The topic of conversation this week in our office was whether Big Data technology is stepping on the toes of the Fair Housing Act.
In place since 1968 (with subsequent amendments), the Fair Housing Act has been the driving force of creating diverse neighborhoods and communities. It was specifically enacted to prohibit discrimination during the sale, rental, and financing of housing based on race, religion, national origin and gender.
“Steering” renters or buyers to specific areas based on any of these classifications is where the real estate community is subject to the most scrutiny. In fact, when asked, most agents say they aren’t allowed to provide information regarding key buying decisions such as school district diversity, crime rates or demographics. All information that is readily available in the public domain and usually for free.
Today the Realtor community is facing a lot of pressure. There’s pressure to retain the “standard” 6% commission. There’s a brewing battle between MLS data and aggregators such as Trulia or Zillow over data-sharing. And now there’s a question over the ability to provide the same level of service and information that a customer can get by surfing the ‘Net on their own. These issues greatly impact the public’s undesirable view of the cost/benefit of working with a Realtor.
I think it’s time for Realtors to evaluate the stance of providing limited or no information over providing quality assistance in a buying decision.
Today, companies like NeighborhoodScout or Movoto compile data and provide raw statistics such as local school district ranks or crime rates. Neighborhood Scout is not a broker yet it offers features such as Lifestyle Neighborhood Search that provides a general description of neighborhoods, demographic information, property values and trends, public school rankings and crime rates.
Most information is free but more detailed information can be obtained on a fee or subscription basis. Andrew Schiller, CEO of NeighborhoodScout, was recently quoted as saying that “the website does not breach fair housing laws. The site can actually promote integration by highlighting appealing characteristics of communities that some people may have otherwise overlooked”.
He also added that “searching based on racial and ethnic statistics is not necessarily contemptible, pointing to a case of a Korean immigrant with poor English skills who used the site to find other areas with high concentration of Koreans”.
A buyer can meet with an agent, carrying a host of criteria to help narrow their choices and find the perfect home. The agent, who is a professional, is then supposed to refer the buyer to local law enforcement, school board or government agency for more specific information about cities, neighborhoods and schools and more.
But this same buyer can log onto a website and search for neighborhoods within 15 miles of a particular metropolis, with a median value between $251,000 and $400,000 and a property tax rate between 0.88% and 1.1%.
The buyer can enter specific demographic information such as “with a low crime rate” and “low proportion of children in poverty,” or “a high proportion of Hispanic residents with college degrees that are property owners”. The results are displayed as an area map color coded to highlight the combination of search results.
Consumers want to be educated about the biggest financial decision they may make in their lives. Perhaps it’s time for NAR to revisit how they encourage agents to deal with these issues.
There has to be a way for agents to incorporate this readily available information into discussions with clients without risk of lawsuit for violating the Fair Housing Act.
The Act was designed to prevent deliberate discrimination – not from discussing diversity. Can’t we educate agents on “how” to have the conversation rather than pretending it doesn’t, or shouldn’t, exist?
Offering inferior support to a customer when data is available from other sources doesn’t bode well for the future relevance of the real estate broker, who expects to remain central to the home buying and selling experience.
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