Long Island Steering Investigation

Avoiding the trap of racial steering


 Debbi Conrad  |    February 17, 2020
Long Island Steering Investigation

‚ÄúFollow the school bus, see the moms that are hanging out on the corners.‚Ä̬†

This was the advice a Long Island, New York-based real estate agent gave potential buyers, one example of discrimination found during the three-year Newsday investigation that uncovered widespread evidence of unequal treatment by real estate agents on Long Island. In this paired-testers study, two undercover testers ‚ÄĒ for example, one black and one white ‚ÄĒ separately sought an agent‚Äôs help in buying houses. The testers presented similar financial profiles and requested the same types of homes in the same areas. The agent‚Äôs actions were then reviewed for evidence that the agent provided disparate service.

One Long Island real estate agent told a black man that houses in a predominantly white neighborhood were too expensive for his budget. But the same agent showed houses in the same neighborhood to a white man who had the same budget. After testing 93 real estate agents, Newsday found evidence of widespread separate and unequal treatment of minority homebuyers and minority communities on Long Island. Asians were discriminated against 19 percent of the time, Hispanics were discriminated against 39 percent of the time, and black consumers were discriminated against 49 percent of the time. Agents associated with multiple brokerages were accused of steering the undercover investigators to neighborhoods that matched the investigators’ race or ethnicity and often subjected minority investigators to more restrictive conditions prior to viewing properties.

The study

The Newsday study is extensive and provides written transcripts, photos and videos of the agents meeting with the testers. The report detailed various instances of real estate agents steering buyers, including:

  • An agent suggested five Plainview homes to a white house-hunter ‚ÄĒ but told a black homebuyer that houses with the same market value were out of his price range.
  • An agent escorted a white customer on house tours without requesting identification ‚ÄĒ but asked a black house hunter to show ID.
  • An agent warned a white homebuyer about gang violence in Brentwood ‚ÄĒ but directed the black house-hunter toward the predominantly minority community.
  • An agent warned a white customer to avoid investing in Freeport ‚ÄĒ but suggested the predominantly minority village could be a good choice for a black customer.

Learn more about these instances of steering at projects.newsday.com/long-island/real-estate-agents-investigation.

The following excerpts give the flavor of the extensive report.

Said one agent when speaking to a white customer: ‚ÄúI don‚Äôt want to use the word steer, but I try to edu ‚ÄĒ I use the word ‚ÄĒ I educate in the areas.‚ÄĚ

Pointing out a need to study who lived in a community before buying, that agent … advised the customer to observe nighttime patrons of convenience stores.

‚ÄúWherever you‚Äôre going to buy diapers, you know, during the day, go at 10 o‚Äôclock at night, and see if you like the area,‚ÄĚ she said, adding:

‚ÄúThere was one fellow who would ‚ÄĒ like insisted on this house, and the wife was pregnant and had a little one, and I said to him, ‚ÄėI can‚Äôt say anything, but I encourage you, I want you to go there at 10 o‚Äôclock at night with your wife to buy diapers. Go to that 7-Eleven.‚Äô¬† They didn‚Äôt buy there.‚ÄĚ

‚ÄúI have to say it without saying it, you know?‚ÄĚ ‚Ķ
She also counseled: ‚ÄúWhat I say is always to women, follow the school bus. You know, that‚Äôs what I always say. Follow the school bus, see the moms that are hanging out on the corners.‚ÄĚ ‚Ķ

[This agent] made no similar comments when visited by a black tester.
 

See more excerpts from ‚ÄúLong Island Part 1, They Call It Steering‚ÄĚ at projects.newsday.com/long-island/steering-real-estate-agents.

The agents largely avoided the minority communities, recommending homes there only 15 times. But when they did offer listings in minority communities, they sent those listings more often to minority buyers than to whites.

‚ÄúI think what you‚Äôve described is steering based on racial composition of a neighborhood. The fact that everybody is steered away doesn‚Äôt make it acceptable,‚ÄĚ said Greg Squires, a professor of public policy at George Washington University in Washington who has served as a consultant to fair housing groups and the U.S. Department of Housing and Urban Development.

‚ÄúYou could argue that this does not show discrimination against the home seekers because everybody was steered away from these neighborhoods,‚ÄĚ Squires added. ‚ÄúIf in fact that‚Äôs the case, what it suggests is discrimination against certain neighborhoods because of the racial composition of those neighborhoods.‚ÄĚ ‚Ķ

Channeling home buyers toward some towns and away from others can have economic consequences, as the practices reduce demand in some places to the detriment of homeowners and drive it up in others to the benefit of both homeowners and of agents who can reap larger commissions on sales.

‚ÄúTheir financial well-being is directly tied to the value of the homes in the area in which they specialize,‚ÄĚ ‚Ķ ‚ÄúSo, this kind of creates this powerful financial incentive for real estate agents to participate in this reproduction of segregation.‚ÄĚ ‚Ķ


See more excerpts from ‚ÄúLong Island Part 1, They Looked Almost Everywhere Else‚ÄĚ at projects.newsday.com/long-island/real-estate-agents-minority-communities.

Newsday‚Äôs fair housing consultants found that the agent quoted previously used ‚Äúcoded language‚ÄĚ or ‚Äúa euphemism‚ÄĚ to describe steering when talking only to the white tester. Newsday concluded the agent knew what steering was, but the agent used a euphemism she mentioned only to the white tester but not the black tester. Instead of ‚Äústeering,‚ÄĚ she made comments about ‚Äúlocation.‚Ä̬†

Agents also discriminated based on neighborhoods, which can have an economic effect on prices and commissions, serving to further perpetuate segregation.

Discrimination and steering

The federal Fair Housing Act prohibits real estate professionals from discriminating in real estate sales or rental transactions on the basis of race, color, religion, sex, disability, familial status or national origin.

Under Article 10 of the REALTOR¬ģ Code of Ethics, a failure to provide equal services to all buyers and participation in any discrimination against any members of a federally protected class is unethical. Article 10 also prohibits discrimination on the basis of sexual orientation or gender identity.

Steering is the practice of directing potential buyers toward or away from a particular neighborhood or community based upon a protected characteristic such as race, color or ethnicity. Illegal steering substitutes the judgment of the real estate licensee for that of the buyer and thus eliminates or restricts the buyer’s choice. 

Discrimination occurs any time an individual uses a prohibited basis to treat the same requests for services or housing information differently. For example, suggesting an African-American couple focus their search in a neighborhood because it is predominately African-American and discouraging them from looking in a nearby neighborhood that is predominately white, is steering. The same is true when a licensee inconsistently applies prerequisites for providing services. For example, requiring a prequalification letter from African-American but not white buyers, only requiring buyers of a certain national origin to show ID, or requiring only Muslim buyers to sign a buyer agency agreement before showing them a home violate fair housing laws. 

Steering promotes racial segregation and is illegal under federal and state fair housing law. Steering often is subtle and difficult to pinpoint without testing.

Wisconsin penalties for licensee discrimination

The penalties for Wisconsin licensees who discriminate and steer based on race are more severe than for other license law violations.

Wis. Admin. Code § REEB 24.03(1) makes it clear that licensees may not discriminate against, may not deny equal services to, and may not be a party to any plan or agreement to discriminate against any person in any manner unlawful under applicable federal, state or local fair housing law. Under Wis. Stat. § 452.14(3)(jm), the Real Estate Examining Board (REEB) may revoke, suspend or limit the license of any licensee, or reprimand the licensee, if the REEB finds the licensee has intentionally encouraged or discouraged any person from purchasing or renting real estate in a particular area on the basis of race. In addition to these penalties, the REEB shall, for the first offense, suspend the license for not less than 90 days; and for the second offense, the REEB shall revoke the license. 

This penalty may be imposed in addition to any penalty imposed by antidiscrimination housing ordinances promulgated by any city, village, town or county pursuant to Wis. Stat. § 66.1011, or imposed by the open housing law in Wis. Stat. § 106.50 and enforced by the Equal Rights Division of the Wisconsin Department of Workforce Development. In other words, there are many different agencies standing ready to enforce the fair housing law and harshly penalize licensees who discriminate or steer. 

Prevention

To avoid any steering or discrimination, licensees may wish to strictly adhere to the following guidelines and use checklists to ensure the provision of equal housing services to all buyers:

  1. Keep any prerequisites to providing services uniform, consistent and objective.
  2. Have a standard questionnaire or list of questions they always ask all buyers to determine the type of property the prospect is interested in. This questionnaire should be based on criteria such as price point; financial qualification; neighborhood amenities; distance from work and other locations, schools and parks; and any other factor the prospect identifies as important.
  3. Avoid giving personal opinions about a community or area, even if asked. Instead, guide buyers to third-party sources to answer their questions about neighborhood-specific information, like school ratings and crime statistics, allowing the buyers to research and reach their own decision.

Buyers should be provided with information about a variety of neighborhoods and homes within their price range and then be permitted to choose where to look and, ultimately, where to live. Licensees should never assume that any area is off limits to anyone based upon their race, color, national origin, ethnicity, religion, disability or any other factor that is treated under fair housing law as a protected class. Licensees may ‚Äústeer‚ÄĚ buyers to properties, as long as they are guiding buyers to properties that match the buyers‚Äô qualifications, search parameters, property features and specified needs the buyers have designated. Fair housing is about choice ‚ÄĒ the buyer‚Äôs choice.

New NAR Fair Housing Action Plan

The Newsday investigation underscored the need for the National Association of REALTORS¬ģ (NAR) to ramp up and reinvigorate its fair housing commitment. NAR unanimously passed a Fair Housing Action Plan on January 8, 2020, abbreviated ‚ÄúACT,‚ÄĚ emphasizing (A)ccountability, (C)ulture Change, and (T)raining. in order to ensure REALTORS¬ģ are doing everything possible to protect housing rights in America. The plan also specifically commits NAR to:

  • Ensure state licensing laws include effective fair-housing training requirements and hold licensees accountable to their fair housing obligations.
  • Integrate fair housing into all REALTOR¬ģ conferences and engagements and to include a fair housing theme throughout NAR‚Äôs mid-year meeting every May.
  • Explore the creation of a voluntary self-testing program, in partnership with a fair housing organization, as a resource for brokers and others who want confidential reports on agent practices so they can address problems.
  • Create more robust fair housing education, including unconscious-bias training and education on how the actions of REALTORS¬ģ shape communities.
  • Conduct a national study to determine what factors motivate discrimination in a sales market.
  • Develop materials to help REALTORS¬ģ provide consumers with information on schools that avoids fair housing pitfalls.

Department of Housing and Urban Development (HUD) Secretary Ben Carson agreed to join NAR in a joint public service campaign to emphasize NAR’s commitment to fair housing and how consumers can report problems.

See the complete NAR Fair Housing Action Plan: www.nar.realtor/fair-housing/new-fair-housing-action-plan

Resources Related to Newsday Investigation

Fair Housing and Steering Resources from NAR  

‚ÄúWindow to the Law: Fair Housing Update‚ÄĚ video at¬†www.nar.realtor/window-to-the-law/fair-housing-update

NAR Fair Housing Action Plan: www.nar.realtor/fair-housing/new-fair-housing-action-plan

Fair Housing and Steering Resources from the WRA

  • April 2007 Legal Update, ‚ÄúAvoiding Discrimination in Advertising and Racial Steering,‚ÄĚ at www.wra.org/LU0704 includes the similar results of the National Fair Housing Alliance Report on Housing Discrimination and Steering.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.





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