By: Tezeta Roro
Though fair housing has become a hot topic in recent years, it has always been an important aspect of the real estate industry. It’s true that some states requre continuing education on fair housing, but the reality is that many do not, even with renewed interest and emphasis on the Fair Housing Act. And for the states that do require it, are agents equipped with practical tools on how to meaningfully make a positive impact in our industry?
The reality is that fair housing has always been an issue. The ramifications of historic factors like redlining and discriminatory lending practices are still felt today. Add in the current affordability and inventory crises, and it will take every industry professional’s consistent dedication to fair housing to make it a reality.
SECTION 8 Rental Assitance
If the ongoing pandemic has taught us anything in the real estate world, it is that things can change in an instant. While many renters could not pay their monthly rent during the worst months of the COVID-19 outbreak, in many cases, landlords who rented to Section 8 voucher holders continued to receive all or most of their rent payments. The government-subsidized program provided stability in uncertain times and continues to do so.
Unfortunately, much of the general public still holds a stereotypical view of those who receive Section 8. The general and incorrect sentiment is that Section 8 is “a handout” for people who do not want to work. The reality though, is that Section 8 is a valuable resource for those who are disabled, elderly, or for people who make under a certain percentage of their area’s median income.
The truth is that most recipients are hard workers who take pride in their homes and maintain the rental property well. The program is outlined with stiff stipulations—like maintaining the home and adhering to the lease agreement—to ensure that recipients remain in good standing with landlords. Doing so violates a protected class whose voucher counts as lawful income. Section 8 can be the catalyst for stable housing for an elderly or disabled person, and it’s also a source of potential upward mobility for someone getting on their feet. In short, Section 8 is a valuable resource when it comes to the implementation of fair housing.
Landlords and real estate professionals must also understand the laws and regulations around Section 8, which can vary from state to state. In some states like New Jersey, landlords or agents cannot discourage Section 8 recipients from applying for rental properties.
So what can we do as real estate professionals in this space?
- Shift your mindset. It all starts internally. All renters, regardless of their source of income, whether it be from a job or a voucher, deserve to be treated equally. Learn more about the Section 8 program in your area and who it helps. Find out more about
- Educate yourself. Section 8 might be a federally-funded program, but its application process, rules and stipulations vary from place to place. It’s important to understand how this housing subsidy works in your area to best inform your clients. Find out how Section 8 works in your community. Learn about the various local resources that help people apply for the program.
- Educate your clients. Part of our job, once we understand the Section 8 program and how it works, is to teach landlords about the benefits of renting to voucher holders. Similarly, it’s also our job to teach landlords the importance of treating rental applications fairly. In many cases, once a landlord sees the value in renting to someone with a voucher, they’ll often partner with the local housing authority and advocates, which benefits all involved.
- Educate renters on their rights. When working with or interacting with tenants, we can educate them on their rights and how to approach landlords and listings. Every time I get a call from someone who asks if my listing accepts Section 8, I use it as an opportunity to educate that potential tenant on their rights.
Over the past few years, the real estate market has shown us that some sellers, some lenders and even some real estate professionals give preferential treatment to conventional mortgages and cash buyers, which puts potential buyers with FHA loans at a disadvantage.
It is important as practitioners to clearly understand the pros and cons of mortgage products and how to position our clients to win. Every client has different needs, and their appetite for risk varies as well. However, we can equip clients with strategies and tools so they can decide what works for them. We can help ensure that FHA buyers remain competitive.
For example, covering lender-required repairs, getting a loan pre-underwritten and limiting inspections to structural items can make the difference for buyers. Depending on assets, finding ways to be creative with a down payment amount to cover appraisal gaps, which are still happening in many parts of the country, may also be advantageous. We are responsible to our clients, no matter which side of the transaction they’re on.
As buyer agents, we must equip our clients with these tools and help them remain competitive. As listing agents, we are responsible for objectively advising our clients so that we do not violate any fair housing regulations. In turn, we’re keeping our commitment to fair housing and helping make the marketplace more equitable.
FHA Condo Approval
Taking the FHA component a step further, condos and townhomes not FHA approved become out of reach for buyers. Even though there are spot approvals for individual units, the time and effort it takes often discourages all parties involved, particularly when there may be offers with mortgage products that are easier to navigate come through.
So what can we do here? We can partner with condo communities to help them get approved for FHA. I recently helped an 80-unit condo get approved to accept FHA mortgages, opening up the pool of available homes for buyers with these loans.
Here’s what I know about FHA status:
There are mortgage companies and professionals, property managers, association board members and consultants who are all eligible to file the FHA approval application for condos and townhomes. It’s a matter of identifying those people and helping them understand what’s possible.
The process is refreshingly quick so long as the application and supporting documents are submitted on time and with the cooperation of the management company or association. The last approval I worked on took about a week including a long holiday!
These approvals are good for three years. After that, a renewal application, which is much less time-consuming than the original application, can be filed starting six months before expiration and up through six months after expiration.
Wondering if condo buildings in your area are FHA-approved? Here is where you can look up the information. The U.S. Department of Housing and Urban Development makes the information readily available.
A commitment to fair housing means learning all you can about the various ways in which you can make a difference for buyers and renters. Here are some action items to consider:
- Be Familiar with Section 8 and other rent assistance vouchers in your market so you can support both tenants and landlords.
- Connect with your mortgage partners to strengthen an FHA client’s buying power to compete in the market.
- Look up condo and townhouse communities in your market and check their FHA approval status, and work on getting them approved.
As industry professionals on the front lines of the housing market, we occupy a unique space and have the power to help create change and make fair housing a reality. Want to connect? Reach out and let’s talk fair housing!
Tezeta “Tez” Roro is a mom, a PTA leader and a community builder. She is a full-time practitioner licensed in New Jersey who is deeply engaged in her community. After a 12-year career in the corporate world, Tez entered the real estate profession as a result of her own home buying experience and thus has a great deal of empathy and understanding for the home buying and selling process. Her mission is to provide a real estate experience where each of her clients make informed and confident decisions.
Good article. In this market, it is hard to compete with cash or conventional loans where buyers are waiving inspections and making appraisal contingency. Buyers using FHA loans have a hard time competing with that. Also, you never know when the appraiser is going to require repairs for an FHA loan. Also, no one should be discriminated against for source of funds. Section 8 does pay a large portion of the rent and the landlord is assured of that coming in on time but also Section 8 Assistance requires an inspection of the property being rented and some landlords–let’s face it don’t want to keep things up! Tez, thank you for the article.