What is real estate steering? Why you MUST avoid it?

When you’re buying or selling a home, you expect your real estate agent to be your guide, advocate, and trusted advisor. But what happens when that guidance is influenced by unconscious biases—or worse, intentional discrimination? This is where real estate agent steering can become an issue. 

Steering in real estate is a subtle yet harmful practice that can perpetuate housing discrimination. It’s something every homebuyer, seller, and real estate professional should be aware of.

In this article, we’ll break down what real estate agent steering is, why it’s problematic, and how the National Association of Realtors (NAR), the Department of Housing and Urban Development (HUD), and the Civil Rights Act are working to combat it. 

We’ll also explore how real estate agents can avoid steering and provide objective information to clients, ensuring everyone has equal access to the housing market.

What is real estate agent steering in the housing market?

Steering happens when a real estate agent influences a buyer’s decision about where to live based on protected characteristics such as race, religion, gender, disability, familial status, or national origin. For example, an agent might show homes in predominantly white neighborhoods based on the assumption that a white client would prefer to live there, or they might avoid showing homes in certain areas based on the racial or ethnic makeup of the community.

Steering can be intentional, but it’s often the result of unconscious biases. These are the subtle, ingrained attitudes or stereotypes that affect our decisions without us even realizing it. For instance, an agent might assume that a family with children would prefer a suburban neighborhood with good schools, or that a single woman would feel safer in a gated community. While these assumptions might seem harmless, they can limit a client’s options and reinforce segregation in the housing market.

What is the difference between steering, blockbusting, and redlining?

Steering, redlining, and blockbusting are illegal real estate practices in the U.S., banned by the Fair Housing Act. These practices have historically shaped and unfortunately continue to influence the demographic landscape of many American neighborhoods. Here’s what each of the concepts means:

• Steering: Real estate agents influence a buyer’s choice of neighborhoods based on race, religion, gender, or other protected characteristics. This can involve not showing homes in certain areas based on assumptions about the buyer’s preferences. Steering often occurs subtly and can reinforce segregated, single-race neighborhoods.
• Blockbusting: Agents scare homeowners into selling their properties cheaply by falsely suggesting that new, diverse groups moving in will lower property values. For example, an agent might hire a person of color to walk through a neighborhood, and then convince homeowners to sell at lower prices by claiming the area’s market value will drop.
• Redlining: Financial services such as mortgage loans and homeowners insurance are denied to residents of certain areas based on race, national origin, or ethnicity. 

Why is steering a problem?

Steering undermines the principles of fair housing, which are enshrined in the Civil Rights Act and the Housing Act. These laws were designed to ensure that everyone has equal access to housing, regardless of their race, religion, national origin, gender, disability, or familial status. When real estate agents engage in steering, they’re not only violating these laws, but they’re also perpetuating inequality and limiting opportunities for certain groups of people.

For example, steering can contribute to the racial and economic segregation of communities based on outdated stereotypes. It can also prevent potential homebuyers from considering homes that might be a perfect fit for their needs and budget, simply because those homes are in neighborhoods the agent assumes they wouldn’t like. Over time, this can have a ripple effect, reinforcing disparities in wealth, education, and access to resources.

How are NAR and HUD fighting real estate agent steering?

NAR has long been committed to promoting fair housing practices. In fact, the NAR’s Code of Ethics explicitly prohibits discrimination based on race, religion, national origin, gender, disability, or familial status. Realtors who violate this code can face disciplinary action, including fines, suspension, or even loss of their license.

Similarly, HUD enforces the Fair Housing Act, which makes it illegal to discriminate in the sale, rental, or financing of housing. HUD also provides resources and training to help real estate professionals recognize and avoid steering. For example, HUD’s Fair Housing Initiatives Program (FHIP) funds organizations that educate the public about their rights and responsibilities under the law.

How can real estate agents avoid steering?

As a real estate professional, it’s your responsibility to not steer buyers and help them make informed decisions about where to live. Here are some practical steps you can take to avoid steering.

Educate yourself about fair housing laws

Familiarize yourself with the Civil Rights Act, the Housing Act, and the NAR’s Code of Ethics. Understand the concept of discrimination and how to avoid it.

Check your unconscious biases

We all have biases, but being aware of them is the first step to overcoming them. Take the time to reflect on your assumptions and consider how they might influence your interactions with clients.

Provide comprehensive listings

When working with buyers, show them a wide range of property listings based on their budget, needs, and preferences—not on their protected characteristics. Let them decide which neighborhoods and homes are the best fit for them.

Use neutral language

Avoid making assumptions or using language that could be interpreted as steering. For example, instead of saying, “This neighborhood has great schools for your kids,” you could say, “Here’s some information about the schools in this area.”

Focus on the facts

Stick to objective information about the property, such as the home price, size, and features. Let the client decide whether the house meets their needs.

Encourage clients to explore different areas

If a client seems hesitant about a particular neighborhood, encourage them to visit it in person. Sometimes, preconceived notions can be dispelled by firsthand experience.

Stay up to date on training

Take advantage of fair housing training programs offered by the NAR, HUD, and other organizations. These programs can help you stay informed about best practices and legal requirements.

What are the topics an agent cannot talk about to ensure fair treatment?

Real estate agents must avoid certain topics to comply with the Fair Housing Act. Here are some examples of what they can’t discuss:

• Agents can’t give opinions on crime rates. Instead, they can direct you to public resources such as local government websites or apps for neighborhood information.
• Agents can’t comment on school systems or a school’s reputation. However, they can provide objective data like test scores. For detailed insights, a buyer should research schools themselves and visit them.
• Agents can’t suggest neighborhoods based on age or family status. To understand an area’s demographic, the buyer should visit the new neighborhood, talk to residents, or join local social media groups.
• Agents can’t recommend neighborhoods based on religious communities but can provide a list of places of worship. For specific needs, you may ask your religious leaders for community-based recommendations in the new area.

What can homebuyers do to protect themselves?

If you’re a homebuyer, it’s important to know your rights and be aware of the signs of steering. Here are some tips to help you navigate the housing market:

• Don’t rely solely on your agent to tell you about different neighborhoods. Use reliable online tools, visit communities in person, and talk to locals to get a feel for the area.
• If your agent only shows you homes in certain areas, ask why. A good agent should be able to provide a variety of options that meet your criteria.
• Be aware of red flags. If your agent makes comments about the racial, religious, or ethnic makeup of a neighborhood, or if they seem to be pushing you toward or away from certain areas, these could be signs of steering.
• Know your rights. Familiarize yourself with the Fair Housing Act and other laws that protect you from discrimination. If you believe you’ve been steered, you can file a complaint with HUD or your local fair housing agency.

Key takeaway 

Steering isn’t just a problem for the real estate industry, it’s a societal issue that affects us all. When people are steered toward or away from certain neighborhoods, it reinforces segregation and limits the diversity of our communities. This, in turn, affects everything from school quality to access to jobs and healthcare. 

We can address steering through education, awareness, and a commitment to fairness. Whether you’re a real estate agent, a homebuyer, or just someone who cares about equality, you have a role to play in ensuring that everyone has access to the housing they need and deserve—where everyone can find a home in the community of their choice. 

Remember, housing decisions should be based on facts, not stereotypes. The ultimate goal is to build more inclusive, equitable communities. It’s not just about following the law, it’s about doing what’s right.

Written by Ramona Sinha. May 22, 2024

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.