[Best of 2023] How Agents Are (Unintentionally) Violating Fair Housing

We're continuing an annual tradition of counting down our top 10 articles of the year. The following article was originally published in September and is #6 in our countdown. See #7 here.

The homebuying frenzy of the pandemic seems to have died down, but many buyers (more than half, according to a recent survey) are still encountering multiple-bid scenarios when they enter the market. These situations are challenging for both buyers and agents. Buyers don't like them; they feel like it's too hard to compete with investors or cash buyers. And agents struggle to help their buyers stand out from the bidding crowd.

A recent WAV Group survey asked buyers who had attempted to purchase the home during the past year whether they'd encountered a multiple-bid situation and what advice their agent gave them to help them win the bid.

Fair Housing and buying a home

A quick recap: The Fair Housing Act is designed to protect people from discrimination based on the following categories or statuses when they are renting or buying a home.

• Race
• Color
• National origin
• Religion
• Sex (including gender identity and sexual orientation)
• Familial status
• Disability

In order to prevent discrimination based on the buyer's identity, it's important for both the buyer's agent and the listing agent to take care to protect the buyer's identity.

So what does Fair Housing have to do with multiple-bid scenarios? WAV Group asked buyers who were involved in multiple-bid situations about the advice their agents gave them to help them craft a winning bid. While no doubt well-intentioned, some agents were advising their buyers to disclose their identity to the seller in an attempt to make a personal connection and possibly win the bid. This is (unfortunately) a pathway to Fair Housing violations.

'Love letters' and in-person meetings

WAV Group's survey found two problematic pieces of advice that agents are giving in multiple-bid scenarios: "write a letter to the seller to go with my offer" and "meet the seller in person to present the offer." The idea of writing the seller a "love letter" is not new, but it can be problematic from a Fair Housing perspective because those letters reveal personal information about the buyer — often intentionally — such as marital and familial status.

Obviously, in-person meetings come with similar caveats or problems. If a seller is meeting a buyer face-to-face, certain details about that buyer (such as their race, national origin, or gender identity) will become apparent to the seller.

The survey showed that agents are suggesting face-to-face meetings more frequently than any other option: 49.2% of buyers said their agent recommended meeting the seller face-to-face to present their offer. Somewhat surprisingly, more buyers of color (52.7%) than white buyers (38.7%) said their agent suggested this course of action.

About one in five buyers (19.9%) said their agent suggested writing a "love letter" to the seller. This proportion was significantly higher for white buyers (25.3%) than for buyers of color (18.0%).

Advice around offer amount and contingencies

Of course, agents are only trying to help their buyers submit a winning bid on a home they can afford, which can be increasingly difficult in an era of consistently low inventory and high mortgage interest rates. What other pieces of advice are agents giving their buyers?

More than one-third of agents recommended that the buyer offer the full asking price to sellers, and more than one-third of agents recommended offering above asking price if possible (34.3% for both). Agents also suggested that buyers offer to close quickly (31.7%), offer cash (28.6%) and to waive certain contingencies if possible (15.2% for home inspection and 14.1% for appraisal).

What can agents do to help buyers win bids?

While multiple-bid situations are difficult for both buyers and agents to manage, there are some ways that agents can help smooth the road for their buyers.

First, know your market! Multiple bids are not common in all markets, or during every year. As an agent, it's important to understand what's happening in your market in terms of buyer bidding, what the competition looks like, and then convey that information to your buyers. If you explain from the get-go that the market is still hot and they should expect submitting several bids before they find their home, that can help set their expectations accordingly.

Next, try to assess what the seller needs most. Money is obviously important, but promising a fast move-out or accepting the home in an as-is condition whenever possible can help give your buyers an edge.

Talk to your broker about providing buyer-friendly solutions, such as cash-offer programs or bridge loans. If your brokerage already has these options, make sure you understand how they work and are explaining them to your buyer clients before they submit a bid.

Dig deeper for listings. If the inventory is tight in your market, it might be a good time to start looking for landlords who are tired of renting their investment property and might want to sell, or homeowners who want to upsize or downgrade but feel stuck due to interest rates or other variables. If you can unlock some inventory for your buyers that won't involve a bidding war, maybe you can bypass that business entirely!

Staying connected to your market and educated about what's happening is critical for any agent, but it's especially important for buyer's agents in multiple-bid scenarios. If you'd like to learn more about what the Fair Housing report uncovered, you can download it now on WAV Group.