Most real estate agents will work very hard to help you find the home of your dreams. But there are certain things your agent just can't do for you, and for good reason.
Regulations such as the Fair Housing Act (FHA) governs the actions of real estate agents when it comes to the showing, selling, and buying of real estate in a manner that is fair to all parties. The Fair Housing Act holds real estate agents to fair and ethical standards of practice in how they market and sell homes, and sets limits to prevent unfair or discriminatory practices. Some agents may try to defy some of these rules, either because they don't understand them, are not aware of them, or don't agree with them, but none of these is an excuse.
When you're working with a real estate agent, there are a few things you should be aware of to make sure that they're following the rules and dealing with you fairly. You should also be aware of how the Fair Housing Act works on a broader level, so you know what to expect in your real estate venture, and so that you stay within legal bounds.
- Real estate agents are bound by anti-discrimination laws and regulations including the Fair Housing Act and state law.
- The Fair Housing Act prevents housing discrimination based on race, color, religion, national origin, sex, disability, and familial status.
- Many states have passed their own laws to prevent discrimination in housing.
- Agents are not allowed to answer certain buyer questions; for instance, by law they cannot answer questions about the ethnic makeup of a neighborhood.
Rules That Apply to Real Estate Agents
Even though your real estate agent may be working for you, they must obey a number of legal, regulatory, and ethical bodies. The many sets of rules that govern or affect a real estate agent's actions include:
- The Fair Housing Act
- The National Association of REALTORS® Code of Ethics
- State real estate laws
- An employing broker's guidelines
- Other discrimination laws
The Federal Fair Housing Act
At the center of a real estate agent's responsibility is the Fair Housing Act. This set of rules can be easy for agents to forget because it's not very public, yet it is at the core of an agent's practice. The Fair Housing Act was signed into law in 1968 as part of the larger U.S. Civil Rights Act. Its purpose is to prevent discrimination of all kinds in housing across the U.S. It was later amended in 1974 and 1988, to include extra protections, and it remains an active safeguard today.
There are seven distinct classes protected by the Fair Housing Act. They are:
- National origin
- Familial status
No one involved in the business of real estate can act in ways that discriminate against people for any of the above reasons. This goes for real estate agents as well as brokers, lenders, and landlords.
State Fair Housing Laws
Many states have passed their own laws to combat housing discrimination. The state of California, for example, expanded the set of protected classes in its own fair housing law. In addition to the main classes under federal law, the California Fair Employment and Housing Act include:
- Gender expression or gender identity
- Genetic information
- Marital status
- Medical condition
- Sexual orientation
- Military or veteran status
- Primary language
- Source of income
Many other states have added classes beyond those of the federal Fair Housing Act, so real estate agents, brokers, lenders, and landlords must be sure to act in line with the laws of their state as well. If you ask a question and your agent isn't giving you a direct answer, there's a good chance it has something to do with fair housing laws, either at the federal or state level.
Fair Housing Laws in Action
It comes as a shock to many people when they learn that a real estate agent cannot address certain requests because they are bound by law. Even if the intent behind your request is good or harmless, real estate agents are bound to follow protect the classes in the lists above from housing discrimination.
Suppose your agent asks about your weekend and you tell them about being a guest at your cousin's wedding, and you make mention that the service was held at a nearby synagogue. Later on, when you ask your agent to suggest a certain neighborhood, they can't nudge you one way or another based on the notion that you might be Jewish. Even small talk can factor in to an agent's mindset and the actions that follow.
Protected Classes in Neighborhoods
By the same token, by law an agent cannot answer questions about the ethnic makeup of a neighborhood. For example, buyers should not ask an agent to show them homes in neighborhoods made up mainly of Latinos, African-Americans, Native Americans, or any other ethnicity or race. Likewise, the agent can't try to direct you as a buyer only to certain neighborhoods based on your own (or assumed) race or ethnicity.
This process of pushing buyers one way or another based on any protected class is known as "steering," and it is strictly off limits.
Discrimination in Listing Advertising
Even when creating ads, agents must be wary that they are not aimed at or represent any of the protected classes. This feels like a fuzzy rule, but many laws and guides include lists of words or phrases that might be in violation of fair housing laws or NAR ethics codes in the context of ads. When listing your home for sale or rent, do not ask your agent to use words or phrases like:
- Bachelor pad
- Singles only
- Golden agers
- Section eight
- Children not welcome
Demands for School Districts
Most agents know to abide by the FHA and state laws, but many go a step further and act in caution of lawsuits as well. Due to the mere threat of legal action against them, some real estate agents will avoid a number of other types of requests. In California, for example, there is no guarantee that people who live in certain school districts will be able to enroll their children in that school. If a client asks their agent to find them a home in a certain school district, the agent may explain that their children might not end up in the school of their choice.
Making promises about a certain school district is not within the scope of an agent's fiduciary duties and could also be construed as a fair housing violation.
Talking About Crime and Safety
The same concept applies when talking about crime. If a buyer wants to know the crime rates near a home, smart agents will direct buyers to the police department or other sources of information. An agent should never disclose crime stats or say a neighborhood is a safe place to live, even if they think that it's true.
The Bottom Line
These are just a few examples of the ways in which your agent may have to be careful to practice real estate within the bounds of the law. Before you look to buy or sell, it's a good idea to get familiar with some of the basic rules regarding housing discrimination, so you and your agent are on the same page.