Investigation Finds Real Estate Agents Discriminating Against People of Color

By Business Training Media

There are many laws on the books to prevent discrimination against home buyers based on race; however, some real estate agents are routinely discriminating against people of color, according to an extensive investigation

A three-year Newsday investigation uncovered widespread evidence of unequal treatment by real estate agents on Long Island, in the state of New York. 25 undercover testers, oftentimes actors, were trained to be part of this investigation. Differences of color were paramount in the test. Testers were meant to look different, yet they carried the same income level and requested identical preferences. In total, they approached 93 real estate agents for listings. 240 hours of meetings with these agents were secretly recorded. 5,763 house listings were analyzed. What was the final result? Asians were discriminated against 19% of the time. Hispanics were discriminated against 39% of the time. Blacks were discriminated against 49% of the time.

The discrimination happened in the form of agents frequently directing white customers toward areas that had the highest concentration of other white people while guiding minorities toward areas that had greater levels of minority residents. This is called steering. As if that isn’t enough, the investigation also uncovered agents typically requiring minorities to prove financial security in order to be provided with a tour, a common practice among agents these days that should be done to everyone. In this case, white house hunters were typically not required to provide financial capabilities before tours were provided.

On the national level, there is a law called the Fair Housing Act of 1968. It specifically prohibits real estate brokers and agents from doing the exact activity that some Long Island brokers were found to be conducting. Fair housing standards make it so agents can’t talk about the backgrounds of people as a form of verbal steering toward racial or ethnic means. The standards also require agents to provide equal guidance to customers. In fact, there are a number of laws on the books against steering:

• The Civil Rights Act of 1866
• The Civil Rights Act of 1964
• The Civil Rights Act of 1968
• The Fair Housing Act of 1968 (and its amendments)
• Americans with Disabilities Act of 1990
• Interstate Land Sales Full Disclosure Act

Yet, steering is still happening. And, as it turns out, real estate discrimination is not exclusive to Newsday’s investigation. The U.S. Department of Housing and Urban Development reported the same kind of discrimination happening in 2012 throughout 28 metropolitan areas. On July 18, 2008, the U.S. Department of Justice filed a federal lawsuit against another real estate brokerage alleging discrimination on the basis of race and national origin in violation of the Fair Housing Act. Those are just two additional examples and a quick search by anyone will reveal there are many more.

This activity has been happening for years.

And, before one thinks it’s just in the U.S., it’s happening in London, too. Agents in northwest London were willing to meet demands of landlords who had specifications of not letting African-Caribbean people have a chance at the property. This particular situation opens another can of worms displaying an additional form of real estate discrimination that originates from owners of property, done through real estate agents who are willing to comply.

So, what is going on here? More importantly, why is this continuing to happen?

The short answer is that it could be several catalysts. There are a number of factors, or lack of factors, dangling in the wind that make “why” not realistically easy to lock into one box. The only certainty is that racial discrimination in real estate is happening. It’s real. We have that. But, there’s more to it than just that...four things in particular:

1. In almost every case that has been exposed, little is known about the agents themselves. We don’t have the agents’ side of the story. Newsday, for example, delivered the information they uncovered to agents who were tested and gave them opportunities for discussion and comment, as well as their corporate leaders. 13 agents and 21 corporate representatives came to Newsday and viewed materials for 26 paired tests that involved eight agencies. None of them commented. Without their viewpoint, we are missing a piece of the puzzle that can only be theorized.
2. Money is a strong motivator. Unless one is living under a rock (sounds like they had a bad agent), everyone knows real estate can produce an income that is not terrible. Unfortunately, this doesn’t happen until a sale is made. It stands to reason that there are agents who are going to be interested in making a sale sooner than later, and will do what it takes to make that happen. Is there a likelihood that most black people would want to buy in a predominantly white neighborhood? Is there a likelihood that white people would want to buy in a predominantly black neighborhood? If steered toward a community where someone might feel more comfortable because of similar ethnicity, a sale is likely to occur more rapidly. This means more money, faster, for an agent or broker.
3. According to Brick Underground, researchers spoke to brokers who reported being drawn to higher-priced neighborhoods for the higher commissions that come with sales. What does that mean for an agent or broker willing to conduct steering? It means they are focused on money and will steer those they believe have more of it to higher-priced neighborhoods in order to gain higher commission rates. For those who they don’t believe can afford it, steering will go to lower-priced neighborhoods so that valuable time is not wasted and a sale can be made, despite a lower commission.
4. In some places, like Phoenix, AZ, minorities are simply not applying for lending to a great degree. Whites were three times as likely to apply for a home loan in Maricopa County, according to an Arizona Republic analysis of data provided by the Center for Investigative Reporting and the Associated Press. Thanks to predatory lending, recession-era exploitation, and political games, factors have contributed to potential mistrust in the system. What is the result of this and how does it create a problem in fully understanding why discrimination is happening in real estate? When minorities willingly don’t apply for loans, this reinforces racial inequalities.

Do any of these reasons mean that discrimination is not really happening? Of course not. There are always bad actors (no pun intended to the testers with Newsday) when it comes to discrimination. The four factors listed above point to things not being as simple as just outright discrimination, but that doesn’t mean it’s not there. In the end, it’s important to remember that it’s the job of the court to get the full picture.

Is it hopeless?

No.

Just because things are not entirely clear doesn’t mean nothing can be done. Here is a list of practical actions that can be utilized if discrimination seems to have occurred in real estate.

• A Court of Law. As mentioned earlier, it’s the job of the court to get the full picture. In the state of Mississippi, this was apparently done. One real estate team in Mississippi had to pay $46 thousand for steering white homebuyers, after it was brought to court and tried. The group must also participate in Fair Housing training and display Fair Housing signs. In other words, there is always the potential for a lawsuit, as a course of action. With any luck, the court does a good job of looking at all sides and coming to an educated decision.
  
  
• State Law. The national laws concerning discrimination in real estate are not the only laws around. Check with the states, too, as they often have their own set of laws concerning this issue. In Florida, for example, tenants may face property managers who discriminate against them by denying them the chance to rent a condo or home, or by doing things like demanding excessive deposits or advance rents or in an improper eviction process. Sellers may face real estate brokers or agents that are discriminatory in advertising the property for sale or in choosing which potential buyers are shown the property for consideration. This lends itself to the Mississippi example, but it also shows that a state like Florida is ready to assist people who feel they have been a victim of real estate discrimination with specific guidelines and laws of their own.

• Zillow.com. Thanks to the internet, everyone has access to all listings throughout the country. Zillow is nationwide and provides not only each listing available but also demographics for each area, including income levels and school rating information. Additionally, Neighborhood Scout can also provide information on demographics, public school data, real estate listings, and crime rates for any address plugged in. Listings can even be set to automatically email a buyer based on preferences chosen by the buyer. Most regional areas also have local sites that are sometimes more current and up-to-date than the national Zillow. HAR.com, in the Houston, TX, area, is an example of that. One only needs to search for local real estate listings on Google to find more local sites in the country.
  
  The fact of the matter is a person doesn’t have to entirely rely on real estate agents to provide all listings. Sites like Zillow and Neighborhood Scout enable this. If the agent refused to show the home after one is clearly able to see it’s available, it would then be known there is a problem. It’s hard to have that awareness when completely relying on an agent to show everything that’s available and what’s not.

Access to these tools can be had by anyone, either from a home internet connection, or any public Wi-Fi connection, or the library. If, for some reason, none of these options exist for a person who wants to purchase a property, there should be no reason a real estate agent can’t provide access from their home office. If they refuse, that should be a red flag.

In the end, discrimination is still around. It’s unfortunate because we all have to share the same rock. The reason why discrimination persists is more complex than most of us care to admit. Many people only see one side of an issue, and that is part of the problem. Law, alone will not fix things because it’s a tool and not the answer. Inclusion has to become solidified in culture for it to really take root. The real solution is much harder and will take longer than anyone here today has available to them. But it’s worth it. The world benefits from more opportunity. Education increases, families are better supported, and the economy grows. Communities become healthier. We may never fully know why it happens, but one thing we do know is that to change it, we must do so organically. This is done by showing respect to all, even those we disagree with, endeavoring to understand every side, and empowering ourselves with practical tools that must remain as tools and not remedies.

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