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Ethics Watch: How Discrimination in Real Estate Kills the American Dream

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Real estate expert cautions industry to be more vigilant

Discrimination in real estate, specifically "steering," the process of profiling prospective buyers based on race, color, nationality, religion, sex, lifestyle, or disability, to housing in areas where certain groups are deemed to "belong," is an issue rarely discussed openly in our industry, but nonetheless, is an ongoing crime that needs to be brought to light and put to an end.

The subject recently came in focus when the State of Michigan Civil Rights Commission filed a charge of discrimination late last month against a large Detroit-area brokerage, alleging that the company, it's broker, agents, officers, and employees unlawfully discriminated against the Claimant's (National Fair Housing Alliance's) "testers" by denying them the enjoyment of civil rights guaranteed by the Constitution and laws of the State of Michigan.

I cannot, in good conscience, pass judgment on the broker, his company, or his employees. Until all the facts are in, all parties receive a fair trial, and the courts issue a judgment, I cannot offer commentary on this particular case.

Generally speaking, however, the Fair Housing Act (Title VIII of the Civil Rights Act of 1968) clearly prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status, and handicap (disability), and "steering" is an obvious violation of the Fair Housing Act.

The problem with profiling and steering is much more serious than any isolated act of racism or discrimination. It not only victimizes the buyer, by limiting the buyer's choices based on a person's physical appearance, culture, or belief, but it also promotes segregation and the ongoing cycle of discrimination. Without steering and other discriminatory practices, neighborhoods would naturally become more diverse. People would purchase homes based more on neighborhood preferences and income rather than on race, culture, and belief. The diversification would naturally lead to greater understanding and acceptance of differences.

In addition to being legally, ethically, and morally wrong, housing discrimination is un-American. It runs counter to the American passion for freedom. It threatens the American Dream of homeownership by restricting it to select groups of Americans. It weakens the synergies that could naturally develop when people of different cultures and beliefs share their values and ideas. It runs counter to the American belief that all people are created equal. And it cheats us all out of the opportunity to reap the potential benefits of diversity.

I can't say whether the Detroit broker, its agents, officers, and employees are guilty of discriminating against clients, but in my career, I have personally witnessed such discrimination committed by both homeowners and real estate professionals. I was actually involved in a case in which sellers refused to provide full access to potential buyers based solely on race. The sellers ended up having to pay $10,000 to the victims, and probably would have paid much more had they not admitted their prejudice and agreed to make restitution.

Setting prejudice aside is not always easy. For some people, it seems impossible. But professionals have a higher standard to live up to. When real estate professionals head into the office or out to show a house, they need to leave any prejudices they may have behind them. Real estate professionals in particular must select homes to show to buyers based on the buyer's targeted price range rather than on the racial demographics or other tools used to intentionally segregate the population.

For America to remain the dynamic melting pot, its citizens must be free to move and live wherever they choose and to pursue whatever they envision as their American Dream of homeownership. – Ralph Roberts
Ralph Roberts is a real estate fraud expert and activist and author of Flipping Houses For Dummies and the upcoming book Foreclosure Investing For Dummies (June 2007, John Wiley & Sons).

For more information, visit http://www.flippingfrenzy.com or contact Ralph at RalphRoberts@ralphroberts.com or 1-586-751-0000.

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