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Sunday, July 15th 2007

7:35 PM

When Fair Housing Laws Go Too Far

This is a great article that my Managing Broker passed on to all of us and so I just had to blog it.  Thank you Fern!  Read on.

When the Fair Housing Act Goes Too Far: What Your Broker Can't Say

What About Free Speech and the Pursuit of Happiness?

By KATE MORGENSTERN, AOL REAL ESTATE

Broker Lingo

According to the Fair Housing Act, these words raise red flags when weeding out discriminatory housing practices:

  • Family Friendly
  • Thai Restaurant nearby (or any word indicating ethnicity)
  • In-Law Suite
  • Nanny Quarters
  • Area Churches
  • Sex (Single Men or Women)

  • There is a quiet hysteria brewing amongst many U.S. real estate agents. This pervasive fear stems from the idea that, based on the Fair Housing Act, real estate agents could be prosecuted or fired for answering the most fundamental, universal kinds of questions they are asked by renters and home buyers every day.

    An eligible bachelor contacts a real estate agent to help him find a pad. He is looking to be surrounded by other singles in a lively atmosphere. A married couple with young children wants to steer clear of rambunctious, 20-something singletons to avoid the same housing situation the bachelor craves. The corresponding inquiries ensue: “Is this place family friendly?” “Is this the kind of neighborhood where I can find a lot of young singles like myself?” These are the kinds of questions that make many real estate agents’ skin crawl.

    Providing that type of information to home buyers and renters could land an agent in some serious hot water. The resulting reticence to answer these questions means home buyers and renters sometimes can’t rely on their real estate agents to do the job they appointed them to do: to answer the questions that will help them find appropriate accommodations in the type of neighborhoods that suit them and their lifestyles. In short, the law may hinder home buyers and renters in their pursuit of the kind of happiness that comes from finding the perfect home.

    Interpretation of the Law The Fair Housing Act was created to thwart discriminatory practices in the real estate industry based on a slew of categories that includes race, religion, sex and familial status. The intent of the law is good, right and just. According to the
    Office of Fair Housing and Equal Opportunity, their policies “make sure all Americans have equal access to the housing of their choice.”
     
    But what happens when interpretation of the law prevents Americans from finding the housing of their choice in the first place? I interviewed a veteran real estate agent on the topic who wishes to remain anonymous. We’ll call her Kira.

    Where Did We Go Wrong? One purpose of the law is to put a stop to racial steering, which is the practice of guiding home buyers and renters towards some neighborhoods and away from others based on race. Kira says, “I think the intention of the law is very good -- to discourage people from discriminating. But I think the intensity with which they try to enforce it is a disservice to their efforts, because one of the main reasons why clients hire brokers is they want brokers’ knowledge and insight. And that insight includes demographics.”

    Kira explains that, in some cases, clients want to be racially steered (and more often than not, steered based on familial status.) She tells me many brokers unofficially specialize in ethnic placement to help non-English speaking clients find their home away from home among others of their nationality. “A lot of brokers have a niche market of serving minorities. If there was a Chinese broker with Chinese agents and they serve a mostly Chinese clientele, it would be tough to prove discrimination because it would be human nature to want to be around people who speak your language.” She says the Fair Housing Act attempts to impose guidelines to curb this human nature, which is an extremely touchy outcome in the world of fair housing laws.

    Kira says, “People want to work with people who are their same background, and it’s a trend some cultures tend to meander into.” For better or worse, this trend can lead to neighborhoods’ harboring certain demographic concentrations and income levels. This runs counter to the grain of the idealists' view of the perfect melting pot, an American landscape of patchwork neighborhoods harboring all classes and cultures.

    Kira adds, “To prohibit a broker from giving the client knowledge that they are requesting, even if it’s illegal, I think it’s wrong. If a client wants to live in a certain neighborhood with certain demographics, with certain qualifications like children or no children, or not too many teenagers, then I think brokers should be allowed to discuss the knowledge they have on that and help them.” Kira feels the law can “limit our rights as citizens” by making it illegal to talk about the kind of community where one wants to live.
    Independent Thinking The overwhelming problem with the Fair Housing Act is that it often prevents real estate agents from matching their clients with their desired housing situation because it’s illegal to answer many of their clients’ questions. Just about every home buyer is interested to know what their potential neighbors might be like, but within the construct of the law, home buyers cannot rely on a professional real estate agent to find out. “I think what hurts is trying to granulate it down to one-on-one relationships. Independently, brokers should be allowed to discuss with their clients what their clients want to discuss, based on the client’s individual preferences,” says Kira.

    In certain circumstances, Kira feels somewhat comfortable giving those prohibited answers. “If I know my client because they are a friend or a referral of a friend, then I’m much more likely to be able to talk to them candidly about fair housing laws and tell them, ‘Oh, I’m not allowed to discuss this, but I’ll give my two cents anyways,’ and feel safe that it’s not going to get out.” But like many real estate agents, she has weighty reservations about the possibility of getting nabbed for discussing forbidden topics.

    When Kira isn’t personally connected with a client via friends or a referral, she practices caution. “If they asked me something anti-fair housing, I would say, ‘I’m not allowed to discuss that,’ and that would of course affect the service level I’m providing. I would tell them, ‘Hang out on a Saturday afternoon, see who is hanging out, who is watering their lawn, who is grocery shopping.’ If the buyer is interested in the neighborhood, all fair housing laws aside, the buyer should hang out there and make sure they like the feel of the area. So they can almost answer their own questions just by being more involved in the process.”
      A Verbal Minefield The Fair Housing Act extends to real estate advertising as well, a provision that Kira occasionally finds helpful. She says, “An ad can’t say anything to discourage singles, families or a certain class from wanting to live there, and I think that serves a purpose in making brokers aware when we advertise that we should try to appeal to everyone and not exclude anyone. When builders advertise new projects, they need to use diverse faces on the pictures. Put a white female or a black man or a gay person to make the ad look like it’s appealing to all people. In inspiring that idea, the law is helpful in terms of leveling the playing field.”

      Even in the realm of advertising though, Kira says the law steps over the line. When she uploads her home listings to certain web engines, she is blocked from adding particular information. For example, she is barred from including neighborhood restaurants if they happen to contain an ethnicity in the name. She’s also not allowed to specify that a community is “family friendly” or that a home has an “in-law suite” or a “nanny’s bedroom.”

      The law can also hinder home sales when a strict interpretation of advertising regulations prevents sellers from finding potential buyers. Kira says that some brokers won’t reveal school districts in their home listings “because they’re scared of fair housing laws. I think it’s downright irresponsible. A lot of parents search by school district, and if your seller’s house doesn’t come into the search because you didn’t list the school district, you’re doing your seller a disservice. It’s a simple fact: this house goes to this school, and people need to get over it. I think that’s one instance when they’re taking fair housing absolutely out of control.”

      Concerning the inclusion of information such as neighborhood restaurants and school boards in her listings, she emphasizes, “That’s not discriminatory. It’s fact. When we’re dealing with fair housing, we have to realize that the law is trying to target the subjective nature of a certain commentary, and keeping the subjective and facts separate probably goes a long way towards helping people distinguish what is a violation of fair housing.”

      The Big Picture Despite her objections surrounding the stringent confines of the law, Kira supports the fundamental idea of the Fair Housing Act. She says, “If you look at it from a global perspective, I would venture to say that a lot of the anti-discrimination policies we’ve set forth have helped us. Equal opportunity laws are sometimes ridiculous, but the general idea is good and by and large, so are the results. On the grander scale, I think fair housing is causing more good than harm. It’s annoying. Bottom line. But in the bigger picture, it’s probably helpful.”

      As for how the law can be changed to make its scope clearer, the answer might lie in adding more specific language. Kira says, “I think if a client asks you a question, you should be able to answer it. So if even if they’re going to force me to phrase it in a certain way to keep it neutral, that would be a step in the right direction.”

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