- At the very least, real estate agents need to make homesellers aware that we cannot legally do anything that makes a home for sale only available to a certain group of people.
Everyone wants to write about fair housing issues for Inman — said no one ever. It is a lot more fun to write about the latest technology trends and how to get rich.
Is fair housing really our problem? As a Realtor, I am required to follow fair housing laws. Fair housing is about being inclusive so that anyone who can pay for it can buy a home that is for sale or an apartment that is for rent.
Sure, there are some exceptions, like 55-plus housing for example.
Finding ‘good neighbors’
We all want to have the best neighbors, and often when I list a unit in a small association, the neighbors directly tell me to make sure the unit gets sold to the right kind of people.
I always have to assume, because I’ve never asked, that the kind of neighbor is anyone I can sell the unit to because they qualify for a mortgage or can pay cash.
What other qualification could a person possibly need to be a good neighbor?
I recently witnessed something that really made me think, and maybe even understand, how a condo association might be cherry-picking owners or how it could circumvent fair housing laws and get help from its real estate agent to do it.
The condo units that have inspired this rare fair housing article have a fairly high turnover of owners, especially as compared with the rest of the neighborhood where people tend to own their homes for decades.
There was a time not too long ago when they were hard to sell, but right now they are in demand. Partly because of the shortage of units for sale, and partly because of the uniqueness of the units and the neighborhood.
When owners decide to sell, they call their Realtor. The Realtor gets a signed listing contract and permission to withhold the unit from the MLS, and then goes about “pre-listing” the unit.
Sometimes these condos are advertised on the internet or with a “coming soon” sign, but usually, they are just marketed in the agent’s office to his or her colleagues.
Last year, a unit came on the market and sold quickly, but I noticed that both the buyer’s agent and the seller’s agent were from the same office. The unit was pre-marketed to agents in the listing agent’s office, and the unit got an offer before it went on the market.
The buyer’s agent and the listing agent were both from the same office. I wouldn’t have even noticed, but I checked because the sales price seemed low, which is probably just a coincidence.
Marketing through neighbors
Another unit was listed but withheld from the MLS so that the owners could get it ready to sell. I don’t know for sure if the agent marketed the listing, but I do know that the owner sent out an email to his neighbors letting them know that his unit was for sale.
A lovely couple walked by the condos one day, and they saw a neighbor outside working in her yard. They asked some questions about the condos.
The neighbor asked them if they wanted to buy one, and gave the couple contact information for the owner from the email she had gotten about the not-yet-listed unit for sale.
The couple contacted the owner, who contacted his agent, and the agent got back to the couple. The couple had an agent, and there was no dual agency. The couple did end up making an offer before the unit was put in the MLS. The offer was accepted.
In both of these situations, the sellers got what they wanted — an offer. It’s a seller’s market, and buyers who don’t know the right people might have trouble finding a home to buy.
Where’s the line?
If someone wanted to circumvent fair housing laws, withholding a house from the MLS and marketing it to a small group of people could work well. Especially in high-demand areas where the inventory of homes for sale is low.
I’m not saying it’s a fair housing violation, but I think it is a good idea to market homes beyond our own offices and circle of friends and business partners.
Homeowners certainly have the option of limiting who sees their home, but real estate agents have to follow fair housing laws.
There are agents and entire offices of agents who routinely list property and then have the sellers sign a document that gives the agent permission to withhold the property from the MLS.
These agents tell me they have to pre-list because the homes are not ready to go on the market, and they need time to measure and to create marketing materials.
They cannot wait until everything is ready before they have the contract signed because they fear the owners might change their minds, or they might list with someone else.
I have to agree it’s always in our best interest to have a signed listing contract.
Agents who can get offers before the home even goes on the MLS get rave reviews from their clients. Sellers love that kind of service, especially those who remember how hard it was to sell during the great recession.
I am not saying that fair housing laws are being violated by keeping homes off the MLS and marketing them to small groups of people.
I am just saying that it doesn’t look transparent, and I can see how it could look like a fair housing violation to someone who is having a hard time finding a home to buy.
There are some homeowners who do not fully understand the pre-listing and marketing process. At the very least, we need to make them aware that we cannot legally do anything that makes a home for sale only available to a certain group of people.
When there is a shortage of homes for sale, and people really want to buy a house, they may even see fair housing violations where there are none.
Teresa Boardman is a Realtor and broker/owner of Boardman Realty in St. Paul. She is also the founder of StPaulRealEstateBlog.com.