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“Life’s not fair, Habibi” is a familiar response to children to typically get them to radically accept a situation instead of throwing a temper tantrum.
Conversely, as adults, particularly in the U.S. housing arena, housing is legally required to be fair, so go ahead and let your voice be heard if you witness unfairness. But what is fairness?
As I am out on the road as a fair housing instructor, I often hear from learners that fairness in housing means that every protected class is treated equally.
That’s a good start but there is more to it. However, some do not seem to grasp fair housing beyond knowing the protected classes – whether federally or locally (such as religion, familial status, military status, criminal record status, etc.) – are off-limits so let’s delve deeper.
4 types of fairness essential to fair housing
Distributive fairness
This type of fairness focuses on the outcomes or allocation of resources and benefits. It concerns whether the distribution of goods, wealth, opportunities, and rewards among individuals or groups is just and equitable.
This recent digital redlining settlement with Redfin is an example of unfair housing rearing its ugly head through faulty distribution for residents of Detroit or its surrounding suburbs.
Informational fairness
This concerns the adequacy and transparency of the information provided during decision-making processes. It involves ensuring that all parties have access to relevant information and understand the basis for decisions that affect them.
Here is just one example of recent paired testing results (think of a mystery shopper but for real estate and the only differences among the fictitious shoppers are a feature of their protected class – so same income, credit score, but perhaps a different religion, and so forth).
“In general, the rental tests showed housing providers were more likely to give White testers more detailed information, respond more frequently to their messages, and offer more favorable terms than to their matched pair counterparts,” the report exposed.
Procedural fairness
This is also known as procedural justice and refers to the fairness of the processes and methods used to make decisions and resolve disputes. Key elements of procedural fairness include:
Transparency: The processes and criteria used to make decisions should be open and clear to all parties of the real estate deal. This includes providing information about how decisions are made and on what basis.
Consistency: Procedures should be applied consistently across similar cases and situations. This helps ensure that decisions are not arbitrary and that similar circumstances are treated in similar ways.
Impartiality: Decision-makers should be neutral and unbiased. They should not have a personal interest in the outcome and should not show favoritism or prejudice toward any party involved.
Right to be heard: Individuals affected by decisions should have the opportunity to present their views and evidence. This often includes the right to file a complaint with the company management.
Right to legal representation: People have the right to seek legal advice during the decision-making (it often being no fee with through HUD or a local fair housing agency).
Reasoned decisions: Decisions should be based on evidence and relevant information and supporting documents should be shared with the complainant. The reasons for decisions should be clearly articulated, explaining how conclusions were reached and why certain actions were taken.
Review and appeal: There should be mechanisms in place for reviewing and appealing decisions. This allows for the correction of errors and ensures accountability in the decision-making process.
For example, not every appraisal is lowballed but when an egregiously low home valuation does rear its ugly head, like in this instance for the late Dr. Shani Mott, the above seven principles of procedural fairness are usually also missing in some capacity (whether one or all seven) at the offending company.
Thankfully, these are the areas where reform is starting to happen through laws like this and this.
But, why wait for legislative reform? These are proactive procedures that can be made policy by every realty firm, bank/lender, and appraisal office now.
Interactional fairness
This refers to the quality of the interpersonal treatment people receive when decisions are made. It involves treating individuals with respect, dignity, and honesty. It also includes providing explanations for decisions, which helps to build trust and respect in relationships and organizations.
Case-in-point: Social media influencer, “Dr. Raven the Science Maven” Baxter shared her unfortunate first-time homebuying experience where the process seemed fair until weeks after her offer to purchase was accepted, she happened to excitedly drive by her soon-to-be new home (which most first-time buyers are prone to do).
She interacted with the home seller for the first time. Within hours, the homeowner boldly asserted that since the buyer was Black, the homeowner wanted to cancel the sale.
Interestingly, it would have been great if both the homeowner and the homebuyer had intermediaries to schedule visits between… oh wait they did but the agents on both sides seemed to “drop this ball”. Some believe real estate agents and brokers are just “overpaid door openers” but we are skilled go-betweens. It is key, however, that we are proactive.
Have you had ‘The Talk’?
As I mentioned during this conversational YPN Live event, Dr. Baxter’s agent likely did not have a routine of having (on Day One) “the talk” (fair housing edition) with clients of all backgrounds and demographics.
Unfair housing awareness is key because our clients may have pure intentions (just to buy, sell, or lease a home) but the person(s) on the other side of the table may not, as Dr. Raven Baxter rudely learned. Let’s learn from this viral fiasco and work more proactively.
Start today and make having a fair housing talk part of your very first meeting with each client, whether for a listing appointment or buyer’s consultation (or some other real estate deal).
Promoting interactional, distributive, informational and procedural fairness:
- Fair housing laws aren’t “Disney magic” so they don’t magically stop discrimination. However, they may impose penalties if someone is caught. Remember, in many instances, complaints must be filed within one year; document and report unfair practices to HUD and your local fair housing advocacy agency and consult with the National Community Reinvestment Coalition and the National Fair Housing Alliance.
- Of course, staging a home should only entail neutralizing the property, not the people who own it. Lowball appraisals are often revealed when a “secret shopper“ of an opposite protected class covers for the homeowner (e.g. Christian vs. Muslim, White vs. Black, able-bodied vs. differently-abled, male vs. female, single vs. single with kids, etc.) Keep receipts and know area comps so you can help your sellers appeal a bad appraisal if needed.
- Sellers may innocuously think, “We want this home to be enjoyed by a family of five like ours.” (This is a literal seller quote!) Decode the law for seller clients and advise buyer clients to strip protected class identifying information from offers when legally possible/allowed (e.g. names, email addresses, pictures, love letters, etc.) Remember, buyers and sellers never have to meet when they are represented by proactive agents and brokers.
- Never assume that loan terms are in your buyer’s favor; compare outside your community (especially if you are in a formerly “redlined” area) with at least three quotes from a variety of lenders.
- Know that you may be judged and dismissed by your loan type (looking at you, FHA) so look for reputable grants and programs that help your buyers go conventional.
Dr. Lee Davenport is a real estate coach/educator and author who trains real estate agents to provide access and opportunity in real estate. Connect with her on Instagram.
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