Massachusetts Real Estate License Practice Test

What do the terms 'blockbusting' and 'steering' refer to in real estate?

1. Techniques to increase property listings

2. Methods of manipulating the real estate market for profit

3. Practices that encourage discriminatory acts in housing

4. Strategies to enhance community development

The correct answer is: Practices that encourage discriminatory acts in housing

The terms 'blockbusting' and 'steering' refer specifically to practices that encourage discriminatory acts in housing. Blockbusting involves inducing homeowners to sell their properties at lower prices by creating fear of the influx of minorities or other groups into a neighborhood, suggesting that property values will decrease as a result. Real estate agents may use this tactic to acquire properties cheaply and then sell them at a higher price to newcomers, effectively exploiting racial or ethnic tensions. Steering, on the other hand, is the practice of guiding prospective homebuyers or renters towards or away from certain neighborhoods based on their race, ethnicity, or other protected characteristics. This can limit individuals’ housing choices and perpetuate segregation. Both of these practices are illegal under the Fair Housing Act, which is designed to promote equal housing opportunity and prohibit discriminatory housing practices. By understanding these terms, real estate professionals can better navigate ethical responsibilities and ensure compliance with housing laws while serving diverse communities.