Did they commit a Fair Housing Violation? Episode #306

Todd: Hello. Welcome to Todd Miller TV joined here today with Oana. OK. I’ve read an article today that was on the Wall Street Journal.

Oana: OK.

Todd: And it was about how there’s a difficult time, it’s difficult to get houses. So one of the things that they’re saying that’s a good technique is to write a letter like a pretty please letter to the seller to try to make your case for them to take your offer over other offers. So, we all know that absence of knowing anything about the buyers, the sellers tend to pick what kind of offer. If you don’t know anything about the buyers, which offer does the seller typically take?

Oana: The highest net for the seller.

Todd: Highest net for the seller with the best terms if you’re going to close in a reasonable time and that they think that they believe will actually close, right?

Oana: Right.

Todd: OK. Well, in this article, in this case, the buyer didn’t do that. He intentionally admitted that he – the seller said, he picked an article or he picked a buyer because of the letter he wrote, not because of the amount. So here’s part of the problem. In the letter he wrote, “My wife and I are – she’s pregnant. We’re expecting a kid. We want to have a family. We see you have a family. We’re like you. We both have families. Our kids will play in the same place that your kids played. And we want you to take our offer over everybody else’s.” Is there a potential problem with that?

Oana: OK. So if this is between buyer and seller, it’s all fair and it will even work. However, when you’re dealing with – when you’re choosing an offer based on somebody’s familial status, meaning whether they got kids or they’re married or not married, when you’re choosing an offer based on their race, their religion, I think the opportune words are “fair housing violations”.

Todd: OK. All right. Fair housing violations.

Oana: So that’s a really very treacherous thing to do and I don’t recommend it. Yes. I mean look, we all want to position ourselves to get that house, OK?

Todd: OK.

Oana: I have taken buyers with me when I present an offer to a seller when I’m representing the buyer because I know that my buyer is charming and maybe he will be able to charm the seller and maybe we’ll get our offer accepted. I get that. OK? I totally get that.

But as a seller, when you are discriminating against someone else because they’re not like you, they’re not the same race as you, they don’t have the same familial status as you, they don’t have the same religion as you, now, you’re discriminating against protected classes and you are opening yourself up to more liability than it’s worth for you to have the warm and fuzzy that someone just like you just bought your house.

Todd: So essentially, those people who submitted better offers, more money, better terms and everything, were discriminated against because they didn’t have kids or they didn’t state that they have kids.

Oana: Well, they weren’t discriminated against because they didn’t have kids because we don’t know if they did or not.

Todd: Right.

Oana: But if they had also written a letter saying, “Hey, I am a single person of this orientation.” And the people went, “Oh, they’re not like us. We would not sell to somebody of that race, that religion, that familial status, that sexual orientation.”

Todd: Right. OK.

Oana: Now, you’ve got a problem.

Todd: OK. So, I went to – if you go to hud.gov and you type in for housing, you can read all the fair housing laws. But I’ll spare you and I’ll tell you what the federal ones are. These are the federal ones. Race, color, national origin, religion, sex, familial status, and handicap, you can’t discriminate against any of those.

Now, depending on what state you’re in, there are some other ones that apply. For example, we have some extra ones here in Nevada. One of them is sexual orientation. You can’t discriminate based on sexual orientation in Nevada. Other states you may be able to because it’s not federal.

And what it says in there, Oana, it’s really interesting, it says that neither a buyer nor a seller can advertise nor take any action to use any of these to discriminate for or against somebody. So the buyer in theory and this was a home that was listed in MLS.

Oana: Right.

Todd: And once you listed in MLS, fair housing applies to you no matter what. So if you hire a real estate agent, no matter what fair housing – if you are a buyer or seller, it applies to you. So the buyer in theory is sending a letter saying, “Hey, I have kids. Please take my deal.” The seller stating publicly in this Wall Street Journal article, “Oh yeah, sure. We have all these really offers that were more but we just – they had kids and we like people with kids so we accepted their offer.” And I don’t know that anything – if I was one of the other people, I’d probably be upset. I’d be like, “Hey, wait a minute. So because I maybe didn’t have kids or you didn’t know, you didn’t take my offer even though that was a better deal?”

Oana: What if I had more kids? Wait a minute. I didn’t know that kids were a prerequisite of me buying your house.

Todd: Right. So, and the problem is this article has been out there. Thousands of people have probably read it and not one person has said, “Hey, wait a minute.” I think I’m the first person because I’ve sent an email to the author and she’s like, “Oh, that’s interesting point.” And I’m like, “Seriously? That’s an interesting point?” No, it’s a federal law violation. You can’t do that.

So anyway, yes, we have very low inventory in most of the country. It’s very difficult and people are having to do out of the box things just to get offer accepted.

Oana: That’s right.

Todd: I don’t know if I personally as a listing agent or representing a buyer would advise my client to step into the realm of a fair housing violation however benign that may seem. And I know you’ve shown the house and people get to see who you are. They remember that. We have no idea that they later on say, “I remember those people that came by. I’m not going to sell to them. I’ll just reject their offer and make up some excuse.”

But when you go on to Wall Street Journal, to a reporter and say, “Yeah, we took their offer because of a protected status and restricted other people.” That’s probably not a good idea.

Oana: No, it’s not. And it’s not worth it. Pick the offer that best works for you and I think that’s the most fair thing to do. And moreover, I mean you would not want to be discriminated against on the other side either. You would not want someone to not buy your house because of your familial status. You would not want to be deprived of other services either out there in the world. So treat others the way you want to be treated. Be fair.

Todd: I can’t imagine if the people that sold the house move to another house somewhere and the people said, “Well, you have kids and we don’t want to sell the house to somebody who has kids.” They would probably really upset with that.

Oana: Yes.

Todd: So, it would be a violation of fair housing if they do that.

Oana: That’s right.

Todd: More likely. OK. All right. So anyway, I thought I’d share that with you. That’s my update for today and hope to see you on another video. Thanks.