When Long Island newspaper Newsday took on a groundbreaking, three-year investigation that revealed widespread agent bias against consumers of color, it started with a simple observation: Long Island was diverse, but its communities and school districts were segregated.
“There are 200 communities on Long Island, but most of the African Americans [are] in only eight of them,” said Bill Dedman, investigative reporter for Newsday and now a consultant for the National Association of Realtors. Dedman, part of the team behind that investigation, spoke at the Idea Exchange Council for Brokers Forum at NAR’s annual conference, the Realtors Conference & Expo, on Thursday. The forum took on the topic of housing discrimination, including what it looks like now and why it continues to happen.
The award-winning investigation, “Long Island Divided,” which included 100 agents at 12 of Long Island’s largest brokerages and 25 trained fair housing pair testers, revealed that, in 86 paired tests, black buyers were discriminated against 49 percent of the time, while Hispanic and Asian buyers were discriminated against 39 percent and 19 percent of the time, respectively. The interactions were videotaped via hidden cameras legally worn by the testers.
For the investigation, Newsday chose 12 brokerages whose listings made up more than half the listings on the market: Douglas Elliman, Century 21 Real Estate, Charles Rutenberg Realty, Coldwell Banker Residential Brokerage on Long Island, Coach Realtors, Daniel Gale Sotheby’s International Realty, Laffey Fine Homes, Keller Williams Realty, The Corcoran Group, Signature Premier Properties, Realty Connect USA and RE/MAX LLC.
Corcoran and Daniel Gale Sotheby’s International Realty were the only brokerages where no discrimination was reported.
What housing discrimination looks like now
Agents to be tested weren’t predetermined. The investigators cold-called a brokerage and got whomever was on duty. After the first tester met with that agent, a second tester would be matched with the same agent. The Fair Housing Act applies to companies, so a brokerage’s agents are required to provide the same service, “but we thought it would be more fair and more persuasive to have our buyers see the exact same agent,” Dedman said.
The testers were trained to give the same script regarding their housing wants and needs, their price range, their number of bedrooms and bathrooms desired, their income and mortgage pre-approval status, their first-time buyer status and the area in which they were interested in, according to Dedman.
Bill Dedman
“What they got was very different [listing] maps,” he said. “There were two main things that we saw: one was steering and the other was refusal to serve,” he said.
“In a tenth of the cases, our black homebuyers couldn’t even get service because the agent would apply some sort of barrier to serving them that that same agent did not apply to the white homebuyer. ‘I can’t help you if you don’t sign an exclusive contract with me.’ ‘I can’t help you if you’re not pre-approved.’ But then that same agent would provide service to the white buyer who didn’t meet those same criteria.”
Investigators were also surprised by the number of “inappropriate comments” the agents made, according to Dedman. “‘You don’t want to go there, it’s a mixed neighborhood.’ ‘I won’t show you any homes in these communities’ and then listing all the communities with people of color. ‘Make sure not to get off the highway before you get past Exit 28.’ Just all sorts of inappropriate comments under the Fair Housing Act,” he said.
And those comments were always made to the white buyer, unbeknownst to the minority buyers. “The African-American buyer or the Hispanic or Asian buyer would come back and would say to us at Newsday, ‘She was so nice. I got such good service.’ And it was only when we would put the two together and show them the video, did they have any idea that they were not getting the same level of service that the white buyer was getting,” Dedman said. “You can only really get at that through testing.”
While the buyer testers would have given the same income and credit score if asked, they usually weren’t asked for any economic information, according to Dedman.
“But there seemed to be some assuming going on,” he said.
Everyone now has a case against those brokerages
Newsday found that not only were people of different races being sent to different listings, but discriminating agents were almost universally sending all homebuyers around communities of color, according to Dedman.
“So those eight communities on Long Island with African American population — nobody got any listings in those communities, they were just all steered around,” Dedman said.
“It didn’t take but 90 seconds for our law professor consultant to say, ‘Wait a minute, who has a Fair Housing Act lawsuit in that case? The community does, everybody who’s ever tried to sell a home in that community, the listing broker for all the homes sold in that community, everybody whose home equity is less than it should be and therefore has less money to pass on to their kids and grandkids to go to college has a lawsuit against the brokers who were steering around those communities.'”
While some people tend to think of housing discrimination in terms of saying the wrong comments or of treating people differently, steering creates a real risk for real estate companies to become the targets of Fair Housing Act lawsuits, Dedman added.
While no one is suggesting that Realtors created redlining, the issue is that they are perpetuating its effects, according to Dedman.
“Because if you steer around an area because ‘Oh, the resale values aren’t good there,’ well then the resale values aren’t good then that affects the appraisals and then that affects [what] gets recommended,” he said.
The 12 brokerages that Newsday looked at had almost no market share and had opened no offices in those eight African-American communities on Long Island. That meant that the agents seemed to lack familiarity with those communities, according to Dedman.
“Agents had a very clear map in their mind that they would express to customers. Boy did they know where the school lines were,” he said.
“Race wouldn’t get mentioned but they were following racial lines. For example, they were steering people around Freeport, which has beautiful homes on the waterfront. My guess is that the agents didn’t know that that African American community has beautiful homes on the waterfront because they don’t have listings there.”
Half of Realtors don’t think discrimination exists
NAR surveyed its members after the investigation came out, asking if they had witnessed discrimination in the past year and if they believe it exists. “In terms of the first question, the answer was in single digits of people who actually said that they’d witnessed it. We didn’t ask ‘Have you engaged in it?’ But even on the second question, … only a third of our membership said that they believe that it still existed,” said Bryan Greene, NAR’s director of fair housing policy, who also spoke at the forum.
Bryan Greene
“A full majority, about 59 percent … said just simply no and did not acknowledge in their answer that it existed. We repeated this in June as part of another survey, and the numbers have changed slightly. About half of our membership did not acknowledge in their response that discrimination existed. It suggests that even six, seven months after this Long Island Divided, people either aren’t acknowledging that what they saw in the video is discrimination or resist this notion.”
Dedman said he saw how people would resist the notion if they hadn’t had any complaints. “People may not quite grasp the idea that you would have no way to know. No one will ever make a complaint that they were steered compared with another customer because none of your customers has any idea how any of your other customers are being treated,” he said.
Why discrimination continues
Chris Duff, chair of the council, noted that there are various theories for why discrimination continues to exist.
“Some folks say, ‘Oh, it’s just prejudice.’ Others say, ‘They’re doing it because they think this is what the seller wants’ or they think that to keep the business, this is what they need to do,” Duff said.
“I’ve heard others say that this is the agent thinking they need to get to closing as fast as possible, so they need to make judgments about what people want. So for white applicants, they’re making judgments of what whites want. I suppose the implication is with the minority or people of color, assuming the quickest thing to do is to move them somewhere where they predominate because so many are segregated.”
In response, Dedman pointed out that, under the law, the reason or motivation behind discrimination doesn’t matter.
“The Fair Housing Act doesn’t prohibit intending to discriminate. It forbids treating people differently,” he said.
“I do suspect, though, that there’s some profiling going on. That is, some expectation that people would feel more comfortable or will buy more quickly in an area where they’re in the majority.”
He also suspected what he called “referred racism” to be at play.
“We know that there’s been some racial discrimination in appraisals, for example, more difficulty getting appraisals approved to make a loan in a minority area. If you thought that there might be difficulty getting the loan approved, or difficulty at the bank, then you might be less likely to be moving someone into an area where they help integrate that area,” he said.
“You also might think that a neighbor might be offended, or that the seller might be offended. Remember, the neighbors are future potential sellers that might hire you to represent them.
“So it could be that some people are acting not on what are their biases, but sort of playing to the lowest common denominator of the financial community or of the neighborhood, and feeling subconsciously like there’s some profit to be made in that.”
Steering as a service
The Newsday team was also shocked by how baked in discrimination was to the first conversation a homebuyer had with a real estate agent.
“The agent might give a speech with a map and ask questions and be sort of introducing the new customer to homebuying and the first thing the agent would start with was, ‘Here’s the list of the school districts you want and the school districts you don’t want.’ And then our testers, of course, are helpfully coming back to the Newsday office with different lists written in the same handwriting of which schools you want or which areas do you want, which areas don’t you want,” Dedman said.
He emphasized that it wasn’t that the agents were caught uttering some kind of “casual slur” in a moment of annoyance.
“I hate to say it, but for those agents, it seemed to be the service that they were selling. It seemed to be what they viewed their function as. You know, ‘You’re a new customer. I want to persuade you that I know the business, that I can help you. And the first thing I’m going to do to demonstrate that knowledge is to start listing which school districts you do or don’t want,'” he said.
Duff pointed out that some agents will witness an agent in their community doing something discriminatory — such as a listing agent limiting eligible buyers to families because that’s what the seller wants — but don’t want to report them because they will likely have to work with that Realtor at some point.
“It starts at the top. Companies really need to set expectations and perhaps also explain why they have those expectations. The company needs to make clear, not only is [discrimination] not acceptable, but it’s stupid,” Greene said.
Greene pointed out that two of the brokerages tested in the Newsday investigation were found not to be discriminatory.
“Some companies are saying, ‘I don’t need to do this to make money.’ Not only does it not pay, but it’s not achieving the outcome that you think it is and you’re turning away customers. The testing illustrates they’re turning away people who would present themselves as qualified for the home. So they’re making false judgments,” he said.
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