Fair Housing Rules for FSBO Sellers

If you're considering selling your home for sale by owner, you need to know about fair housing laws. Now, fair housing laws also apply if you rent property, but definitely if you're considering selling a property on your own, you should know about fair housing laws and make sure that you don't unwittingly violate them. It could land you in a world of hurt legally, and you just want to do the right thing anyway. And fair housing laws really are set up to make sure that people do the right You think? All right, so let's get into it. Fair housing laws serve as crucial guidelines to guarantee equal access to housing opportunities for everyone, regardless of race, color, religion, national origin, sex, familial status, or disability. In Michigan, these laws are stringent and apply across various segments of the real estate industry, spanning from rental housing to residential property sales. As a real estate expert, possessing a comprehensive understanding of these laws is of super importance to ensure that we avoid legal pitfalls and ensure ethical conduct in our business dealings. In this comprehensive guide, we'll explore all aspects of fair housing laws in Michigan, shedding light on essential information for sellers contemplating doing a FSBO or a for sale by owner transaction. All right, understanding fair housing housing laws in Michigan. Michigan's fair housing laws primarily find their roots in the federal statutes like the Fair Housing Act and the Michigan Elliott-Larsen Civil Rights Act. These laws mandate non-discrimination in various housing-related transactions and activities, including number one, advertising. It is unlawful to publish advertisements that imply a preference a limitation or discrimination based on protected characteristics.

This encompasses specifying preferred tenants or preferred buyers predicated on race, religion, gender, and other protected categories.

Number 2, property showing and sales. Sellers, landlords, and real estate agents are prohibited from engaging in discriminatory practices during property showings or sales transactions. This encompasses steering prospective buyers or tenants away from specific neighborhoods or properties based on their protected characteristics. Can't do that, folks. Number 3, financing. Lenders must refrain from discriminating against buyers based on protected characteristics when extending financing for housing purchases or rentals. Terms and conditions. All individuals must receive identical terms terms and conditions for renting or purchasing a property, irrespective of their protected status. Next, reasonable accommodations. Landlords and sellers are obligated to provide reasonable accommodations for individuals with disabilities to ensure that they have equal access to housing opportunities. Potential pitfalls. Here are some potential pitfalls for sellers considering selling for sale by owner. Despite the allure of saving on real estate commissions, FSBO seller sellers may unwittingly find themselves entangled in fair housing law violations. Without the guidance of a seasoned real estate professional, FSBO sellers might inadvertently indulge in discriminatory practices. Here are some examples of potential pitfalls. Number 1, discriminatory advertising. In 2019, a Michigan landlord faced legal action after posting an advertisement stating a preference for Christian tenants only. Such language suggested discrimination based on religion, violating Fair Housing Act laws. Number 2, selective property showings. A FSBO seller in Grand Rapids, Michigan recently faced backlash for refusing to show their property to African American prospective buyers, citing fabricated reasons. This discriminatory behavior resulted in public scrutiny and legal consequences. Next, unequal treatment. Verdell and Julie Franklin, an interracial couple, visited a house in Hamburg Township, Michigan. They later filed a federal lawsuit alleging discrimination against the real estate agents involved. So it's not just FSBO sellers.

Real estate agents can get themselves in hot water here too. Another reason why you want to make sure you're dealing with an agent that has a certain level of sophistication. Okay, just plain and simple.

The lawsuit claims that Mary Kay Eikens, the listing agent, showed biased behavior during the property showings, demonstrating no interest in the Franklins as potential buyers. Ikins allegedly disregarded their offer and misled them about the property's selling conditions, including a higher sales price and cash-only terms, which were not disclosed in the listing. The lawsuit also implicates the listing agent's employer for refusing to present the Franklins' offer to the homeowners due to their race. The house was later sold to a white buyer at the same offer price furnished by a mortgage loan and with the option for an inspection, contradicting the terms that were conveyed to the Franklins. The lawsuit seeks accountability for these discriminatory practices and highlights the importance of recognizing and addressing discrimination. So how do you protect yourself as a for sale by owner seller to make sure that you steer clear of inadvertent fair housing law violations? FSBO sellers should adopt a proactive approach. Number 1, educate yourself. Thoroughly acquaint yourself with fair housing laws at the federal and state levels to grasp your obligations and avoid discriminatory practices. Number 2, use inclusive language. Scrutinize your property listings and advertisements to ensure that they are devoid of language that could be construed as discriminatory or exclusionary. Number 3, treat all buyers equally. Extend equal access to property showings and treat all prospective buyers or tenants with fairness and respect, irrespective of their background. Number 4, accommodate disabilities. Exhibit willingness to entertain and accommodate reasonable requests or modifications or accommodations from individuals with disabilities. Number 5, seek professional guidance. Consider consulting with a real estate attorney or tapping into the expertise of a seasoned real estate professional to navigate the legal complexities and ensure compliance with Fair Housing Act laws.

One other little tidbit that's really, really often used in our market here locally in the greater Traverse City area are what's called love letters from buyers.

This is a strategy used in a competitive seller's market when there are too many buyers and not enough homes for sale. It's an attempt that buyers use to get a leg up on the competition.

And in so doing, many buyers will write what's called a love letter to the seller.

These letters are designed to pull on the heartstrings of the seller and often include personal information about the buyer and how they'll treat the, the property going forward. But it's— it includes personal information about the buyer in an attempt to create a connection between the buyer and seller. I have a section in my listing agreement when I sit down to represent a seller, and we're going look at listing their property for sale, I have a section in that listing agreement that specifically addresses these buyer love letters, and I always advise clients not to receive them, that I should withhold those.

I never like withholding information from my clients, but this is an exception to that because I think it provides them a layer of protection against a Fair Housing Act claim, against the possibility. Certainly it would be very, very rare to have a claim, a Fair Housing Act claim, but it's also rare to get killed in a car accident and people buy life insurance, right? So why not buy yourself some insurance and just not receive these buyer love letters? Okay, now why would a buyer love letter put you at risk for a claim of discrimination or a claim of violating Fair Housing Act laws?

Well, here's why.

Imagine you're in a multiple offer situation and you receive a buyer love letter from one buyer and they're telling you all about their family, their kids, where they're from, all of that sort of thing.

And then you have several other buyers who missed out. You choose this buyer partially because of the love letter that they sent you, and you kind of fell in love with their story. Well, there could be something in here that could have led to a biased decision, and it could have led to a biased decision against one of these other buyers who may be one a buyer that's in one of those protected classes as identified in the Fair Housing Act laws. So there's a potential that you could be exposing yourself to a future claim of having violated Fair Housing Act laws.

So that's my advice. That's why I say to my sellers, better to not receive those love letters.

I still have had some sellers, they really want to receive them, but at least they go into it eyes wide open knowing that they're exposing themselves to the potential for that. And I agree with them that I think the chances are very, very low.

But once again, as I mentioned earlier, the chances of me getting killed in a car accident are very low, but I buy life insurance.

In conclusion, Fair Housing Act laws serve as guardians of equality and champions against discrimination in the housing market. Whether you're a real estate professional like me or a FSBO seller in Michigan, adhering to these laws is imperative to shield yourself from legal liabilities and to maintain ethical standards. It also is just doing the right thing, really. By mastering these nuances of Fair Housing Act regulations and taking proactive measures to comply with them, you can contribute to fostering a more inclusive and equitable real estate industry for all. Thanks for tuning in. If you have a specific question about real estate, whether it's related Fair Housing Act laws, or any other thing related to real estate, leave it in the comments. Leave your question in the comments. I'll answer it right here on the channel. I answer your specific questions about real estate. If you're interested in learning more as I create more content about real estate and also highlight all, uh, that our great area, uh, the Greater Traverse City, uh, Michigan area has to offer consider subscribing to the channel. All right, thanks so much, appreciate it. I'm Sander Scott, your full-service realtor, and we'll see you at the next video.