How To Protect Yourself From Real Estate Discrimination

Here's what you need to know to protect yourself from racial bias when selling your house.

Investing in the real estate market is a proven gateway to building intergenerational wealth and closing the wealth gap for all Canadians. But when it’s time to sell, what if something like inherent bias ends up influencing a buyer’s decision to buy your home or not? Here’s what you need to know to protect yourself when selling your house.

Discrimination and Racism in the Real Estate Market

Canada’s long history is riddled with discrimination and racism in its real estate practices that pre-date the 1960s. From the way the country has treated the Indigenous, Japanese, the African Canadian Community and other ethnic groups, it’s clear we had some problems. Luckily, reform has happened since these practices first emerged. 

As a multi-ethnic society, we’ve all descended upon this great country with hopes and dreams for a greater future. Unfortunately, we’ve also brought along and learned while raised here some practices of toxic-racial bias or perhaps racist points of view. These have become deeply entrenched in our belief system, and how we operate and judge one another. Such bias can show up while selling your home, and racism and bias can impact your bottom line.

What Role do Realtors Play in This?

A realtor’s job is to protect sellers in the event that you do encounter a buyer who is racially biased. Realtors are trained to be cognizant of how that bias may impact their perception, or their perceived value of the property. 

As a seller, especially in this market, you want the highest possible sale price…but how your home is presented can leave clues, revealing your cultural and ethnic identity. There’s a reason why it’s recommended that you ‘neutralize your home’. This means removing distracting décor and personal belongings that hint at ethnic background. This doesn’t just make the home more presentable and marketable, but also helps to conceal the identity of clients. This makes it harder for a racist or biased person to exercise their prejudice.

How do you Neutralize a Property?

A few things you can do to make your property more neutral are:

  • Painting your home using a neutral palette, using, whites, greys, and light beige colors.
  • Removing family photos.
  • Taking down any kind of cultural décor and or religious items.
  • Being mindful of foods you’re cooking while your home is listed. Yes even odors can turn off buyers.
  • Working with a realtor who will invest in staging your home.
  • Not being home during showings.

Discrimination During the Appraisal Process

A part of the sale process also includes the appraisal. After a buyer purchases a home and if they need a mortgage, their lender will order an independent appraisal to ensure what the buyer offered for this house is in line with market value. 

Studies and reports have shown that in some cases, if the seller or homeowner is a person of colour, or there is evidence thereof, appraisers have undervalued the home because of bias. This could be devastating if the buyer, who purchased the home at market value, paid more than the low-appraised price.

As an example: A seller sells for $900,000 at market value, the appraiser who has racial bias now comes into your home, and sees you’re a person of colour. Now they may they think the home is worth less … so they value the home at $850,000. That means the buyer is now on the hook to pay the $50,000 out of pocket because there’s a difference in purchase price and appraised value, which isn’t likely to result in a sale. 

If you have to relist your home, especially in a cooling market, this could cost you big time because now, you may sell at a lower price and likely head into litigation with the buyer to recoup your losses. It can be a mess, and all of this heartache and potential financial loss is because the cancer of racial bias. The subject of race and discrimination could have a profound effect on your bottom line when selling – sellers need to be aware that this does exist. People need to know what to do when selling to protect themselves because their equity & wealth are ultimately at stake.