National Association of Realtors Disappointed with New Fair Housing Ruling

On July 23, 2020, Department of Housing and Urban Development (HUD) Secretary Ben Carson announced that he would effectively end 2015’s Affirmatively Furthering Fair Housing (AFFH) rule.

The purpose of the AFFH ruling was to ensure communities complied with the 1968 Fair Housing Act. In order to get any HUD funding, local governments needed to track poverty and segregation in their communities by completing a 92-point questionnaire. Now, without AFFH, municipalities can declare they’re in compliance with fair housing rules themselves, and HUD will accept it based on their word.

Instead of making housing providers pass a sort-of fair housing exam (the 92-point questionnaire), responsibility largely lands on tennents to file complaints. In an official press release, HUD said they can still “terminate funding if it discovers, after investigation made pursuant to complaint or by its own volition, that a jurisdiction has not adhered to fair housing regulations” (emphasis added).

AFFH has been under attack since 2018, when HUD stopped strictly enforcing it. Since then, a 2019 National Fair Housing Alliance report found 31,202 complaints of housing discrimination in 2018, the highest number since the NFHA began collecting such data in 1995.

Concerning the ruling, the National Association of Realtors issued the following statement.

The National Association of Realtors is disappointed that HUD has taken this step, which significantly weakens the federal government’s commitment to the goals of the Fair Housing Act,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, CA. “The viability of our 1.4 million members depends on the free, transparent and efficient transfer of property in this country, and NAR maintains that a strong, affirmative fair housing rule is vital to advancing our nation’s progress toward thriving and inclusive communities. With the pandemic’s disproportionate impact on people of color reminding us of the costs of the failure to address barriers to housing opportunity, NAR remains committed to ensuring no American is unfairly denied this fundamental right in the future.”

 


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Who Should Pay the Buyer’s Agent?

Traditionally in America, the home seller pays the buyer’s agent, however--that tradition is under fire due to new lawsuits filed in Chicago against the National Association of Realtors and others. The outcome of the cases could have far reaching impact in the world of American real estate.

According to a recent Washington Post article, class-action lawsuits have been filed against NAR, the nation’s four largest real estate brokerages, and the MLS companies they use. The suits state that federal anti-trust laws have been violated by the named entities by forcing sellers to pay the buyer’s agent inflated commissions.

The claimants state that the buyer’s agent should be paid by the buyer in a competitive market, and also that the split commission contracts enforced by MLS companies often cause the seller’s agents to be unfairly compensated.

The outcome of these suits could affect home owners and buyers as well as agents and brokers.  Some say that if the courts rule against the defendants that commission rates for buying and selling agents will go down in order for agencies to stay competitive in a customer’s market. If home buyers were required to pay their agent’s commissions instead of the sellers, they would negotiate directly with the agent to pay only for services rendered, as opposed to the blanket commission currently paid by the seller.

The downside to such a situation going into effect is that when it comes to purchasing a home, buyers are already at a financial disadvantage—forced to pay for closing costs and moving costs on top of the price of a home. According to the Post, some Realtors say that the added expense of having to pay their agent’s commission would put a heavy strain on “first-time and other cash-short buyers”. This could have a negative impact on real estate markets across the country.

 


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