05.17.05

Steps to keep you on the right side of Fair Housing

By Terry Watson, ABR, ABRM, CFS, CIPS, CRB, CRS, DREI, ePRO, GRI, LTG, SRES

I am convinced that good-natured REALTORS® get sucked into the Fair Housing Vortex because of lack of understanding. . The purpose of this article is to slam that door and bolt it shut! April was Fair Housing month, but the following steps are time proven and should be used year round.

The mortal enemy of litigation is consistency and systems. A good system can be your get out of jail free card. Get a system and keep good notes. It is my sad duty to report that the average REALTOR uses giblets of paper or the back of a deal folder as the preferred record-keeping system. While in the heat of the moment this may seem convenient and even practical, in a court of law it usually illustrates a lack of organization and aides the prosecution, painting the picture of a carefree, system-less, random REALTOR from which the public should be protected.

A REALTOR would be wise to employ an electronic contact database. With the press of a button your database will record copious notes that can be printed with the date and time of events. As REALTORS, we need to start thinking like the medical profession. Doctors and nurses document EVERYTHING during and after their conversation with you. The motto taught in nursing school is, if it is not in the chart, it didn’t happen! If a REALTOR is charged with a fair housing violation and they can show a clear paper trail of notes and reports to substantiate their position, this becomes a powerful defense. We should be using an electronic system, so that when notes are entered they are date stamped, time stamped and cataloged in chronological order. If you have ever watched a courtroom drama, dates, times and timelines are used to impeach, convict and aid in creating character assassinations that can decimate a career! The “he said” and “she said” can convict.

To summarize:

• Use a program like e-Neighborhoods that delivers an objective and unbiased comparison of neighborhoods. When given unbiased information that compares neighborhoods, blocks and properties side by side, buyers usually make informed decisions without needing to be told what to do. I don’t tell, I inform. Steering basically is the process of guiding or directing a protected class to or from a neighborhood for biased reasons. If we allow the prospects to choose (vs. telling them, “you want this area or that area”) it goes a long way toward removing the ammunition of a claim that someone was harmed based on our comments about an area. If I were to list all the agents who have made unsolicited claims about the merits of an area, and who were later threatened with litigation because of unsubstantiated claims, it would become a novel as thick as War and Peace! The word “Gentrification” should be enough to let you know that neighborhoods change. In our required real estate training, we learn that all neighborhoods go through life cycles, which include: growth, stability, equilibrium, decline and gentrification or re-gentrification. Virtually every real estate book explains this. If all neighborhoods go through this cycle, why would any REALTOR issue a blanket warranty? For example, I live in Chicago. A downtown condo with an unobstructed lake view always sells at a huge premium. Agents would tell buyers that a downtown condo with a premium view was a no-brainer and a gold standard investment. Enter 9-11. Immediately after – for a period of time – you could not give away a condo or a rental on a high floor of a building that sat out as an open un-enshrouded target. I would not want to be the agent who stakes his/her career on the safety, stability or potential of any area. Real estate is based on perception. Neighborhoods change and world events can change perception in a heartbeat. I am the source of the source, but not The Source.
• The best time to handle a problem is before you have one. My motto is, kill the monster while it is small. I suggest every REALTOR put together a tight, information-packed buyers and sellers package that includes the danger areas of real estate. Timely information and documentation can be considered “Kryptonite” to a lawsuit. A great place to get started is HUD. They have a Web site that is the eighth wonder of the world (www.Hud.gov) with amazing free fair housing downloads to include in the packet that will keep us out of harms way. REALTOR.org also has a jaw dropping section called Field Guides. The Field Guides are unparalleled resource tools for REALTORs and amazing handouts for our clients and consumers. The Field Guide on Fair Housing is a must have.
• Avoid unnecessary comments about safety. I call this “Super Agent Complex.” We want to be Danny or Donna Do Good. We accomplish this by trying to help our client. Mistakenly, we tell them what neighborhoods are good and what neighborhoods to avoid. Hence the problem. Always allow the buyers to choose but don’t choose for them. Our job is to provide information so that clients can make an informed, intelligent decision. We are professionals. We are professional because we don’t tell people what to do. If you tell someone an area is good or bad and they make a faulty purchase decision based on your information, you could have liability. Most manufacturers only give you a 90-day warranty. Yet REALTORS with a few utterances are basically giving a lifetime warranty on an area, a school or a block. Let the buyers decide if the area fits their needs. I am appalled at the frequent use of the words “quiet neighborhood” in marketing material. It is quiet until the little Lhasa Apso moves in across the yard and barks all night. The term “quiet neighborhood” is relative. “Good schools” is another phrase to avoid. The school is only good until something terrible happens. How would you like to be the REALTOR who gave the OK on a school that soon after had a shooting or a massacre? Bottom line, be the source of the source, but not The Source. Send clients to the school board or other reliable sources that don’t have a license to lose. Let the school district warrant the school, or speak about the academic accolades. Real estate is liquid, what is safe or good today may not be safe or good tomorrow.

Don’t let a bad business decision become fodder for a fair housing complaint. The majority of litigation surrounding transactions could have been avoided with the inclusion of reliable unbiased third-party information, disclosure and good sound business decisions. Remember, once litigation begins, it is too late for prevention.