What Is Steering in Real Estate? A Deep Dive for Savvy Homeowners and Investors
Steering in real estate is a discriminatory practice where real estate agents guide prospective homebuyers towards or away from specific neighborhoods based on their race, color, religion, sex, national origin, familial status, or disability. It’s a violation of the Fair Housing Act and a serious ethical breach, undermining the principles of equal housing opportunity. Agents engaging in steering are not allowing clients to make informed decisions based on their preferences but are instead imposing their biases, perpetuating segregation and limiting access to resources.
Understanding the Nuances of Steering
Steering is not always overt. Often, it manifests in subtle suggestions, biased information, and strategic omissions. It can be incredibly damaging, preventing individuals and families from living where they choose and reinforcing discriminatory housing patterns. To truly grasp the insidious nature of steering, we need to delve deeper into its manifestations, legal implications, and how to identify and combat it. It is crucial to understand what is not steering and what is, so you can be sure you are not breaking any laws.
Direct vs. Indirect Steering
The concept of steering in real estate is based on illegal and unethical practices. It is often misunderstood to be legal practices as well. Here’s a breakdown to better understand the direct and indirect applications.
Direct Steering: This is the most blatant form. Imagine an agent actively discouraging a Black family from looking at homes in a predominantly white suburb, stating, “You might be happier in a more diverse area.” Or, conversely, suggesting a white buyer might be more comfortable in a mostly white neighborhood. This involves explicit comments and overt actions that clearly indicate discriminatory intent.
Indirect Steering: This is more subtle but equally harmful. It involves:
- Showing limited properties: Agents might selectively show properties in certain neighborhoods while avoiding others, effectively limiting a client’s options based on protected characteristics.
- Providing biased information: Agents may exaggerate negative aspects of certain neighborhoods, like crime rates or school quality, while downplaying similar issues in others, all based on discriminatory assumptions.
- Using code words: Agents might use seemingly neutral language that masks discriminatory intent. For example, describing a neighborhood as “up-and-coming” might be a veiled reference to a change in racial demographics.
- Geographic Targeting: An agent could direct a client to a certain neighborhood based on their ethnic background or familial status, steering them toward or away from certain geographic locations.
Why Steering is Illegal and Harmful
The Fair Housing Act of 1968 explicitly prohibits steering and other forms of housing discrimination. This landmark legislation aimed to dismantle discriminatory practices that historically denied equal housing opportunities to minority groups. Steering undermines the core principles of this act by:
- Perpetuating Segregation: By directing individuals into specific neighborhoods based on protected characteristics, steering reinforces existing patterns of segregation and limits diversity.
- Limiting Opportunities: Steering restricts access to resources and amenities, such as quality schools, safe neighborhoods, and job opportunities, that are often concentrated in certain areas.
- Depriving Choice: Steering denies individuals the right to choose where they want to live, based on their preferences and financial capabilities, not on discriminatory assumptions.
- Ethical Violation: It is a violation of the Realtor’s Code of Ethics.
- Damage to Reputation: Steering practices can result in damage to the agent’s personal and professional reputation.
Recognizing and Combating Steering
Being aware of the signs of steering is the first step in combating this discriminatory practice. Here are some red flags to watch out for:
- Limited Property Options: If an agent consistently shows you properties in only one or two neighborhoods, despite your stated preferences, question their motives.
- Overly Specific Recommendations: Be wary of agents who make overly specific recommendations based on your race, ethnicity, or family status.
- Inconsistent Information: Pay attention to inconsistencies in the information provided about different neighborhoods. Are some areas unfairly criticized while others are overly praised?
- Gut Feeling: Trust your instincts. If something feels off or discriminatory, it probably is.
What can you do if you suspect steering?
- Document everything: Keep records of all conversations, showings, and communications with your agent.
- File a complaint: Contact the Department of Housing and Urban Development (HUD) or your local fair housing agency to file a complaint.
- Seek legal advice: Consult with an attorney specializing in fair housing law.
- Report to the Real Estate Commission: An agent’s license can be suspended or revoked for a violation of the Fair Housing Act.
Frequently Asked Questions (FAQs) About Steering
1. What specific protected classes are covered under the Fair Housing Act?
The Fair Housing Act protects against discrimination based on race, color, religion, sex, national origin, familial status (presence of children), and disability. Steering based on any of these characteristics is illegal.
2. Is it steering if an agent shows me properties that fit my budget and preferences, but happen to be in a certain area?
No. Showing properties that meet your stated needs and budget is part of an agent’s job. The issue arises when the agent limits your options based on discriminatory reasons, even if they claim it’s for your “best interest” based on biased assumptions.
3. What if an agent tells me a neighborhood has “good schools” without specifying which schools? Is that steering?
Not necessarily. However, if the agent consistently emphasizes school quality only when showing properties in certain neighborhoods, it could be a subtle form of steering, especially if those neighborhoods are predominantly of a certain demographic. Ask for specific information about school ratings, test scores, and programs.
4. Can an agent recommend a neighborhood that is known for its strong sense of community?
Recommending a neighborhood with a strong sense of community isn’t inherently steering. However, if that recommendation is made solely to direct certain buyers away from other areas because of their perceived “lack of fit” based on protected characteristics, then it crosses the line.
5. How is “familial status” defined under the Fair Housing Act?
Familial status refers to the presence of children under the age of 18 in a household, including pregnant women and those seeking custody of children. Steering based on familial status might involve discouraging families with children from certain neighborhoods or directing them to areas perceived as “more family-friendly” based on discriminatory assumptions.
6. Can an agent show me properties with accessibility features if I have a disability?
Yes, and they should. Providing information about accessibility features is not steering but rather fulfilling their duty to accommodate individuals with disabilities. The issue arises if the agent refuses to show you other properties based on their assumption that you wouldn’t be interested due to your disability.
7. What is the difference between steering and blockbusting?
Steering directs buyers towards or away from specific areas, while blockbusting involves creating fear and panic among residents of a neighborhood to encourage them to sell their homes at below-market prices, often by suggesting that a specific minority group is moving in. Both are illegal.
8. How does redlining relate to steering?
Redlining is a discriminatory practice where lenders refuse to offer mortgages or insurance in certain neighborhoods based on the racial or ethnic composition of the area. While not directly steering, redlining contributes to segregation and limits housing options, making steering more effective in maintaining discriminatory housing patterns.
9. What should I do if I witness an agent engaging in steering with another client?
Report the incident to the local real estate commission, HUD or a fair housing organization. Even if you are not directly affected, witnessing steering and reporting it can help protect others from discrimination.
10. Are there any legal defenses for an agent accused of steering?
The best defense is always to be able to show that there was no discriminatory intent and that the choices shown to the client were based solely on their stated desires and within their stated budget. Documenting all communications and having clear, objective criteria for property selection can help avoid accusations of steering.
11. How can real estate agencies prevent steering among their agents?
Agencies should implement comprehensive fair housing training, monitor agent activity, and establish clear policies against discriminatory practices. Regular audits and client feedback can help identify and address potential instances of steering.
12. Is steering only a problem in certain parts of the country?
No. Steering is a nationwide problem that can occur in any area where housing segregation and discriminatory attitudes persist. Awareness and vigilance are crucial in all communities to ensure equal housing opportunity for everyone. It is critical to understand that steering is a violation of federal law.
In conclusion, steering is a serious violation of the Fair Housing Act, which aims to ensure that all individuals have equal access to housing. It is critical for real estate professionals to have a strong understanding of the Fair Housing Act, and all that it encompasses. By being aware of its subtle and overt manifestations and taking proactive steps to combat it, we can help create a more just and equitable housing market for all.
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