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10 ways for real estate agents to stay compliant with fair housing laws

Knowing and staying compliant with current fair housing laws helps real estate professionals give everyone a fair shot at the American dream of homeownership

The last thing homebuyers and sellers expect to encounter on their real estate journey is discrimination. But until 1968, unethical practices in real estate prevented thousands of people from renting, buying or selling their homes.

These discriminatory practices were written into community covenants and passed down from local government to local government until 1968, when the Fair Housing Act was passed.

After that, real estate professionals were tasked with cleaning up the industry and giving every client equal opportunities. 

What is the Fair Housing Act? 

When it was passed in 1968, the Fair Housing Act made it illegal to discriminate in rental housing, real estate sales, and financing based on race, color, national origin, religion, sex, familial status, or disability. It is Title VIII of the Civil Rights Act of 1968.

The provisions for discrimination based on familial status and disability were added in 1988. This prevented discrimination against families with children and people with disabilities in all aspects of the housing market.

There are some significant exemptions under the Fair Housing Act. Owner-occupied buildings with four units or fewer do not have to comply with the provisions of this act. Single-family housing sold or rented “by owner,” private organizations, and members-only clubs are also not liable under the act.

10 things real estate agents should know about the Fair Housing Act

Any violation of the Fair Housing Act can be reported to the U.S. Department of Housing and Urban Development and can result in fines and other penalties. Understanding the act’s provisions can help you become a more ethical real estate agent and help you follow a law that encourages open access to high-quality housing for all.

Here are 10 things real estate should know about the history of the Fair Housing Act and what it means in practice.

1. Inequality was rampant

As in many areas of life, housing inequality was widespread until this act was passed. Minority groups had been systematically denied housing opportunities, and some communities actively drew lines where financing terms were different to discourage historically disadvantaged groups. 

As the turbulent time of the 1960s came to a close, the Civil Rights Act was passed, providing more protection against systemic racism that was widely practiced. The Fair Housing Act was just one aspect of this law.

2. Certain groups are protected

As a real estate agent, it’s critical to understand who is protected under the Fair Housing Act. Agents cannot discriminate against anyone based on their:

  • Race
  • Color
  • National origin
  • Religion
  • Sex
  • Familial status
  • Disability

Some states and local jurisdictions have added age, marital status or sexual orientation as protected classes. 

3. Steering is against the law

In an act of open discrimination and racism, agents were encouraged to “steer” clients toward or away from specific neighborhoods based on their protected class. This is no longer allowed. Agents must show all clients properties available in all areas. 

4. Blockbusting is not allowed

Blockbusting is a manipulative practice that preys on fear and inaccurate information.

In blockbusting, also called panic selling or panic peddling, real estate agents spread rumors that an “undesirable” group of people is moving into the neighborhood, using fear and mistrust to convince homeowners to sell quickly and abandon their neighborhood.

Agents then resell the properties at an elevated price to incoming minority or protected groups, pocketing the difference.

5. Advertising practices must be fair

The Fair Housing Act also set strict requirements for how real estate can be advertised. It’s forbidden to tailor marketing materials of any kind to express a preference for or against a protected class.

Landlords and real estate agents that are governed by the act can no longer use phrases such as “singles only” or “safe Christian neighborhood” to exclude or single out certain groups.

6. Reasonable accommodations are required

Although renovating an investment property to accommodate every potential disability is not required, reasonable accommodations must be made.

This includes making modifications to common areas, installing grab bars in bathrooms, and allowing service animals in buildings where pets are not otherwise allowed.

7. Real estate professionals must stay educated

Laws and regulations in housing constantly evolve, and ignorance is no excuse. Real estate professionals need to take their education in this area seriously, making every effort to understand the law as it is written and any changes or amendments that occur.

8. Mortgage lending has rules too

If you are a real estate agent who is also a mortgage professional, there are fair lending practice guidelines that apply to you.

The Equal Credit Opportunity Act and the Home Mortgage Disclosure Act prohibit discriminatory lending practices. Agents should be aware of these laws to guide and protect their clients during the home-buying process.

9. Violating the Fair Housing Act is serious

Violating fair housing laws comes with more than a slap on the wrist. Even the best real estate agents who violate a provision of the act can face severe penalties, including fines, lawsuits and potential loss of their license. In addition to having professional consequences, violating this act is unethical and can tarnish an agent’s reputation and trustworthiness in the community.

10. Inclusivity is the best approach

Inclusivity goes beyond following the law and having different faces on your promotional brochure. It actively promotes building a community where all are welcome and given equal access and opportunities. 

A more diverse clientele is good for business and good for the world at large. In seeking to grow the range of people you serve, you are fostering a place where everyone feels respected and embraced. Because real estate agents are in the business of finding homes, this can only be seen as a good thing.

A real estate agent’s role

The role of a real estate agent within the larger real estate industry is to create strong communities of people living and working together.

By staying compliant with fair housing laws, individual real estate agents can play a pivotal role in building inclusive communities that give everyone a fair chance at the American dream of homeownership.

Luke Babich is co-founder and CEO of Clever Real Estate.

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