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What homebuyers and sellers need to know about Fair Housing

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The Fair Housing Act was meant to promote real estate equality in the U.S., and although there’s still a lot of progress to be made, the legislation plays a role in almost every property transaction today. It may not be the first thing most people think about as they prepare to buy or sell a home, but it’s still smart to understand how it works.

Bankrate spoke to Socar Chatmon-Thomas, broker/owner of Elegant Estates Realty & Auctions, in Austin, Texas, who presented on Fair Housing at the National Association of Realtors’ annual conference in 2021.

Here’s what she said you need to know about Fair Housing and how it can affect your own real estate transaction experience. This conversation has been edited for length and clarity.

What is the Fair Housing Act? What is its history?

A lot of the activists were fighting in the 1960s for civil rights. One of the civil rights was the Voting Rights Act of 1965 and another one of the civil rights acts was Fair Housing. Black people were denied the right to purchase a home wherever they wanted to purchase a home. They were denied access to fair loans and denied access to neighborhoods and all sorts of stuff because of the color of their skin.

Dr. Martin Luther King, Jr. was assassinated on April 4, 1968 and the fair housing laws were almost like the John Lewis Voting Rights Act: it was just kind of in Congress. Nothing was happening, the bill was dead, people were not going to vote for it. When he was assassinated, LBJ said, “we gotta get this passed.”

He used his influence, called in a few favors, met with people until all hours of the night, and seven days after Dr. Martin Luther King was assassinated, on April 11, Fair Housing was passed.

That’s the history of fair housing in this country and it was needed because when the soldiers came back from World War II, they were given the GI bill, but the Black GIs and the brown GIs were not able to use the GI bills to buy homes. You can go and risk your life for your country but you can’t come home and buy a house or use the GI bill to go to school. They came back to a segregated America.

These are the provisions of Fair Housing: Fair Housing says that you cannot discriminate against anyone in the sale, lease, purchase or investment, or loan process, based on race, color, religion, sex, handicap, familial status and national origin. As a Realtor, we have two more protected classes: sexual orientation and gender identity, those were added to our code of ethics in 2014 and last year president Biden sent out an executive order to HUD to add gender identity and sexual orientation to the HUD definition of Fair Housing.

It’s for anyone. There are only a couple of exemptions. The exceptions are: If it’s a religious structure owned by a religious group, you can say only the people in this group are allowed to live here, like if you’re a Jewish synagogue and you have housing for your rabbi.

Other exceptions, like 55-and-over communities, need to receive special permission for their covenants.

If you are personally living in a house, say you’re a single woman and you’re living in a duplex, because you live on the property, you can say only single females.

If you have a seller who says “I only want to sell this house to people without children,” it’s a violation of Fair Housing. If you have a seller who says “I’m Hispanic, I only want to sell this house to Hispanic people,” it’s a violation. If you have buyer who says, “I only want to be in an area where there are gay people like me,” that’s a violation.

Has it been effective?

I’m a real estate broker and we are — a lot of times — the first contact people have with the real estate industry. Fair Housing has made some changes and some difference in our nation because there are now people who live wherever we can afford to live.

A few years ago, a Newsday investigation on Long Island, New York was a wakeup call for us Realtors. If someone had said to me that Realtors are discriminating against people based on the color of their skin, I would not have believed it, but this report showed it was happening all the time.

As the gatekeepers, as the first point of contact, we have sworn to uphold the law. The people who were in that video, “Testing the Divide,” some have lost licenses, some have fired them from their companies. I think some of them are going to have to pay fines to HUD as well. HUD, Housing and Urban Development, has $40 million in the budget designed for testing for Fair Housing, so they’re coming after us.

How does the law affect homebuyers and sellers?

The only way the public finds out about it is through us as Realtors. People are never going to stop saying these things, but as real estate professionals, we have to say “Mr. and Mrs. Buyer, I cannot have a conversation about any of these protected classes because it’s a violation of Fair Housing.”

A seller, look at the facts, just the facts ma’am. Right now we’re in a market where there are a lot of multiple offers. As a Realtor, when I’m representing my seller, I just give them the facts. I never give them a copy of the contract that gives the names of the people because the names can sometimes have surnames that people associate with different ethnic groups. We shouldn’t be worried about who it is.

When a buyer is searching, none of that demographic stuff is out there. They just search for a house in the area they want to live in. As their agents, we have to make sure we help them not violate the law.

I’m a glass half-full person, if I weren’t, it would be hard to wake up in the morning. One of the things I know is that in order to do my job, I really feel like most people are not doing it maliciously. It’s my job to educate them. I tell my sellers: “The only color you should be concerned with is green. Do they have enough green in their hands to buy the house? If the answer is yes, let’s move on.”

Can buyers or sellers be charged with Fair Housing violations?

Yes they can be. You can report them to HUD, you can report them to Fair Housing agencies that are national or local. If, for instance, I had a seller who said to me, “I do not want to sell my house to anybody who was not born in the United States.” That’s a violation of Fair Housing due to national origin. You tell them that and they say “I don’t care.”

As a Realtor, I have to then remove myself from that transaction. I have to cancel the listing and walk away, and at that point I can report that seller to the National Fair Housing Council, to HUD, I can file a complaint.

As of April 2021, first-time violators could be charged up to $21,663, and repeat offenders as much as $108,315.

Institutions like banks can wind up paying millions of dollars if they’re found in violation.

What can be done to strengthen Fair Housing?

Segregation is by design. The natural migration pattern of humans is not “hey I’m going to be where all my people are.” It’s “hey, I’m going to live where the stuff I do is.”

If there are programs that will help subsidize people moving into the most convenient neighborhoods for their lifestyle, people will naturally move closer to their jobs or other activities. 

What else should people know?

They just need to buy a house that they can afford and not worry about any of the protected classes. If a buyer buys a house they can afford, they’re fine. If the seller chooses an offer that is best for them without any consideration of any of the protected classes, they’re fine. It’s when you start introducing the biases and prejudices that we have problems

I created an equation: people + properties = profits. We want to take people, regardless of who they are, we want to find a property to put them in, and when we put them in a property, we as Realtors make profits. If we take that blanket equation and never worry about who the people are, it makes everybody happy.

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Written by
Zach Wichter
Mortgage reporter
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.