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Real Estate Redlining: What to Do If You’re Facing Discrimination When Buying or Selling a Home

Racial discrimination and redlining may be illegal, but it is unfortunately still alive and well in California. The documentary “Our America: Lowballed” highlighted how homebuyers and sellers still face severe racial discrimination in real estate even in supposedly accepting areas like San Francisco. 

The documentary focused on Paul and Tenisha Austin, a Black couple living in San Francisco who were attempting to sell their home. They bought the house for just under $900,000 and invested $400,000 into the property in 2020, renovating and adding to the structure. In 2021, they had the property appraised in preparation for selling it. However, the older white appraiser who visited their property declared it was only worth $989,000, significantly lower than they knew it should be worth.

That’s when the couple took drastic action. They “whitewashed” the house, removing family photos and cultural objects that could indicate they were Black, and had a white friend step in to show the house in their place. The result was significantly better: the new appraiser determined that the home was worth $1,482,000, almost a half-million dollars more than the previous appraisal a month prior. 

This is just one example of an all-too-common practice. Racist real estate professionals continue to discriminate against homebuyers and sellers, despite laws against it. This modern-day redlining can make it significantly harder for non-white consumers to invest in property. 

What Is Redlining?

The term “redlining” comes from the historical practice of segregating neighborhoods by race. Neighborhood and city plans would have bright red lines indicating where people of color could buy a property and where they could not. Redlining kept Black and other non-white people segregated from white neighborhoods, schools, and communities by keeping them physically separated. 

In addition, it encouraged biased officials to disregard maintenance and safety needs in non-white communities, preventing people of color from accessing housing in safe and secure neighborhoods, even if they could afford to buy there. 

Today, official redlining is illegal, but does it still happen? Unofficially, yes, due to individual professionals’ biases. That’s why consumers have legal protections against discriminatory housing practices. If your right to fair housing has been violated because of your race, you may be able to take legal action. 

Consumer Rights in Real Estate Purchases

To stamp out the practice of redlining, the federal government instituted the Fair Housing Act in 1968. This Act protects consumers by banning landlords, real estate companies, municipalities, and other organizations involved in the industry from discriminating against sellers or buyers based on their race, religion, gender, or other protected class. Under the law, real estate professionals cannot make decisions, overcharge people, lie about housing availability, or deny housing in part or full based on a protected status. 

Furthermore, lenders and other financial institutions are barred from making decisions about a consumer’s creditworthiness based on race by the Equal Credit Opportunity Act. This Act protects every person’s right to receive credit and loans according to their financial history, not their demographics. It also applies to home appraisers, barring them from overvaluing a property to prevent someone of a certain race from buying or undervaluing it because of the owner’s race. 

These two laws make racial housing discrimination illegal nationwide. However, it still happens, not just to low-income people without the resources to defend themselves. As the Austins’ example shows, housing discrimination can occur even in the top income brackets. It can cost victims their dream homes or hundreds of thousands of dollars when it does. Other examples of housing discrimination motivated by race include:

  • Refusing to offer you a loan despite good credit
  • Restricting you to higher interest rate mortgages despite your credit
  • Failing to inform you about relevant offers and programs on the assumption that you do not qualify because of your race
  • Steering you toward specific properties or neighborhoods and away from others
  • Refusing to sell you a property because of your race
  • Lying about whether a property is on sale

How to Hold Real Estate Professionals Accountable for Discrimination

You have the right to pursue legal action if you have been discriminated against for your race while trying to purchase or sell a home. You may be eligible to receive compensation for your losses, such as the cost of hiring additional appraisers, the extra interest you paid due to discriminatory loan policies, and other fees caused by biased actions. 

If you want to do so, you must prepare your case. Here’s how:

  • Consult with an experienced consumer rights and credit attorney. Racial discrimination in real estate is a complex issue. Depending on how you were discriminated against, the correct way to move forward can vary significantly. Your attorney will advise you on the next steps for your claim. 
  • Collect evidence for your case. This can range from collecting communications demonstrating bias to getting another appraisal as the Austins did. Your attorney will help you gather the evidence you need for a strong case. 
  • File a complaint with the organization. In some cases, you may be able to resolve discrimination simply by bringing it up to the organization. You can discuss whether this will be effective with your lawyer. 
  • Notify the appropriate government agency. If you faced discrimination from a financial institution, you might need to file a report with the Federal Trade Commission or the Consumer Financial Protection Bureau. Your attorney will help you identify the correct path forward.
  • File a lawsuit. Finally, your attorney will help you take the case to court to receive compensation for your losses.

At the Law Offices of Todd M. Friedman, we are proud to offer proven legal representation for consumer real estate discrimination. We provide aggressive advocacy for our clients to ensure they receive justice, fair treatment, and compensation for their losses. Reach out to our expert Equal Credit Opportunity Act attorneys to discuss your case and learn more about how we can help you fight against discriminatory lending practices that deny you fair participation in the housing market.