Fighting Sales Discrimination: Lessons from the Long Island Investigation

By Susan Shackleford

The Canopy Realtor® Association’s Diversity Council tabbed Bill Dedman to speak at the latest Realtor® Hot Topic on April 1, kicking off National Fair Housing Month. What could a journalist, even a Pulitzer prize-winning one, have to say to Realtors®?

Plenty. It was no April Fool’s joke.

Dedman shared powerful, real-life examples of racial discrimination in home sales. As President David Kennedy said in introducing him, “The fools are the ones who continue this behavior.”

“This behavior” is the widespread racial discrimination Dedman and his colleagues at Newsday discovered in a three-year investigation of real estate agents in a well-known New York City suburb. Their “Long Island Divided” series rocked the home-sales world when it came out in November 2019, and the series is still reverberating.

Some of the agents caught on videotape in the investigation who violated fair housing laws are undergoing disciplinary hearings and could be suspended or lose their licenses. NAR and individual associations are beefing up fair housing training in major ways, and Dedman, one of four lead journalists on the series, has found himself a popular speaker not only with Realtor® groups, but also with bankers, the Federal Reserve and HUD.

“It’s been surprising and definitely gratifying that so many Realtor® associations around the country responded to the newspaper investigation and are … using it start a conversation,” Dedman told the Hot Topic audience over Zoom.

Paired Testing, Hidden Cameras

The “Long Island Divided” investigation used paired testing to see if real estate agents delivered equal service to buyers as required by the 1968 federal Fair Housing Act and the Realtor® Code of Ethics.

Paired testing has long been a way government agencies detect violations of fair housing laws. They use the technique because individuals seldom know how others are treated in the same situation. Even some testers in the Long Island study were surprised to learn they’d been discriminated against. “That agent was so nice” was a common refrain, Dedman said.

All the testers posed as first-time buyers who had the same housing criteria and represented the same key demographics except for one major characteristic: race. The study would send a tester to a real estate firm, who would then see an agent selected by the firm. Later, a tester of a different race would meet with the same agent.

Each tester wore a hidden camera, which is legal under New York law, as it is in North Carolina, South Carolina and most states.

Coupling the video recordings with the paired testing in the Newsday study provided conclusive evidence of how agents treated people they believed to be buyers. “Being caught on video helped lead to greater impact in changing this system,” said Dedman, who shared a variety of video clips from agent-tester interactions.

Newsday trained 25 testers and tested 93 real estate agents at 12 firms over the three years. The 12 firms represented about half the real estate companies serving the two counties that make up Long Island. Agents who were tested at only two of the 12 firms were found not to be discriminating against buyers, the study found.

Stunning Discrimination

At the 10 other firms, the discrimination toward minorities was stunning. It occurred 19% of the time against Asians, 39% of the time against Hispanics and a whopping 49% of the time against Blacks.

“Steering” was common and blatant. White testers were steered to white neighborhoods and minority testers to integrated neighborhoods. Heavily minority neighborhoods weren’t even on the radar of most agents in providing listings; those neighborhoods were overwhelmingly ignored.

“One of the patterns startled us,” Dedman said. “Some agents began their presentations to buyers with a map, comments or steering that violates the Fair Housing Act. We noted that it didn’t seem to be offhanded; it seemed to be the sales pitch, standard guidance for narrowing a home search. It seemed steering was the service they were selling.”

Calling steering “an imprecise term,” Dedman offered some examples: “Telling one person there is no housing in their price range but showing housing in that price range to others. Making unsolicited comments about race and ethnicity in an area, or comments about schools and crime to encourage or discourage living there — especially when being silent on those matters with another customer.”

The study also showed that on average white testers received 50% more listings than minority testers, and that minority testers were sometimes required by the agent to have a preapproval letter from a lender before seeing listings, yet the same agent showed listings to the white tester without a preapproval letter.

Asked if he thought the agents had unconscious racial bias, Dedman said the law doesn’t consider that. “The law covers behavior; it’s not a mind reader,” he said.

Talking about Schools

As for what agents can legally say to buyers about schools, Dedman noted that schools are more segregated today than 30 years ago. Realtors® must be careful not to use schools as a euphemism for talking about race, he said, and providing the same schools information to all buyers is the legal way to deal with the situation.

If buyers indicate they are selecting a school for racial reasons, Dedman said, “You’re not responsible. Fair housing controls your actions, not your customer’s thoughts. You may find you’re uncomfortable, and that’s a moral question.”

Dedman said NAR is working on providing more guidance on school information and is preparing a film on the topic. “I think this area is going to change rapidly in the next 10 years,” he said.

Asked how Realtors® can combat racism, Dedman said, “The undoable task is to combat racism. The doable task is combating unequal treatment.”

Tips on Ensuring Equal Service

He advised brokerages to have a checklist to remind agents of the same steps they should take with each client. “Do we ask for ID or not, do we ask for income or not, preapproval or not?” he asked. “It’s important you treat clients equally.

“This is where broker supervision comes in,” he continued “I have a guess that most brokers have little information on how agents conduct these conversations and how to decide what to click on the MLS.”

He also recommended continuing to diversify agent ranks by race and to acquaint agents with minority neighborhoods, perhaps by doing bus tours. “It did not seem clear that agents were familiar with minority neighborhoods,” he said.

One more tip he offered was that firms could use the approximately 40-minute documentary on Newsday’s investigation as training for agents. He said the training might be a “movie night,” and he advised those attending on how to make it most effective.

“It’s not helpful to have movie night and figure out who is the discriminator in our office,” he said. “It’s more helpful to have a ‘how does it work’ approach — what are the best practices on preapproving people, the best practices on handling these kinds of sellers pushing, or buyers pushing, us into gray areas under fair housing laws. Talk about those as a problem that affects all of us in the office — what is the best way to solve that, from a shared perspective?”

The group problem-solving approach, Dedman noted, assumes “good faith and can lower the temperature around difficult topics or race.”

For more on fair housing, consider these resources:

NAR’s Fair Housing Action Plan (ACT! Initiative)