April Is Fair Housing Month. Have you had "The Talk"? In an Atmosphere of Lawsuits and Mistrust, It's Vital We Proactively Decode This Sensitive Topic with Grace
Featured in Inman News.
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| WITNESSING HISTORY! Last week we were in DC for the annual Just Economy Conference hosted by the NCRC (National Community Reinvestment Coalition) with some historic news. |
It’s April 2024, and you likely are well aware of the various lawsuits and pockets of rising consumer mistrust (it is by no means everyone) of real estate agents and brokers making the headline rounds.
Some specific concerns that were expressed by Bing’s ‘Copilot’ AI include:
Trust Issues: Many agents admit that some of their peers indeed deserve the stereotype.
Communication Woes: Delays and lack of communication are common complaints. Buyers and sellers yearn for timely responses and transparency.
Shady Valuation Tactics: Shady valuation practices irk both buyers and sellers.
Profit Motivation and Aggressive Sales Tactics: The perception of being unnecessary middlemen in the property process adds to the discontent.
Although those are AI responses, this output is based on what has been inputted. Thus, these results are telling (even if not from a scientific study) — it is more vital than ever that real estate professionals don’t wait but proactively address market concerns.
What Consumer Concerns Need Professional Intervention?
Here’s an example of Minnesota REALTORS® actively working to repair and improve current market conditions and affordability through varied land-use regulations and zoning.
As another example, a coalition of housing advocates (real estate brokers, attorneys, nonprofit leaders, etc.) in Atlanta are working with government leaders and homebuilders to create more starter homes at affordable prices.
As a national example, NCRC CEO Jesse Van Tol (pictured above, center) announced on Wednesday, April 3, 2024 at the Just Economy Conference that NCRC and KeyBank are announcing a $25 million agreement to work together to ensure greater levels of investment in minority and underserved communities. The announcement comes on the heels of a December 2022 report by the NCRC, which found that between 2018 to 2021, KeyBank’s share of mortgage originations to Black borrowers was the lowest among the nation’s 50 largest home purchase lenders. The report also found indications that KeyBank engaged in “redlining in several major cities and a dramatic drop in the bank’s overall lending to low- and moderate-income (LMI) borrowers.”Wait, what? “Redlining” happens TODAY, still?
Did you know that instances of the illegal practice of “redlining” have been documented within just the last decade? We are not talking about sixty years ago. We are talking about now.
Shockingly, we do not have to look at data prior to federal fair housing laws in 1968 to find occurrences. See the Department of Justice’s Combatting “Redlining” Initiative, which has secured over $107 Million in relief for communities of color, for modern-day instances of unfair housing.
As a friendly reminder, yes, we have fair housing laws now, with the most monumental beginning in 1968, spurred by the Rev. Dr. Martin Luther King's tragic assassination.
“Now. with this bill, the voice of justice speaks again. It proclaims that fair housing for all – all human beings who live in this country – is now a part of the American way of life.”
President Lyndon Johnson
However, laws are not "Disney magic". In other words, laws did not instantly mean all violations would stop. For example, Dateline and True Crime podcasts show that although kidnapping, murder, and other crimes have BEEN illegal, they still happen. Laws simply mean that IF someone is caught and IF there is enough evidence, that person may face some sort of penalty. It is no different for illegal, unfair housing practices.
In short, unfair housing still happens and/or may be a threat (just three – of many – cases in point: this, this and this).
Thus, we would be wise to have "The Talk" fair housing edition to ensure homeowners sell. I know many think of the "birds and the bees" when we say "The Talk", but there is another talk that is key for (what I call) being a Fair Housing D.E.C.O.D.E.R. (with decoder being an acronym to advocate not alienate).
Do you know how to help your clients avoid “redlining” and other forms of unfair housing (including unfair lending)?
For most things in life, preparation is never lost time so this post will review the first two talking points (in order for this post to not turn into a dissertation, the remaining can be in a future post) to proactively prepare your real estate clients on how to decode unfair housing.
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Being a Fair Housing DECODER©
As real estate professionals, we are often our clients’ first, and sole, trusted real estate adviser. Thus, it is key that we proactively “school” them on what fairness in real estate looks like before it happens.
First, prepare clients that it is illegal to exclude or be excluded based on any legally protected class.
Federally, we have the “Big 7”, which includes race, religion, national origin, color, sex, disability, and familial status, but local governments may also include designations like “military status” or “returning citizen”. Let’s not take for granted what our clients know. Make sure you share the ever-expanding laws that apply to your area by connecting with your local fair housing center.
For example, in "The Talk" image above, point number two can stop a seller from selling dead in her tracks. Here's data showing that although homes should be appraising for more over the last few years due to how quickly the market has appreciated, some sellers may be illegally lowballed (given a value that is lower than supported comparables) based on a protected class.
Plus, here are some first-hand accounts.
Let’s help sellers decode unfair housing (and lending) – like low appraisals – before they happen!
Second, explain to clients how much similar homes in the area are selling (the most recent home sales a.k.a. "the comps").
Whether you work with home buyers or sellers, one of your first appointments should consist of reviewing what homes in the area are selling. Review trends such as now versus six months ago versus one to five years ago. When clients know “the comps”, not only are their expectations better informed, but they can be more alert to unfair practices.
Thankfully, Dr. Shani Mott, as a history educator at Johns Hopkins University, and her family were well aware of the local market values. They were able to get a second appraisal that was approximately $250,000 more than the original quote.
Imagine how losing $250,000 impacts a household of five? Heck, a household of one?
Tip: Providing annual area comps for past clients creates goodwill and keeps us top-of-mind for future real estate deals.
Yet, not every homeowner has this information handy depending on their day-to-day activities (including any health challenges and family obligations) and career focus. Unfortunately, Dr. Mott was battling cancer at the time, which recently claimed her life.
“The function, the very serious function of racism [I will broaden this to any form of discrimination] is distraction. It keeps you from doing your work. It keeps you explaining, over and over again, your reason for being.” –Toni Morrison, Pulitzer and Nobel Prize winner
Dr. Shani Mott spent her last days dreaming of a time when not just her family, but anyone after her would have more standardized remedies in place. It’s a travesty that her attention was divided and even distracted by dealing with a low home valuation.
What if the appraisal industry had clear-cut, uniform/industry-wide complaint policies that likened them to the ease of shopping at Target? I rarely have any issues when I shop at Target but if there is a problem, Target’s clear, customer service and return policy makes it very easy to get a fair, timely remedy. And, I do not simply expect this at my local Target. I have confidence that any Target I enter will provide the same experience.
Thankfully, some of the reforms in the last few years are helping to improve home seller experiences. Now, sadly but in honor of her determination, we can add the informally coined, “Shani Law” to our advocacy.
Tip: Prepare clients that there is currently no nationwide policy to contest a home valuation – it’s not yet as easy as shopping at Target but that’s my dream. This is where our continued advocacy as Fair Housing DECODERs© becomes vital!
Third, explain, encourage and be open to beta testing.
With the low appraisal example, "staging" a home for an appraisal, may mean having a person of an opposite protected class being a stand-in for the actual homeowner. That would look like a Christian for Muslim, able-bodied for differently abled, DINK (dual income couple with no kids) for a family of five, male for female, and so forth.
Of course, staging a home should only entail neutralizing the property, not the people who own it!
However, since the 1940s and 1950s, often the only way that unfair housing (and lending, including lowballed appraisals) can be determined is if testers (similar to secret shoppers) of a differing protected class step in and pretend to be the client. Testers may reveal problematic, unfair housing (and lending) like low appraisals, steering, “redlining”, denial of services or accommodations, and the like.
Fourth, take your clients’ “temperature checks” often and encourage them to report issues.
If your client’s "spidey senses" are tingling due to possible illegal treatment, encourage them to go with their intuition and document and report any instances of unfair housing. Often, the reason unfair housing can continue unchecked is because it is typically not reported. The National Fair Housing Alliance has estimated that although there are upwards of 30,000 reports of housing discrimination annually, that is likely only one percent of actual fair housing violations, yeesh!
If your clients are not sure if their "spidey senses" are on point and need a consult before going straight to HUD or your local fair housing center (where things can get real, fast), start with a consult with lower stakes by going to:
https://nationalfairhousing.org/report-discrimination/
Dr. Lee Davenport is a real estate coach/educator and author (of including Be a Fair Housing D.E.C.O.D.E.R. and How to Profit with Your Personality). Dr. Lee trains real estate agents around the globe on how to work smarter with their unique personalities and how to “advocate, not alienate,” so everyone has access and opportunity in real estate.
Have you ever needed the “Cliff Notes” version of fair housing? Well, move over Spark Notes!
The Starting Point: How to Be a Fair Housing DECODER Guide https://books.bookfunnel.com/learnwithdrlee
It is available to download for a limited time at no fee. Score!
This condensed workbook (based on the nationally acclaimed workshop) offers Dr. Lee's novel concept of being a Fair Housing DECODER© who skillfully and proactively advocates --not alienates-- for equitable access and opportunity in real estate for EVERYONE.
“Interesting approach on the topic of fair housing that I have not seen offered to Realtors.” --Maria, Broker/Owner, REALTOR®
“I have the Realtor GRI designation and they should make this part of that designation. This is THAT good. THANKS, Dr. Lee!” --Michael, Broker/Owner, REALTOR®
Hurry, download (and share with others) today while complimentary supplies last!
