Understanding Steering in Real Estate Made Simple
In This Post
What is steering?
On the question of steering, Wikipedia has an excellent definition that does away with worrying about semantics and also does away with the myriad of "what if"questions agents endlessly ask in continuing education classes. Substitue any protected class for the word race in the definition and you will be good to go.
Racial steering refers to the practice in which real estate brokers guide prospective home buyers towards or away from certain neighborhoods based on their race. Racial steering is often divided into two broad classes of conduct;
- Advising customers to purchase homes in particular neighborhoods on the basis of race
- Failing, on the basis of race, to show, or to inform buyers of homes that meet their specifications[
Steering is an action by the real estate broker and does not involve the client. The client can ask the broker to make certain choices for the buyer or the seller that would be considered steering and get the broker in trouble. I know it is difficult for most brokers to say "I don't know..." to any question asked by a client, but in Fair Housing issues, the correct answer is, "I don't know where you mean. What neighborhoods do you like?"
It's easy enough to avoid Fair Housing issues by providing lists for clients that include several neighborhoods and as they tell you that they do or do not want a particluar areas, they are making choices, not you the broker for them.
All that said, I'm not an attorney, never dressed up like one on Halloween either. Do what your designated broker tells you to do, if you can't figure it out otherwise.
UPDATE NOV 7, 2010 Realtor magazine has a good article with 8 examples if you think steering doesn't happen these day.
Glenn Roberts, SRES*
Lake and Company Real Estate
206-524-3665
Seattle Residential ~ I Do That
Licensed broker since 1985 offering spectacular service to buyers and sellers in greater Seattle, with particular interest in Green Lake, Ballard, Phinney Ridge, Wallingford, Ravenna, Bryant, View Ridge, Roosevelt and the University District.
*Senior Real Estate Specialist
Referrals from past clients and other agents always make me smile.
Interesting comment. Thank you for the insight. Does this really happen?
Glenn ~ You've definitely hit the nail on the head with this post -- terrific, timely information and great advice!
It is hard to imagine that steering would continue to take place anywhere in the United States at this point in time.
Mike - Since they've made laws, it doesn't happen any more (yeah sure). But it was standard practice many years ago.
Tish - Thanks.
Well said, thank you for the reminder.
Allen - It happens now in subtle ways. And there are people from Fair Housing out in the field testing agents every day.
I thought steering was a thing in the past. I sure hope it doesn't happen. Thanks for the reminder.
Excellent distinctions, thanks for sharing. When it comes to neighborhood selections, I prefer to show out-of-town clients the satellite mapa and we can evaluate the entire area and zoom into available properties based on any criteria defined. Local buyers usually know where they want to go and where they want to avoid without needing that, but the satellite view of the region is helpful.
A good reminder re steering which I know is still practiced in many subtle ways. It isn't only a race thing but neighborhoods (kids, no kids, ethnic, schools, etc.)
I've also heard/read that if you are working with your clients as an "Exclusive Buyers Agent" and they request (I'd want it in writing if legal!) certain community types, locations you can do so???
The subject has been known to ignite very heated online debates!!
Sue of Robin and Sue
Carol - You are welcome
Indera - I think it would surprise you how easy it is to fall into if you're not paying attention.
Drick - Nothing beats letting the client knock on doors around a listings to see if that is the neighborhood of choice for them. At any rate, it's not a decision I'll make for them.
Sue - Steering is what an agent does, on their own, before getting such input from a buyer. I don't fell comfortable in selecting the enighborhood based on a clients suggestion of a type neighborhood they want to live in. I insist they name the neighborhood.
Glenn,
This is certainly an area where real estate agents are "overly" cautious. Steering by the agent is legally and morally wrong. Buyers however, can choose to live where they want.
Rich
Rich - exactly, and agents shouldn't be choosing the area for them.
As much as I would love to think this is a thing of the past and can't happen in these, our modern enlightened times, it does and I'm glad you bring this up. Most often I think it's out of naivety and ignorance, but none the less... your reminder is well taken. We live locally, but our environment is global. Our culture is a much more diverse kaleidoscope of origins than it use to be and all of us deserve equal treatment, opportunity, and the right to pursue a home and place where we want to live.
René - No one deserves only the homes an agent thinks they should see. We need to guard against that.
Great post. Thanks for the heads up about the issue!
Glenn - Like some of the other comments you've received so far, brokers and agents must be very careful with this. I had to repost your great blog.
You'd be shocked if you knew how many folks here in the South point blank ask us questions about areas that are SO offensive, to me. I"m not risking my license nor my integrity for anyone. Great post and we all need to follow your advice!
It amazes me that this still happens. Good reminder though.
Micheal - You're welcome
Todd and Devona - Thanks for the reblog.
Elizabeth - it's a question you just have to hand back to the buy on a silver platter.
Sajy - Real estate is local but most facets of it are universal. It happens.
I would rather be honest with clients than anything else...just my opinion
In our community, Silicon Valley (Santa Clara county) CA .if the agent told the client that area is a Koran area you may not fit in will be STEERing but at the same token, if the agent ask the client; Do you like to see some area and let the client decide where the client will fit in that will be perfectly fine.
Grace Keng,CRS, CDPE www.gracekeng.com
Dustin - Honesty is the ticket, but your honest opinion may get you in trouble if you answer the wrong question.
Grace - As your name is your link, yes, if the client picks the area, it is not steering.
Glenn,
I do find it difficult to believe that any agent would be doing this in our society today... but then maybe I'm naive.
Judi - I think that are many agents that do not think before they answer questions. The urge to have all the ansers is to great.
Hi Glenn. This is a serious issue and should be taken serious. Unfortunately it still happens throughout the states. I'm glad you wrote about it.
Lana - It is unfortunate.
Coleen - Steering is the action of the agent to show a buyer only those neighborhoods that the agent thinks the buyer should be in, or not showing them areas the agent thinks they shouldn't be in. When the laws were passed it was because agents were not showing buyers some areas and were only showing them other reas based on race. Fair Housing has expanded that to include several protected classes. Know them. For example, if a client says, I don't want to live in a neighborhood with a ...name a race...living there and you agree to avoid such area by determining where those areas are yourself, you are in big trouble. Ask the buyer specifically what areas they want to live in.
I am pretty sure that this rarely happens anyplace in the US these days. An stats on its occurence today?
Glenn Steering can also involve a real estate agent having customers use a particular lender, attorney, etc
It still happens, and I recently had someone ask me if I knew "how many (blank) lived in a particular neighborhood?"
He knew he had crossed the line and quickly apologized.
Clients have their own ideas about where they want to look for a home. That is a very individual choice and one that must come from the buyer. I cannot imagine an agent "steering" anyone these days - but maybe it happens.
@ comment #20. . exactly why this is a law.. . your beliefs will get you in trouble one day.
Always need to be careful. I have been asked point blank by a client for neigborhoods with a certain race in order to make their transition easier. I tell them if they like the house, walk the neighborhood and meet the neighbors. Go to the community pool and ask questions. There is not a race field in the MLS search criteria.
Glenn, great summary of what steering is all about. Thanks for the reminder.
Clients ask questions that could lead to steering all the time. I simply tell them that the areas have a wide range of residents and that if they'd like to get to know the area better, they should spend some time in the neighborhood. I've found that most people just want to make sure they don't have any crazy neighbors.
George - I've posted a link above to a Realtor Magazine article with 8 examples that will surprise you.
Karen - Lenders and attorneys are not protected classes but the reason you direct a client a certain way could be considered steering.
David - Sometimes silence is the best eye-opening answer.
Michael - Yes.
Claudette - See the link above.
Fernando - Bingo. Some sellers can lead us into trouble to if we believe doing what they want is the safe path. The law comes first and ignorance is no excuse.
K C - Yes, clients should do their own discovery of neighborhood make-up. Love your "There is not a race field in the MLS search criteria."
Michael - Thank you
Bryan - That's why clients should knock on doors.
The only steering I know about is when they round up cattle......You see, when you play by the rules, you may get left behind, but you sleep like a baby for it....
Richie - Sleep is good. Knowing the rules helps.
Hi Glenn,
We really don't seem to run into steering issues with the exception of buyers with kids wanting to move into neighborhoods with other kids. But once we explain that we can't show them houses based on that criteria, they understand and it doesn't become a factor anymore.
~Lisa
I couldn't help but notice "I Do That" above your What is steering in real estate made simple. lol
So easy to have our words twisted, huh?
I'm sure in some market areas this is a very big deal. But, here the only steering is by the buyers ability to buy. We have 3 bedroom homes for $125,000 and 3 bedroom homes for $425,000. All homes are not created equal - for those strict Constitutionalists ;-)
My own opinion - this ain't rocket science.
I couldn't help but notice "I Do That" above your What is steering in real estate made simple. lol
So easy to have our words twisted, huh?
I'm sure in some market areas this is a very big deal. But, here the only steering is by the buyers ability to buy. We have 3 bedroom homes for $125,000 and 3 bedroom homes for $425,000. All homes are not created equal - for those strict Constitutionalists ;-)
My own opinion - this ain't rocket science.
I think you will find that steering in this case goes beyond just the racial variety. It also includes all of the protected classes that the Fair Housing laws cover. I am still amazed at the number of folks that try to skirt the law with a "wink and a nod". I have had it happen to me and have no appetite or patience for those that make it a practice. One day, they will "wink' at a state tester who will not be amused, nor should they be. There are also a lot of civic organizations out there keeping an eye on issues like this and our practices. So try to skirt them and play cutesy with Fair Housing at your own risk.
Lisa - Steering has a surprising number of facets we don't often recognize.
Gregory - Abilty to pay is not a protected class.
John - All protected class can be steered if an agent wants to break the law or is ignorant of it. And yes, people are out there testing agents.
Steering is not soley based on race. It can also be based on Religion, Age, Sex (ie: gay, lesbian and transgender). And it can often be very "well-meaning"... ie: I'd like to live near others of my type... but we're not allowed to do that either.
Glenn,
As in many situations we have agents that act and behave in a professional manner and then some that don't. I believe this process has been virtually eliminated today with our savvy consumers. Any agent that engages in this practice deserves to have their license yanked.
-Brent
Alan - Well meaning, but illegal. Take classes. Be careful.
Brent - Among the protected classes there may be some with English as a second language and sometimes what they might ask for could take an agent in a different direction than the straight and narrow.
This is one of those sad sad things where something so obvious has to be spelled out and explained as people still don't get it.
Donna - Some are trained in how to make sales, not customer service, and obviously not in the law.