Long Island

Why agents steer

Money plays a significant role in agents guiding white and minority purchasers to communities based on race, according to experts.

Federal, state and local laws bar real estate agents from steering home buyers – that is, guiding purchasers to communities based on race or ethnicity – yet national studies show the practice has grown increasingly common over the past three decades.

Why would real estate agents do that?

Civil rights measures enacted starting in the 1960s “made explicit discrimination in the housing arena and in other arenas of American life illegal,” said Jacob Faber, an assistant professor of sociology at New York University who studies segregation.

“But the effect of that was to push a lot of these practices underground, from the in-your-face signs outside communities saying ‘whites only’ to subtler forms of exclusion.”

As part of its examination of home-sale practices on Long Island, Newsday conducted paired testing of real estate agents, in which white and minority testers posed as comparably qualified homebuyers to find out whether agents would treat them differently. In nearly a quarter of the tests, agents directed whites and minorities into differing communities through house listings that experts said showed evidence of steering.

Across the country, some real estate agents engage in illegal steering, either due to bias or for reasons ranging from a misguided urge to “help” buyers and sellers to a desire to maximize sales and boost commission income, scholars who study housing bias say.

“You’re almost never going to get someone, in person or in an email or over the phone, saying, ‘we don’t rent or don’t sell to black or Latino people,'” Faber said. Rather, the ways real estate agents discriminate against minorities include “talking about housing values to certain people but not to other people, or the ways they talk about schools and what’s a good school,” he said.

Faber said, “We as a society have created this whole vocabulary that talks about race without talking about race.”

In a 2017 research paper, “Investigating the Relationship Between Real Estate Agents, Segregation, and House Prices: Steering and Upselling in New York State,” Faber and coauthor Max Besbris wrote that real estate agents have strong incentives to steer customers by race and that doing so perpetuates racial differences in the accumulation of wealth.

The researchers interviewed 45 New York State real estate agents for the study, withholding the agents’ names. Some agents acknowledged steering customers, saying that’s what buyers and sellers want.

Faber said when his white co-author would interview real estate agents, “he would say something purposely on the nose, like, ‘how does race enter the conversation with clients?'”

The agents “would say, ‘we don’t do that, that’s illegal.’ Then he would say, ‘c’mon,’ and they would basically spill the beans at that point,” Faber said.

The study quotes one agent who said in certain Brooklyn neighborhoods, homeowners “don’t want to sell” to black buyers, and “it’s not really worth it to push.”

An agent in Buffalo pointed to “self-segregation” in the city and said, “I’m not imposing my opinion about neighborhoods, but if someone tells me what they want, I think I can help them make a selection about where to look.”

The study quotes an agent who said, “race definitely plays a part in how we show homes.” The agent said his boss asks if clients are “good people,” and coworkers “clued me in about what that means.”

In a class on fair-housing law offered by the Long Island Board of Realtors in October, instructor and former board president Donald Scanlon said buyers often drive agents to make tough choices.

In the 1900s, he said, steering “meant bringing people of color to one side of town or to a mixed side of town and bringing people who are white to the white side of town.”

Now, he said, the prohibited practice means “helping people make choices on where to live based on who they are or who lives in the area.”

“Here is our dilemma: Do buyers want to know who their neighbors are going to be? Absolutely,” he said, adding: “Not just their immediate neighbors but who lives in the area. That’s an important factor in them making their decision whether to buy or not. And we can’t help them with that. But yet we’re asked all the time.”

Later, he told the agents: “This is a major thing that people want to know, and this is why we are so easy to get. We are so easy to be entrapped” into a steering violation.

Asked to explain what he meant by “entrapped,” Scanlon said in an interview that buyers often ask agents to engage in conduct that he views as steering.

“The agents today are faced with that dilemma,” Scanlon said. “Do they do what the buyers ask them to do and potentially violate the law, or are they very rigid? And then [buyers] will say, ‘Well, you know, so and so would show me. So why aren’t you showing me? What do I need you for?’ This is what we’re facing.”

He added, “That’s how easy it is for agents to get entrapped.”

Even when white or minority homebuyers don’t say they’re seeking a community with a particular racial mix, some agents may believe they are catering to the buyers’ unspoken preferences, fair-housing researchers say.

Or agents might assume that minority buyers prefer to live in communities where their neighbors come from similar backgrounds – in spite of research showing that most minority home seekers want the best house they can buy for their money, in the best school district they can afford.

In a survey of African Americans living on Long Island, most said they wanted to live in a community with low crime, well-maintained homes, high-quality schools and good services, and nearly all said they would prefer to live in a community that is racially mixed, the Syosset-based group ERASE Racism reported in 2012.

Housing discrimination also can arise when an agent makes assumptions about a particular homebuyer based on race, whether consciously or not.

Real estate agents “routinely assume that black and Hispanic buyers and sellers are low income, they don’t know a lot about the buying and selling process and so on,” said Elizabeth Korver-Glenn, an assistant professor at the University of New Mexico who studies racial inequality in for-sale and rental housing markets.

Korver-Glenn said she interviewed dozens of agents in Houston, Texas, some of whom made negative comments about black and Hispanic customers.

“The stereotypes of agents themselves are pervasive,” she said.

In some cases, agents might seek to accommodate what they believe is the bias of local homeowners, since agents rely heavily on referrals to build their networks, Korver-Glenn said.

“There are these incentives that agents have to at least accommodate discrimination, if not directly engage in it,” Korver-Glenn said. In some cases, she said, when a home seller expresses racial bias to an agent, the agent will “coach them on how to avoid being racist in public.”

Agents believe that “if they cut ties with that person, that person is just going to go find somebody from the competition.” Then, she said, “the agent that cut ties with them has lost not only their business but has lost all the business that client could have brought them.

“So essentially, by accommodating that racism … they’re showing that they can be trusted and they’re banking on that trust to be able to continue building their business.”

In addition, some agents fear that if they bring minority buyers to predominantly white communities, certain white neighbors might get angry with the agents for allowing the area to become more racially diverse, said John Yinger, a professor of economics and public administration at Syracuse University who studies discrimination.

“If you’re a real estate broker and you want to preserve your reputation with whites, you don’t want to be seen as somebody who introduces black people to a white neighborhood,” Yinger said.

In a 2015 research paper he co-authored, Yinger analyzed massive federal studies of agents’ behavior toward whites and minorities with equivalent qualifications. Every decade, the U.S. Department of Housing and Urban Development conducts national studies utilizing paired testing.

Yinger found the incidence of racial steering – including agents’ recommending and showing fewer homes in whiter areas to black and Hispanic buyers – increased in federal studies from 1989 to 2000 and kept rising through the most recent study in 2012, even as other forms of housing discrimination declined.

Discrimination by real estate agents was higher in areas with greater proportions of white residents and more owner-occupied homes, Yinger found in his analysis of federal data and reviews of previously published papers.

Black home seekers were significantly more likely than Asian or Hispanic customers to experience steering and other forms of bias, and men and younger buyers faced more bias than women and older buyers, Yinger’s 2015 study found.

“A real estate broker hangs up a sign somewhere and hopes people come to visit,” Yinger said. “And if he is perceived to be somebody who does not have the community’s interests at heart, people are not going to visit.”

The impact on minority homebuyers is not merely that they are being steered away from the whitest areas.

In federal paired-testing studies, minority buyers were more likely to be shown houses near sites on the federal Superfund pollution list, said Peter Christensen, a professor of economics at the University of Illinois and an author of a 2018 National Bureau of Economic Research study analyzing HUD’s most recent paired tests.

Testing shows that real estate agents also are more likely to show minority buyers homes with lower-performing schools, higher crime rates and fewer economic opportunities, Christensen said.

When real estate agents steer minority and white buyers to different areas, they help exacerbate racial inequalities in children’s lifelong educational attainment, earnings, health and likelihood of encountering violence, Christensen said.

Due in part to steering by real estate agents, Christensen said, minority home buyers are still “being systematically excluded from high opportunity neighborhoods.”

Real estate agents who engage in discriminatory practices might not realize they are doing so.

“Most people are aware now that it is inappropriate to say, ‘you can’t live in X neighborhood because you belong to Y racial group,’ but they might limit the choices that people have” by offering certain listings to white buyers but not to minorities, said Ian Wilder, executive director of Long Island Housing Services, a fair-housing group.

Those limits could be “based on what they might even perceive as in somebody’s best interest, that they would be more comfortable living in one community rather than the other,” instead of simply heeding the buyers’ request for, say, a $350,000 three-bedroom home in the Town of Babylon, Wilder said.

Even if bias against bringing a buyer to a particular neighborhood is not deliberate, Wilder said, it’s a choice that the real estate agent “shouldn’t be making.”

After all, he said, “location is one of the biggest determinants of quality of life.”

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