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What Is Steering In Real Estate?

James Anderson

March 23, 2022

The real estate industry provides a platform for selling and buying property, making it more than just a business. Narrowed down to a client and agent level, humanitarian attributes may intervene in the transaction from the beginning to the end.

Some of these attributes include decisions and actions known as steering. Steering in a general perspective means turning away from the main focus.

That aside, what if this occurs in real estate transactions? What is steering when it happens in the real estate industry? Well, continue reading, and we will explore in more detail.

What is Steering?

This is the act of influencing, directing or talking homebuyers or renters into acquiring property in specific areas based on discriminative characteristics. Some of these characteristics include:

  • Race
  • Color
  • Nationality
  • Religion
  • Sex
  • Familial status
  • Disability

These characteristics are winged under the Fair Housing laws, which prevents it from happening.

Steering occurs when buying houses and those looking to rent one. It may also occur at a community or building level when particular floors or access to parts of the building are restricted to specific people like those with families.

The Law on Steering

Steering is a vice under the law as everyone deserves equal rights and opportunities without bias based on the characteristics listed under the Fair Housing act.

There are various measures to protect steering victims and prevent it from happening legally.

Fair Housing Act

This act put up in 1968 is implemented in all states to regulate housing laws on specific characteristics listed above.

Local and state laws

These are unique to an area, and most of the time, they may define other housing issues like landlord and tenant relationships and responsibilities. Some duties may include those in charge of snow removal or garbage disposal.

These local laws also reinforce or back up the Fair housing act giving more legal consequences of the actions.

Consequences of Steering

Steering Can Cause A Decreased Value In Homes

Steering has a spiral effect on a neighborhood. This is a long-term effect that affects the social and economic life of the occupants.

  • Segregated neighborhoods

Racial steering leads to blighted neighborhoods. A ripple effect affects the discriminated communities by reserving or referring specific groups to designated areas.

Home values depreciate, and living costs also become high. The business development of a place becomes hindered therefore impacting the economy of the residents.

 A low economy means low income and a high cost of living. This impedes the place's social development, putting the neighborhood unproductive and dormant.

  • Decreased home values

The local house market in an area is negatively affected when potential buyers are steered towards a different area. This leads to low demand for houses in the area.

When the homeowners in the segregated area try to sell their houses, they will have a lower price on them and might also sit on the market awaiting a buyer.

Flipping and fixing the homes also becomes useless since fewer people are willing to buy the property due to questions like why the value of the adjacent houses is low and the added steering away from the houses.

💡Key Insight: Flip and fix loans and other bank loans become hard to pay back since selling a house also requires money, putting the owner at a potential loss.

How to Identify Steering

Knowing How To Spot And Identify Features Of Steering Is Very Important.

You might have second thoughts about your agent when a gut feeling kicks in. The uncomfortable situations that lead to termination of contracts and backing out of sales might be caused by oblivious steering.

You might not know that you are a victim until you're out of the deal and following up on reasons why. Here are a few ways you can identify steering in your transactions.

1.     Neighborhood

This occurs when advice or descriptions based on the neighborhood are used to sway someone to choose a specific one. The advice can be in terms of race or age groups.

2.     Development

Steering based on the development of a place may be in terms of available amenities but may broadly be on schools, hospitals, and religious places of worship.

If an agent says schools in the neighborhood are not good or that hospitals aren't as good as those in their preferred places of interest, this may largely be discouraging someone from staying there.

They may also suggest unquestioned ideas such as special schools, elderly homes, or family-accommodating neighborhoods.

3.     Security

Crime rates in an area may be used to steer someone away from it. This is often associated with racial profiling or discrimination against race, even though there may be no security concerns.

What To Do If You're A Victim Of Steering 

There are certain things your won't talk about or will loop around the topic. They do this to avoid making you a victim of steering.

You might want to learn more about a place, but little or no information will be given. Some of the topics include:

Religion

Your agent will only give you a list of places of worship in the area or refer you to a public directory if asked. They won't answer questions that directly on the popular beliefs of most of the people living there or their religion.

The best way to know where you may join is by asking your local place of worship before moving if they have any places around your new area.

Demography of the place

Your agent will not answer questions about the age groups of the people living in the neighborhood. Questions inquiring if the place has a youth or an older group living there or mostly young parents may be difficult even to the agents themselves.

You can easily get this information through the social media groups of the area's occupants to get a rough idea. Most places also have places of interest for people your age, and they may give a hint.

Schools

 Some specific questions are just too in-depth, even for your agent. Questions about the most advisable or best school for juniors or seniors can't be answered, but public information about these schools may be collectively offered.

There should be no discriminatory comments like certain groups go to these schools given by the agent. It is helpful to source some of the information online but visiting the schools personally will most suit you.

Security

When moving to a new neighborhood, it is customary to know how safe you are and which measures you should take to make sure you are. This, however, falls into a category in the Fair housing act that prevents the agent from commenting on it.

The resources you might be directed to are public records or social media groups of residents in the area.

So, what can you do if you realize you are being steered into living in a particular place?

Legal Steps to Take

Steering Can Be Serious A Homebuyer Can Seek Legal Advice

Since steering is a sensitive topic protected by the law, some procedures are put in place to guide you to a legal path of action.

  1. Terminate any contracts

If you had a contract like an exclusive contract with the agent, you might need to let the agent know that you want out of the deal. They often comply because their reputation is on the line as well as it is generally difficult to work with someone who is uncooperative.

  • Find a trusted agent

You can change companies or request to have a different agent to continue with the task. There are many reputable firms where most agents have years of experience.

🧠Bear in Mind: The agent's experience or successive transactions may not mean that they are a perfect choice.

  • File a complaint

This should be the first step to take if you're a victim of steering and is the step that involves the law. If changing your agent doesn't work for you, filing a complaint against the agent and understanding the laws on this will help.

When filing your complaint, documentation of evidence is mandatory to your success, and the more evidence you have against the agent, the higher the success of the filed complaint. Multiple testimonies may be obtained through testing.

Testing is done by referring several clients to a suspected agent involved in steering. They all give accounts of their treatment and whether they were steered to specific areas based on their race, sex, familial status, and other factors protected under the housing laws.

Some consequences that may occur if they are found to be practicing steering include fines or loss of their licenses depending on the severity of the case and the local housing laws.

What's Not Considered As Steering In Real Estate?

You cannot ask an agent about a particular category protected by the housing laws then claim the agent's information as steering information.

Some of these situations fall into the following categories:

  1. Amenities

Your agent may advise you to choose a particular area to get home because it is closer to amenities like grocery stores, medical centers, schools, and public services. Some of the tips may be

  • There is a school closer to this home if you would like to enroll your kids.
  • You will have to travel this distance to get to a hospital or grocery store when you choose this house.

All these are in the condition that you, as the client, asked for the information from the agent. For example, which home is closer to a grocery store?

  • Living convenience

This can be advised in many ways depending on the client's questions. The agent should not give this information without the client's request, and if requested, they should provide a list of all the properties and let the client choose.

A building may have a wheelchair ramp and an elevator that will be convenient for someone using a wheelchair. Most of the time, this is even in the client's best interest, and they often inquire themselves.

A house may have spacious rooms and an outdoor area that would be convenient for a family compared to a squeezed apartment. This will save the client time and money looking for an expansion when the inconveniences later show.

A home may be far from the client's workplace, and a preference for a closer neighborhood would make it convenient.

📝Remember: An agent will not refer clients to these properties but give a list of properties where the client will choose one upon visiting and deeming them fit.

  • Policies

There may be implemented policies and restrictions in living somewhere like planned unit developments or home owner's associations in would be an inconvenience to the client.

If the client asks for the information, the agent may give them written rights and responsibilities for the condos or developments. The client will choose which is preferable for them.

✍️For Example: A building may have strict pet policies, and for a client with pets, it would be advisable to have one that allows pets.

Summary: What is Steering in Real Estate

Steering is the act of influencing, directing, or talking homebuyers or renters into acquiring property in specific areas based on discriminative characteristics.

As a real estate agent, there may be circumstances where you unknowingly steer a client to buying a particular house. However, there are some practices you may apply to help avoid this:

✔️Advise clients according to their needs and ask specific questions to help narrow in on their needs.
✔️Pay attention to the unconscious terms you are using, like the descriptive words safe or nice.
✔️Only add information on the client's request about the desired property.
✔️Give a list of all the properties without leaving any out due to assumptions based on the client.
✔️Direct a client to any public resources on questions about schools or other amenities.

Remember, the Fair Housing act for realtors offers an open market with unbiased opinions while giving both clients and realtors the chance to have equal opportunities in the business.

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