Why Background Checks on Real Estate Prospects Don't Work

Many real estate agents run background reports on new prospects before meeting them in person. However, a new study by the U.S. Department of Justice shows why commercial background checks may be ineffective and dangerously misleading. This article explores the weaknesses of background reports:

The NCIC, National Crime Information Center, is the gold standard in criminal background check databases and is available ONLY to law enforcement. This database is the most complete and accurate record of arrests and convictions in the United States and is substantially more complete and accurate than databases used by commercial criminal background check products--which is why a Department of Justice report released this year is so disturbing.

The DOJ Report

This year, the DOJ released its Survey of State Criminal History Systems. The two-year study of arrests and convictions data from 2016 provides insights into why commercial background checks are ineffective. The report found that a remarkably low percentage of arrests and convictions are making it into the nation's most complete criminal history database. The following are some highlights of the report:

• Of the 10.7 million arrests in 2016, only 3.6 million were reported to NCIC
• Of the 3.6 million reported, only 1.4 million had a final disposition. (Final dispositions are necessary for a record to show up in a commercially available criminal background check)
• 2016 was the most complete year in the NCIC's history

What these numbers show is that even if a commercial instant background check system is using the most complete criminal history database in the country, it will still only have information on 13 percent of the crimes. Additionally, we also need to take into account the estimated 30 percent error rate of instant background checks due to variances in the spelling of names, errors in DoB, and mistakes that occur in the data entry process.

So what does all this mean for real estate agents? If a prospect rapes, assaults, or kills a real estate agent, is convicted, goes to jail, gets out, and calls an agent to show him a house and the agent runs an instant background check, the agent has approximately an 8 percent chance of finding out about the crime.

Predatory Behavior

In addition to the incompleteness of criminal history databases, the very nature of crime against real estate agents makes reliance on criminal background checks problematic. Crime against agents is predatory crime, committed by true predators, and meets all the classic predatory behavior patterns. Consider what someone has to do to attack a real estate agent: The predator must "shop" for a victim (it is actually called victim shopping), choose a victim, research the victim (this research is associated with a fantasy stage as well as forms a basis for planning), choose a site, come up with a plan on how to get the victim to be with him at the site, come up with a plan for how to get the victim isolated where he or she can't be seen or heard by others while they are at the site, execute on all of those things, and then they still have to make an attack.

These are not random opportunistic crimes committed by impulsive careless people with extensive felonious criminal "rap sheets." Additionally, predatory behavior, including the crime, is a progressive, obsessive-compulsive behavior pattern similar to that of a binge alcoholic. A predator's motive is power and control; they get an "emotional high" off their crime and all the events that led up to the crime. When visiting with an agent, they intentionally exert "dominance." This dominance is what causes agents to have uncomfortable feelings.

Studies into various types of predators have shed light into their behavior patterns and lack of any criminal history while committing multiple crimes.

• On average, a rapist will have 10 victims in his adult life. (One individual raped 26 agents in 13 years before he finally got caught on the 27th.) Source: Repeat Rape & Multiple Offending among Undetected Rapists
• Other studies—such as Weinrott & Saylor's Self-report of crimes committed by sex offenders, published in the Journal of Interpersonal Violence—have found that, on average, a rapist will have 11 victims prior to being arrested the first time and they estimate that unreported rapes range between 68 percent to 92 percent.
• Only 37 percent of people charged with rape had a previous felony conviction at the time they were arrested for rape the first time, accoridng to the Rape, Abuse, and Incest National Network.

Fair Housing implications of background checks

A discussion of instant criminal background checks would not be complete without considering the legal issues involved. Aside from the obvious legal implications of inaccurate reporting, according to the Supreme Court, the use of background checks may be a violation of the Fair Housing Act. In 2015, the Supreme Court ruled on Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc. The opinion, written by Justice Kennedy, said that a party may prove violations of the Fair Housing Act by either showing intentional discrimination or that a certain practice has an adverse or "disparate impact" on protected classes.

In a 2016 article entitled "What the Latest Fair Housing Guidance on Criminal Background Checks Means for Real Estate" about new HUD rulings, the National Association of Realtors said, "While persons with criminal records are not a protected class under the Fair Housing Act, HUD's recent guidance maintains that criminal history-based barriers to housing have a statistically disproportionate impact on minority groups. Because minorities are a protected class under the Fair Housing Act, HUD's guidance says that creating arbitrary or blanket criminal-based policies and restrictions could potentially violate the Fair Housing Act."

Conclusions

On the surface, running an instant criminal background check on prospects would seem like a sound practice. However, when you "look under the hood" and examine the completeness of criminal history databases, the error rate due to data variances, and the predatory nature of crime against agents, the effectiveness of background check systems in providing agents with "red flags" disappoints. Furthermore, instant criminal background checks pose a potential Fair Housing Act violation. Considering the lack of efficacy and potential Fair Housing issues, if an agent chooses to use instant background checks, he or she needs to do so with an understanding of the issues and risks involved.

Lee Goldstein is the CEO of Real Safe Agent.