Is the Real Estate Industry Serious About Race?

Every American of good conscience is hurting now, both from the evil of police brutality and the evil of looting and rioting. I have been silently seething because I felt I had nothing useful to add that literally everyone with a conscience agrees on. What happened to George Floyd was a shocking and horrifying murder perpetrated by bad cops. Protest is not only justified, it is warranted. Everyone of every color, creed, and background supports the protestors. The entire country was united.

But what is happening in our cities today is a display of criminality taking advantage of the rightfully angry protestors to burn, destroy and loot innocent businesses and to attack, beat, and even kill people who had nothing whatsoever to do with Floyd’s death. Protestors want meaningful reforms; criminals just want free shit and to destroy stuff. Again, not a single person of good conscience thinks that is anything other than evil.

If you justify the looting and the violence as clearly evidenced above, then I honestly don’t care what you think. Legitimate protestors are not these vile criminals. These vile criminals are not legitimate protestors, who are marching and chanting, not taking hammers to store windows and tearing down boarded up storefronts.

These are wider societal issues, and there are plenty of other venues, plenty of other people, and plenty of other organizations to examine those issues, debate causes and solutions, then bring the country together for a way forward. I am hopeful and optimistic that when sanity returns, we will do just that, through dialogue, debate, and yes, elections.

However, I talk and write about the residential real estate industry in North America, primarily the United States. And in recent days, we have seen just about every leader of every organization in real estate, from large national franchises to small indie brokerages to REALTOR Associations and tech companies issue statements about race and real estate. We have seen individual REALTORS posting all over social media about how they’re hurting, how they’re horrified, and how they pledge to listen, to stand up, and to do something.

Words, So Many Words

There is no shortage of all of the lofty statements being issued left and right by every leader in just about every significant real estate company and organization. Inman ran an entire story about real estate leaders speaking out against racism. Race was definitely a conversation topic with many of the general session conversations at the recent virtual Inman Connect Now event.

You should go read these statements, because they seem heartfelt and genuine. Knowing many of the leaders who made them, I have little doubt that they personally feel anguished and are motivated to do something about the problem of racism.

I think that’s nice. I think it’s good that people in real estate are feeling motivated to do something about racial issues. But it’s only nice, instead of great, because I am having some trouble taking these well-intentioned words seriously. It’s a terrible thing to have to wonder if the industry I have dedicated my career to will actually do something about racism beyond issuing statements and reciting feel-good platitudes.

Why am I so cynical?

Show Me the Money

Just about every real estate company is posting all over social media, and issuing solemn statements, saying “Racism Has No Home Here.”

That’s a good sentiment, you guys, but… did we all forget that the Newsday Investigation in Long Island was in November of not 1935 or 1963 but just the end of last year?

The Newsday Long Island Divided story should have rudely awakened all of us to the fact that systemic racism still exists in real estate. There’s just no getting around it. You cannot possibly watch this hidden camera footage from Newsday and think otherwise. Since I can’t embed that video, I’ll embed this one from Metrofocus:

 

Did we suddenly develop amnesia about the fact that only ONE of 68 real estate brokers and agents “invited” to testify at the New York State Senate hearing showed up? Kudos to Ryan Gorman of Realogy for showing up then.

Do you remember how the NY Senate was forced to subpoena the remaining brokers and agents to compel testimony?

Are we to simply forget that many brokers and agents across the industry thought the Newsday story was a crock of horseshit, and said so loudly and proudly all over social media?

Coronavirus put all of that on the back burner, of course, but some of us haven’t forgotten. I can’t forget, because the existence of racism in New York — not usually portrayed by our media as the racist redneck South — in 2020, not in 1960, is personal for me.

So forgive me if I don’t really believe some companies when they’re busy spouting platitudes. For example, when I read words like this from The Real Deal:

Douglas Elliman, with some 7,000 agents around the country, issued its own call to action. “Our hope is that we channel our deep anger, frustration and despair into collective and production action,” executives wrote in an email Monday. “Each of us has our own strength to add to the solution: March. Donate. Vote. We can all help make a difference.”

I can’t forget that this is the same Douglas Elliman who was saying mere months ago:

“Newsday’s report is an unreliable, unethical, and unscientific attempt to create a news story where there is none,” a representative for the firm said at the time. The person noted that the firm has a mandatory agent training program that covers fair housing law, as well as a “zero tolerance policy” toward unfair and illegal treatment of any individual or group.

Let me further note at at the time of this writing, all five Douglas Elliman agents who were named in the Newsday study remain employed by Douglas Elliman.

A sixth, Kevin Geddie, had already moved from Douglas Elliman to Compass back when I wrote the first post. (And yes, he remains employed at Compass.)

In the first post, I noted:

Douglas Elliman made a number of responses to Newsday through its attorney. However, we find this statement when discussing Kevin Geddie: “Douglas Elliman lawyer Rosenberg wrote that Geddie’s remarks “are inconsistent with Douglas Elliman policies and applicable law, and are not tolerated. Had Douglas Elliman been informed of such remarks at the time they were made, Douglas Elliman would have taken immediate and appropriate corrective disciplinary action.”

Seeing as how not only the five remain employed by Douglas Elliman, but that one of the other 34 agents, Rosalind “Roz” Resnick, now works for Douglas Elliman… color me skeptical about “immediate and appropriate corrective disciplinary action.”

Tell me more about this deep anger, frustration and despair. March. Donate. Vote. But let go of an agent who has engaged in racial steering on video? Refuse to recruit an agent who did? Well, I guess that’s a step too far, right?

Irony alert: the title of the first Real Deal article is ““Not just lip service:” Real estate promises change following George Floyd’s death.

What about all of the other companies named in the Newsday story? I went and double checked. You are welcome to go fact-check my research. Let’s go through them:

In summary, out of the 34 agents busted by Newsday, a grand total of ONE is no longer in real estate. One went independent, and two moved brokerages, but remain licensed.

I do not know whether the 33 agents who remain licensed also remain as REALTORS in good standing. That’s a question for NAR, NYSAR, and LIBOR. Anytime you guys want to provide some answers, inquiring minds want to know.

When the real estate industry can’t even deal with agents within its own ranks who were caught on video for the world to see engaging in racial discrimination, all of the platitudes about listening and caring and should, must and will do more all ring extremely hollow.

When companies are making recommendations about voting, donating to black organizations, are telling the world that they are absolutely, unequivocally against racism of any kind, and proudly posting #BlackLivesMatters all over… but they can’t take action against real estate agents caught on camera engaging in exactly the kind of discrimination and racial steering that protestors on the street are outraged about… I’m sorry, I can’t take them seriously.

So, this is an easy and simple thing for real estate companies who are talking the talk to be taken seriously: fire those agents who have engaged in racist behavior, or publish your findings from investigations that show why they had not actually engaged in discrimination, unequal treatment, and racial steering.

If you can’t even do this obvious thing, then honestly, don’t tell the rest of us what to do about race and race relations in America.

Let me also speak to some of the important non-brokerage companies in our space. I’m thinking specifically of the portals, who are so incredibly important to buyers. After all, buyers go to the internet to start their home search process. So it is the portals who often connect buyers to real estate agents, telling buyers to trust these individuals.

Stephanie Giordano not only has a profile on Zillow, she is a Zillow Premier Agent with 4.7 stars:

She has a profile on Realtor.com and on Homes.com as well.

Portals have a special responsibility to make sure that agents they are putting in front of consumers are not engaging in shady-ass behavior.

Read the Newsday investigation of exactly what Stephanie Giordano did, then explain to me how Zillow and Realtor.com and Homes.com continue to promote her to consumers who might not be aware.

I did not look for profiles of the other 33 agents in the Newsday investigation, but feel free to look for yourself. Zillow, Realtor.com and Homes can either refuse to connect consumers to agents who have done things like this, or they can tell us what their investigations revealed to explain what appears to be obvious racial steering.

Sunny tells me all the time: Talk is cheap; production is expensive.

Don’t just tell me you love black people; show me the money.

Publish Your Company Demographics

I lean far more towards MLK, Jr. than I do the current crop of race-conscious activists, as I believe in that whole “content of their character, rather than the color of their skin” thing. As an Asian-American, neither white nor black, but all American, that’s become more important to me as I’ve gotten older.

Having said that, if we’re going down this path of being aware of race and ethnicity, then there is something that all real estate organizations need to do: publish your demographics.

Glenn Kelman at Redfin has been harping on racial inequality for some time now. I don’t agree with his take on much of it, because I am anti-tribalism, but I do respect the fact that Redfin actually publishes what their company makeup is. And this is not some new thing for Redfin. They’ve been doing it since 2015. Here’s an update post from 2016, with this helpful chart:

Redfin goes on to tell us some more details:

Redfin’s field organization is 77% white; the National Association of Realtors is 85% white. Only 1% of U.S. Realtors are black, compared to 6% of Redfin agents. In an industry that’s always recruiting new agents, the pool of untapped talent is massive.

And critically, Redfin breaks out the race and ethnicity breakdown by department and for management:

Given this history, I believe Kelman is 100% sincere when he says in his most recent blogpost called “It’s Not Enough“:

What’s behind the protests’ rage and despair is the sense that talk is cheap, and change is painfully slow. We love to denounce someone else’s racism, but it would matter more if businesses looked at our own contribution to a divided America and decided what to do about it.

The most obvious thing is hiring and developing more people of color to positions of power. We say that we believe talent is equally distributed between people of different races, but most businesses, including Redfin, are run mostly by white people. Changing that can’t be the only priority of a CEO, but it has to be one of our top priorities, now, and long after the protests are over.

Again, as someone who isn’t white, I have some issues with diversity hiring, but that’s a whole different massive issue. What I can say is that if you’re going to talk diversity, you need to do like Redfin has done all these years and start publishing your demographics.

So when Keller Williams says they’re convening a task force to look at diversity within Keller Williams, that’s a wonderful step forward. But start by publishing what Keller Williams looks like today, both in the field, at corporate, by departments, and by management.

I mean, we can already tell that the senior leadership at Keller Williams is lily white:

Scroll down that page and see for yourself. But maybe there are dozens of managers a level or two beneath them who are not white. The only one I can see is Sajag Patel, but that’s because KW has not published its demographics. Disclose your current makeup.

Same goes for every company whose CEO has issued a statement about race and ethnicity and diversity in recent weeks. If you want the rest of us to think you’re doing more than posturing, start by publishing data on your own company’s makeup today.

I understand this is hard to do. It’s simple, but difficult, because it opens you and your organization up to criticism. But if you want to be taken seriously at the race-conscious diversity thing, you’re going to have to be transparent about where you are today.

Here, I’ll start: here at 7DS Associates, 100% of the staff, management, and ownership is Asian-American.

It isn’t only the companies that need to do this. If your REALTOR Association, or your MLS, has issued some kind of public statement about race, inclusiveness, diversity, and so on, then you too need to follow Redfin’s lead and start being transparent about what your people look like today.

For example, we get this statement from Vince Malta, President of NAR:

As longtime champions of fair housing, equality and inclusion are among NAR’s most cherished values. NAR is committed to leading the way on policies that address racial injustice and that build safe and inclusive communities. Building the future begins with equal access to housing and opportunity for all.

We appreciate all you do as REALTORS® to listen, learn, and work with others to be a part of the solution. As leaders in your communities, America’s 1.4 million REALTORS® are active participants in promoting equality, inclusion, and acceptance. We welcome your input and thoughts on how we can improve our communities together.

If NAR wants to be taken seriously about “equality and inclusion” it too needs to publish demographics of its staff and of its leadership. It already publishes the demographics of the REALTOR membership, which is how we know that 5% of REALTORS were black (in 2017).

We already know that the Leadership Team has one Latina (Mabel Guzman) on it, and that the Senior VP ranks have one Asian-American (Lawrence Yun) in it.

That’s not a great look, but maybe there are legions of people beneath the SVP level at NAR who are not white. Tell us. Publish your demographics.

It’s not just NAR. State and Local Association leaders have been speaking out over the issue of race and diversity. “Racism Has No Home Here” is a popular meme in REALTOR circles right now. I can easily Google to find dozens, hundreds, of State and local REALTOR Associations issuing statements about fighting racism, promoting equality, and so on and so forth. If you are a REALTOR reading this, I am 100% certain that your local or State Association has issued a statement; go check.

Well, y’all need to publish the demographics of the State and local REALTOR Association staff, management, and leadership. Y’all need to publish the demographics of your REALTOR members. And y’all need to start publishing disciplinary actions taken against REALTORS who have engaged in racial steering, discrimination, and other actions that further systemic racism.

Hard to Write, Harder to Do

This post was not easy to write. For a lot of reasons.

The residential real estate industry is where I have spent my life and career for well over a decade. I chose to do that, instead of practicing law or joining some tech startup, because of the people in real estate. Most of the brokers, agents, MLS executives, REALTOR Association leaders, and tech company founders are some of the nicest, most genuine, most human, salt-of-the-earth people I have ever met. Many are people I am proud to count as my friends.

Despite some of its flaws, the real estate industry really does help everyday Americans achieve their dreams of homeownership. Could we improve? Of course we can. But we really do a fantastic job, on the whole.

The last thing I want to be doing is writing about painful, divisive issues like race in 2020. I’d much rather be writing about MLS issues, or brokerage models, or technology changes to improve digital closings, or whatever else other than these deep social issues.

And as an Asian-American, neither black nor white so somehow an afterthought in the struggle against racism and discrimination, I truly have become more and more of a believer in MLK Jr’s “content of their character, not the color of their skin” philosophy.

But you know, I can’t remain silent on this issue. I will fight my cynicism on this, and choose to believe that leaders of real estate companies and organizations are serious when they say that current events force a real re-evaluation of their policies, and say that change must happen, and that they will do something about this issue.

Fine, I believe you. You love black people. Now, show me the money.

I understand 110% that doing the above is difficult. They might be simple, but they open companies up to criticism from the outside. I get that. Nobody wants to be vulnerable to criticism, and open to Twitter mobs and such. I get it.

But if we can’t do the simple (but difficult) things like policing our own to ensure that bad actors are not continuing to be put in front of consumers, or being transparent about where we are as an industry when it comes to race, then I’m sorry but there’s no way in hell that we’re going to do the much, much harder things like dealing with underlying causes of systemic racism in real estate.

I’ll turn to those next, in case we as an industry are serious about eliminating systemic racism in this great country of ours… because most of the systemic racism, it turns out, comes from housing.

But this got long, as is my wont, so I’ll deal with those topics in a future post.

Let me leave you with another Sunnyism: Do what you say you’re gonna do. That applies in the day to day practice of real estate, and it applies to grand, big social issues like race and real estate.

You love black people. Show me the money.

-rsh

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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

6 thoughts on “Is the Real Estate Industry Serious About Race?”

  1. Rob, I applaud your post. While I haven’t posted anything let me be the first to respond to your post. MARIS is 100% white. Over the last two years we’ve made two non-white hires. One didn’t work out and the other is now a rock star at REMINE.

    I will hire the best person for every position regardless of color, but I always look at diversity as a positive.

    Keep preaching, the world, real estate industry, and the individual (including me) must grow or this time will look just like last time, until next time.

  2. Bravo Rob. I had posted the Newsday article in a local Facebook group and one Realtor asked why I posted it as they (Realtors) work hard (she thought I was putting down Realtors). I was putting down the complicit behavior.

    Here are my thoughts: Racism also starts at the top! Why do brokerages always get a pass? Why does NAR always give brokerages a pass? For all the traditional brokerages (can I get my hands on those leaked Corcoran contracts?) do you think the splits in agents contracts would show a disparity when comparing white men v. women of color split pay? Do you think their splits would be different if they had around the same volume? Racism and equality does not end on the street. Many equal pay laws allow employees to talk about pay. I’m part of Generation X. I was taught not to discuss pay as it’s tacky and unethical. But times have changed. How will agents change the discrimination if they don’t discuss equality in their own house (brokerage); and I am referring to brokerages who aren’t transparent and have “split schedules”. Do real estate execs get a pass? We all know those split schedules are BS (this excludes firms which have a min. split for all). Majority of the time these split schedules are not trade secrets but used simply for claw backs. Take for example Coldwell Banker (yes I am calling them out). How many agents are actually on their split schedule? It’s not a competitive schedule and therefore the information floated to competitors isn’t worth the piece of paper it is written on (worthless to another company). Take for example some of Realogy’s past non-compete and trade secret litigation. The court docs recently mentioned a manager knew of splits. So many agents are on their own secret confidential split. And it’s time for the industry to call this out- bc it’s bull shit. We should all be asking how are splits determined and is there inequality in this process? If firms are going to use clawbacks and non-competes to keep a 1099 in place than they better be lawful in their practices. Or is it the white men who stomp the loudest v. a women of color who stomps the loudest? I would be willing to bet the house the data would show a system of racism in split pay by these traditional brokerages. Numbers don’t lie. I would also be willing to bet men have higher splits than women.

    Here is NY’s new law that went into effect this year: “In practice, this means that independent contractors may now pursue claims of workplace discrimination, harassment, and retaliation under the NYSHRL. This change is particularly impactful when considered in conjunction with the recently lowered standard for proving claims of harassment.”
    Source: https://www.employmentlawwatch.com/2020/01/articles/employment-us/new-york-state-and-city-expand-human-rights-law-protections-to-freelancers-and-independent-contractors/

    NYC takes it a step further: “the New York City Council recently amended the New York City Human Rights Law (NYCHRL) to make clear that independent contractors are entitled to the same anti-discrimination protections as traditional employees.”

    My recommendation to NYC agents….talk away about those splits. Why should brokerages get a pass on “confidentiality” pay data which would likely (in my opinion) show widespread discrimination and inequality. Think about it. Why do they want to keep it confidential? Because the data would show those agents how are the biggest pain in the asses errr I mean negotiate the best, have the highest splits.
    What other industry takes it to this level?

    A trade secret is information a competitor has gained and used to create an unfair advantage. So why are agents being bullied and told their splits are so-called “confidential”. I’m calling it like I see it. It’s because the broker doesn’t want to give another agent a split raise. If you listen to Realogy’s earning calls, splits are often talked about being too high. Analysts often ask Realogy execs what they are doing about those high splits.

    Those who don’t demand a split raise get paid less. And to be clear about confidential trade secrets: “The plaintiff must also be able to show that the disclosure of the secret information could cause irreparable harm that it would not be possible to remedy after the disclosure is made. The irreparable harm that the plaintiff would likely suffer must be greater than the infringement of the defendant’s rights that occurs as a result of the injunction.”
    Reference: https://www.bc-llp.com/need-prove-get-injunction-trade-secrets-case/

    Here is what my state says for employees (it’s to be debated whether agents are covered under this law–yes I asked the state).

    “Employee wage discussions: Employees cannot be prohibited from discussing either their own wages or their coworkers’ wages, or from disclosing wage information to any person. The MEPA prohibits employers from contracting with employees to prevent them from discussing or disclosing wages. Employers cannot require an employee to keep his or her wages confidential in an offer letter, employment contract, nondisclosure agreement, employee handbook or similar document.”

    I pulled it from this article: “Employers have responsibility to ensure pay equity”:
    https://www.mma.org/employers-have-responsibility-to-ensure-pay-equity/#:~:text=Employers%20under%20the%20law%20cannot,working%20conditions.%E2%80%9D%20The%20statute%20also

    So my entire point of writing this post. Transparency stomps out racism and inequality. Time for Brokerages to get with #2020. Time for NAR to call out the leaders and not just agents. Maybe a time for split schedules to be burned and call it what it is. A useless schedule to create clawbacks and systematic inequality. What % of agents are on the schedule? If I were to bet I would say 15%. And I’m being generous.
    PS. Sorry for any grammatical errors, I don’t have time to proof read (and I’m not the best writer).

    • PS. This is what Authors are doing (trending on Twitter this AM). “Authors release their figures to illustrate pay disparities in the industry. Using the hashtag #PublishingPaidMe, Roxane Gay, John Scalzi and more writers lifted the lid on their rates from debut to now, highlighting an apparent disparity in pay between non-Black and Black authors.

      https://twitter.com/i/events/1269446701347074048?s=13

      So why aren’t agents doing the same? (again agents who work at Traditional firms where it’s a “negotiate your own split” type of deal). How is it that agents aren’t tired of having to go through the dog and pony show of having to hold out to get the split they deserve? How is it that other agents are not resentful because it’s not in their style to be that type of worker (bc lets face it, in other industries they don’t put up with it).

      Transparency breeds equality. Transparency breeds equality. Transparency breeds equality. Transparency breeds equality. Transparency breeds equality

  3. Thank You Rob, for bringing this back to the forefront. I understand that NY STATE agencies will be looking into this and hopefully enforcing laws. The question is which brokerages and portals will lead the way in stopping this behavior; firing agents who’ve clearly broken the law, do ongoing training and random internal secret shopping that catches Agents in the act, removing profiles of agents who’ve been found to have broken fair housing laws (the portals have agent terms of use that need to be enforced). Who’s going to lead?

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