be to stop steering customers at all. Send them all the listings,” said Dedman. “I know you want to make sure that everyone who calls or emails or walks into your office is treated equally.”

Watch A Conversation About Fair Housing for free.. PAR’s Education Foundation and a NAR Fair Housing grant provided the funding to make the webinar possible.