A Cautionary Tale that Multiple Offers can lead to Discrimination in Housing…somewhat inadvertently.
I had a young couple ask me if they should submit a “love letter” to the owners of the home with their offer. I had not heard the letter called “a love letter” before, but it reminded me that I had used a letter like this back in 2006 or so when the home had over 20 offers. I included a lovely picture of the couple and their two children.
Fast Forward to 2012. This year there were many multiple offer situations and in one case a lovely old couple who had lived in their home since it was brand new and for over 30 years did not choose my clients and I was told it was not about price. ??? What WAS it about then?
Long story short…my clients did get the home. Sometimes Sellers say “I want a nice family who is going to raise their family in “our” home the same way we did”. They identify with the buyers of the home and want to picture a “loving family” in the home that they love so much. They don’t intend to discriminate…but…net result???
There has been a lot of talk over the last 5 or more years about “Why do we NEED an agent?” A reminder that often the agent is the ONLY one in the room who can see when a law is about to be broken…intentionally or not.
We are not licensed to SELL Real Estate.
We are licensed to represent people who Buy and Sell Real Estate.
Many agents believe that they are simply passing paper back and forth between buyers and sellers and must follow the instructions of their clients. This is a CAUTION that many people need to be told when they are entering into that gray area of “unlawful” as it is not always blatant discrimination.
Sometimes the seller asking
“which offer is from that cute couple with the baby?”
IS discrimination.
The agent should say: “Let’s look at these offers on their merits, without regard to WHO is making the offer”. People who discriminate often do it quietly, without notice, and sometimes scream the loudest that they are NOT…when someone calls them on it.
If you’re hiring an agent so that you have someone “who can see when a law is about to be broken,” then shouldn’t you be hiring a lawyer instead? Identifying applicable laws and counseling the client on how to comply with them is the practice of law, and it exceeds the authority conferred on agents by the Supreme Court.
Furthermore, I guarantee you that if your client ended up violating the law, was held liable, and looked to you for some recovery (all exceptionally remote for very obvious reasons, but you still maintain professional insurance, right?) your attorney would shout to the high heavens: “She had no obligation to counsel the client as to applicable laws and how to comply with them and therefore cannot be held liable.” And your attorney would have a good argument in this regard, albeit one subject to rebuttal based on (a) blog posts like this (where you hold yourself out as being qualified to render these sorts of opinions) and (b) what you told the client (because once you do practice law, even if unauthorized, you are held to the standard of a practicing attorney).
With that initial comment out of the way: You raise a very interesting point. It wouuld be interesting to really do the research and delve into how and which anti-discrimination laws apply where a buyer provides an unsolicited cover letter for the offer that includes references to one or more protected classes.
Good Morning, Craig.
In the post I said “The agent should say: ‘Let’s look at these offers on their merits, without regard to WHO is making the offer’.” I would think that would be hard to argue with…but here you are…arguing with it… 🙂
Every real estate agent receives extensive and continuous training on ethics and the laws regarding protected classes. That has always been true, and is fairly national as far as I can tell.
I have never heard an opinion that an attorney in his office is more privy to the details of a real estate transaction as they happen, or are about to happen, and therefore more qualified than an agent to deal with such things.
It’s an interesting observation, but I doubt that agents go through rigorous and continuing training on these issues for no good reason.
As to your final paragraph I don’t think it is a violation of any law for a buyer to submit a letter with their offer that has their picture on it. What the seller says and does in the presence of their agent with those photos, or having viewed the potential buyers in person, is clearly within the agent’s area of responsibility once they become aware of any intention on the part of the seller to discriminate.
I do think the training classes mostly direct agents to decline to enter into a contract (listing contract) with any seller who remotely suggests that he intends to discriminate against people when offers are received. The training also recommends negating the contract and bowing out if this intent to discriminate surfaces after the home is listed, and I do think that all agents are well versed on how to handle a situation when discrimination is “in the room”.
The first step in “handling the situation” as noted in the many years of training classes is to tell the seller how and why it is likely illegal for him to impose that standard when reviewing offers from potential buyers. More importantly the agent is to advise the client that they as an agent cannot abide by such activity, or participate in any way in supporting that activity.
The idea is sometimes they actually don’t know it is illegal, and will change their tune once they are made aware that the agent can not and will not be complicit in such activities, and will amend their ways as a result of being “called on it”…and that is most often the case.
Agents are in the front lines on this issue, and that is why they must go through extensive and continuous training on the topic of Fair Housing. That training is mandatory for every agent…and usually mandatory training for license renewal as well every x years.
I doubt the agent is supposed to learn it and leave it in the classroom, but as always…you are entitled to your opinion on that.
Of course the training has a purpose, Ardell. Just not the one you are assuming.
Anti-discrimination laws — starting first and foremost with the federal Fair Housing Act — apply directly to real estate agents as well, not just to sellers (and buyers). Accordingly, in order for you as an agent to comply with the law, you need to be aware of laws that prevent discrimination. Hence educating agents about those laws is an essential part of the training process. When you as an agent are faced with a client request that violates anti-discrimination laws, it is your legal obligation to refuse the client’s request and to not assist in any way in conduct that violates the law.
However, agents are not trained or expected to counsel their clients about these anti-discrimination laws. That is the practice of law that exceeds the scope of an agent’s authority per Cultum v Heritage House.
I can hear the howl of protest already: If we really want to prevent discrimination, and given that most people hire just an agent, why shouldn’t agents counsel their clients on this issue? Because the law — again, arguably because of lawyers’ own economic self-interest — restricts to lawyers the right to counsel others as to awareness of and compliance with the law. That is the system in which we operate.
So should agents leave that training in the classroom? Obviously not. They should sally forth into the world knowing their legal obligations as agents to not discriminate. But they are not supposed to counsel their clients as to the clients’ legal obligations. That is reserved, in our system, for lawyers.
I don’t make the rules, only comment upon them.
Craig,
It’s not surprising that you can “hear the howl of protest” as you ARE the howl of protest…and that is a lone wolf howl as well.
There is no question but that real estate agents are at the forefront when it comes to insuring that people can buy freely without the fear of discrimination. There is just no question about that.
It’s not even a discussion.
That the handful of lawyers in my industry feel compelled to climb up on a pedestal and claim they are the only effective representation in the entire real estate world is an old record that never played well in the first place. It just isn’t true.
I have no hope of persuading you to jump down off your “lawyer” pedestal to have a meaningful conversation on the topic of discrimination in housing beyond your same old, same old “Lawyers are better than Agents” mantra.
Fair Housing is a very important issue and “It takes a Village” to keep that monster in its rightful place. It is NOT an issue that can only be dealt with by lawyers and Courts after the fact in hindsight lawsuits. It must be nipped in the bud when it first rears its ugly head. Agents will continue to nip that in the bud for decades to come, whether you agree that they should or not.
That is the way of the World.
Hmmm, is it just me, or is it getting a little hot in here? 😉
Let me clarify: I am not saying “lawyers are better.” You misunderstand my point. I am saying that, under our existing system, real estate agents are not supposed to counsel clients about their legal obligations, whether as to discrimination or any other legal issue. That’s my point, period.
Should the system be changed? Clearly there is an argument to be made. Is the world a better place if agents exceed their authority in this regard? Again, clearly there is an argument to be made that yes, the world is better when agents do more than what they are supposed to do in terms of counseling clients about discrimination and compliance with the law. As you note, (a) discrimination is insidious, and (b) there are great agents out there (I won’t use names, but using initials an example I’ll toss out “Ardell DellaLogia” 🙂 ) who will make the world a much better place by acting in this manner.
But the fact remains, Ardell, that, under the law, agents are not supposed to do what you do.
Agents absolutely are supposed to do what I do. There is NO question about it Craig. You are only blinded by the fact that the words “counsel” and “law” are in the room and the legal community wants to claim exclusive rights to “counseling” people about “laws”.
That really is more of a fraternity or sorority type claim, as in only members of this sorority can wear pink hats. It’s something you want to lay claim to and by your own “rules” say no one else is allowed to wear a pink hat.
That does not mean the rest of the world must agree with your internal rulings about who can and who can’t.
Agents can and often do speak with their clients about legal issues involved in the purchase and sale of real estate, every minute of every day. That you say they can’t doesn’t change that.
But if it helps you sleep better at night to pretend that they don’t…go for it.
Take the words “counsel” and “law” out of there and leave it at my actual quotation “The agent should say: ‘Let’s look at these offers on their merits, without regard to WHO is making the offer’.” Now tell me that an agent cannot say that to their client and I will send you to the HUD guidelines regarding how to handle these situations for AGENTS and/or LAWYERS without distinction.
HUD recommends that we focus on the property and not the people who are who are buying it, except to the extent of determining that they have the means to buy it and the sincere willingness to buy it.
You can pretend all day and night that agents can’d handle a real estate transaction and can’t write a simple addendum to a contract because your fraternity said they can’t wear a pink hat. That doesn’t change what happens every minute of every day in the real world.
Clearly it is time for my final word on the subject.
In each comment above, I specifically noted that the restrictions on the “practice of law” — indeed, even the definition of that term — is arguably motivated by the economic self interests of lawyers. If that is the case, then those restrictions are not appropriate. In other words, I have already conceded — twice — the point that I think you are trying to make.
And you’re right. Laws are broken every day, all the time — I exceeded the speed limit on my way to work — including laws regarding the practice of law. You note: “Agents can and often do speak with their clients about legal issues involved in the purchase and sale of real estate, every minute of every day.” Again, I don’t dispute that point. I am merely stating — correctly and irrefutably — that such conduct is illegal in that it exceeds an agent’s limited authority to engage in the practice of law. Honestly, that is not a debatable point. If you think otherwise, perhaps another post from you analyzing the issue, WITH REFERENCE TO THE LAW AS IT EXISTS (starting with the Cultum v Heritage House decision) is in order.
The rank personal attacks above? Neither pleasant nor necessary, so don’t expect any further response.
Thank you, again, for raising an interesting point as noted in my initial comment.
P.S. If my daughter calls me in the next 10 minutes and says, “Mom! I want to shoot my husband!” I can “counsel” her that it is against a “law” for her to do that.
I will put on my pink hat and say so, not send her to an attorney to find out whether she can or can’t shoot her husband.
Craig,
The “penalty” for an agent is that they are held to the same standard as the attorney when providing that advice. That is not a penalty. That is common sense.
If the penalty were a fine or imprisonment then you would be correct. The “penalty” is if you are talking about something you better know what the heck you are talking about. That is not “breaking a law”, that is just good advice from the legal community.
Get your facts straight. As long as the advice given holds up to the standard set…it is not against “the law” to give good advice. There is risk in giving BAD advice, but that is always true.
“Get my facts straight” merits one final brief reply:
Except as may be otherwise provided in these rules, a person shall not appear as an attorney or counsel in any of the courts of the State of Washington, OR PRACTICE LAW IN THIS STATE, unless that person has passed the Washington State bar examination, has complied with the other requirements of these rules, and is an active member of the Washington State Bar Association.
WA Admission to Practice Rule No. 1 (emphasis added)
On that note I will say…and gladly say…I hope to never be seeing you “in Court”.
Have a great Labor Day Weekend, Craig! My daughter and her family are arriving tomorrow night through 9/6 and I’m hoping to finally Ride the Duck!
Taking all or most of that time off.
I wrote this post as I recently had a gay couple not getting a house because they were not a family with a child. End Result? They GOT the house. I don’t care if I broke a law making it hard for the seller and agent of that home to break the law. I really don’t. My clients got the house because I was on top of my game and handled it WELL.
That’s all that matters really, isn’t it?
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Well, Craig you have certainly matured as a Broker, because for the second time this morning I’m finding your counsel very much to the point.
A Real Estate transaction is between two individuals, and the seller can sell to who ever they want. They may need legal counsel, and representation in that decision, but they have rights as property owners.
The letters, and photos from buyers should go into the trash, but it raises another issue for me; should the buyer’s agent have the right to present directly to the seller?
That you would think that a seller of a home has the right to discriminate is just sad, David. Very sad.
What’s sad is implying that a seller has to choose your client under a threat of claiming discrimination.
All that is being pointed out is that the Real Estate agent can guide a transaction, but they can’t represent the client in a court of law, which is where this discrimination claim would be decided.
We can make all the claims in the world, but you can not force a seller to do anything. They simply fire the agent, cancel the listing, and hire some one else.
The other alternative is for the agent to cancel the listing if they suspect discrimination.
In either case the seller may be damaged by having to take the house off the market because a Real Estate agent is making claims.
You opened up a whole can of worms here that is fodder for litigation. I don’t see how you can prove discrimination without a court of law.
…and yet when Kary suggests that the court is where things happen in real estate you tell him that less than 1% end up in court. So to suggest that people’s rights only happen in a court…well, you know that is ridiculous.
Basically what you are saying is a seller CAN discriminate as long as agents pretend they don’t notice???
I DON’T THINK SO!
No, what I am saying is you are crossing a line here.
You are making a case that for you it was alright because you felt your client was being discriminated against.
In this case you are using an example that is pure conjecture on your part based on what a “lovely old couple” were thinking.
I know dozens of same sex families, with children, who own property. Some even bought vintage homes from “lovely old couples.”
It’s just a can of worms with very little substance.
David, you have been in real estate in Seattle a lot longer than I have. Do you find the instances of discrimination to be far fewer now than back in the 80s when you started in the business?
There are much fewer instances of dicrimination now than in the 1980s in Seattle, but you are talking about something else.
I only wanted to say that Craig made some very good points.
I agree for many seller it is not all about the money, though I am sure if there are multiple offers they’ll be doing ok in that department. We have tried this before several times and with mixed results, but would sure try it again. People want to drive by and show their grand kids and their friends their old home and do not want it to look like a dump and in the same way if they built it they might want someone to have it that they feel will love and take care of it the way they did. If done right, I do not think this will ever hurt your clients chances and might just help them stand out.
Ardell a very good post and I’ve never heard of the “Love Letter” approach. Something to think about. Most greatful.
All this talk about the law regarding discrimination in housing misses a certain point. The Fair Housing Act was not enacted to prevent discrimination (note the “Mrs. Murphy” clause). The Fair Housing Act was enacted to protect buyers and renters from seller and landlord discrimination. The buyer can choose to buy anywhere they want with or without regard to demographics, racial or otherwise. The buyer can choose…… almost everyone agrees. Certainly HUD does. In ’96 HUD wrote a letter to Jill Levine, chief legal counsel for The Buyer’s Agent telling real estate agents that if a buyer gives a discriminating instruction, their agent should follow it. It is not illegal steering if the buyer is the one doing the steering. This is the purpose of the Fair Housing Act, to protect the buyer’s right to choose where to live.
Let me guess. Tom Hathaway’s son? 🙂 The apple doesn’t fall far from the tree. Did he write the script for that? LOL! Give him my regards, assuming he’s still around. It’s been a long time since he and I have spoken.
Total irrelevant to the post topic and we both know the “Mrs. Murphy” clause was rescinded by HUD. Those many years ago when the Mrs. Murphy letter was written I agreed with it a bit more than in today’s politically charged environment surrounding those issues.
Best of luck to you on your mission, but it’s not the right time or place for it.
Naw, Tom is my brother. He is still kicking but in another line of work. I am the point of origin on this topic. I had an interracial couple relocating from California to the Memphis area. They were in their 60’s but unfamiliar with the area and nervous about being accepted here. They asked for racial demographic information regarding a subdivision they were considering. I avoided their question and that night I read the Fair Housing Act. It was obvious that the teaching of the Act was very different than the purpose – to protect buyers from seller discrimination. The next day I answered their questions. After they closed on their new home, I met with our attorney Jill Levine and we wrote the letter to HUD that resulted in the legal opinion that agents hired by the buyer obey the Fair Housing Act when they obey the buyer’s instructions. Buyers have a federally protected right to choose, protected by the Fair Housing Act. This is not the time or the place? Wow. After 48 years of this law being mis-taught just when would be the time? And if not this place than where?
You won’t convince me that the Fair Housing Laws have nothing to do with sellers discriminating against buyers of a protected class. Nor can you convince me that agents can steer buyers away from neighborhoods based on race or ethnicity.
I do get your point and have had requests like “I don’t want my child to be the only Jewish child in the school” and that is what the “Mrs. Murphy” letter (later rescinded) addressed. But not all agents can handle the distinction, which is my most brokers don’t give that power of distinction to their agents in most cases. I know I can apply it properly, but I also know that many can not.
But back to your being “off topic” and this post is about sellers choosing the buyer in multiple offers based on the color of their skin…and no…you will never convince me that fair housing laws having noting to do with that aspect of real estate. Nor do I think you think so anymore than your broker did back in the day.