What is Steering in Real Estate? Facts You Must Know Before Buying Real Estate Property

Posted by Excelsior Realty Team on January 12, 2024

Have you ever heard of the term "steering" in real estate? It's an important concept to understand when you are particularly planning to buy your dream home. As a buyer, you will have a specific choice of area, a community where you would prefer to live. But what happens if your realtor tries to guide you away from your choice and suggests places that seem more "compatible" to your "race," "origin," etc., out of bias? 

When we are talking about what is steering in real estate, it's exactly what we just said. It simply means the practice of influencing a buyer's choice of communities based on protected characteristics under the Fair Housing Act, such as race, color, gender, etc. If your agent is not exposing information about properties that meet your criteria or expressing biased views about certain neighborhoods, steering may be at play. 

Though illegal under the Fair Housing Act, steering still continues to a great extent in today's real estate market. In this informative piece, we will explore what constitutes steering in real estate and how it can impact buyers like yourself. Identify when it's happening and protect yourself!

What is Steering in Real Estate?

Steering occurs when a real estate agent influences their clients' decisions based on certain characteristics protected by the Fair Housing Act. The characteristics include race, gender, origin of birth, disability, color, or familial status. This can happen during a home buying process where an agent guides buyers towards or away from specific neighborhoods based on biased assumptions.

A study by the newspaper “Newsday” revealed how this action still is in practice. They had real estate agents to show properties to two different sets of customers (white and minority) who had similar tastes and choices. The shocking thing was that 24% of the time, the real estate agents led the white tester to different neighborhoods than the minority testers. It’s an evidence of steering. 

But it's not just limited to buyers; sellers can also be affected if an agent favors certain offers or potential buyers due to bias. It's important to understand that steering is illegal in the United States for good reason – everyone deserves fair and equal treatment when it comes to finding their perfect home.

What is Steering in Real Estate


The History of Steering

Steering in real estate has a long and troubling history. Before the civil rights movement in the 1950s, it was commonplace for real estate agents to practice racial steering without facing any consequences. During that time, realtors would systematically deny African-American homebuyers access to predominantly white communities.

Some progress has been made since then, but we cannot ignore that discriminatory practices still exist within the industry today. These tactics may not be as obvious as they used to be, but real estate agents can still be guilty of these offenses by stating or doing things that seem harmless.

An agent might discourage a buyer of color from considering certain neighborhoods due to "safety concerns" or "criminal activity". At the same time, they would show those same areas freely to other buyers. They may also use terms like "best" houses selectively when discussing potential properties with different clients based on their race or ethnicity.

These are subtle forms of discrimination that prove segregation and impact cities across America by shaping their demographic makeup. It is important for us all to be aware of this historical context and work towards completely eliminating these unjust practices from our real estate industry.

How to Identify Steering in Real Estate?

Identifying steering in real estate is extremely important; otherwise, you can be open to income discrepancies, lack of opportunity, health issues, crime, and violence. These are simply the adverse impacts of biased real estate practices. Steering may come in various forms; whether blatant or subtle, there are telltale signs that you should be aware of. 

Outright Refusal: A real estate agent outright refuses to show you homes in specific neighborhoods without providing any proper explanation.

Subtle Suggestions: The agent may make statements like "You'd be more comfortable in this other neighborhood" or "This isn't a great neighborhood for your (culture, family type, religion)."

Incomplete Property Options: The agent does not provide information on all properties that meet your criteria and selectively shows only certain listings.

It's vital that transparency and objective information guide your decision-making process. Your preferences matter! 

What Are the Consequences of Steering?

The consequences of steering in real estate are far-reaching and have deep impacts on individuals and communities. Let's dive into some key repercussions:

  • Steering restricts specific populations from exploring a wide range of neighborhoods. The situation limits their choices when it comes to finding suitable homes.
  • Often, the areas suggested by biased steering practices lack adequate funding for education, law enforcement, or other essential public services. This creates unequal access to vital resources.
  • If customers are steered into neighborhoods with lower educational funding and limited opportunities, the affected population experiences diminished prospects for academic achievement and career growth.
  • Steered communities may be exposed to environmental hazards such as pollution that can poorly impact mental and physical well-being over time.

What Should You Do If You Experience Steering in Real Estate?

If you find yourself in a situation where you suspect steering from your real estate agent, it's important to take action. The Office of Fair Housing and Equal Opportunity (FHEO) within the Department of Housing and Urban Development (HUD) is responsible for investigating housing discrimination complaints, including cases related to steering.

Here are steps you can take if you experience steering:

1. Start by filing a formal complaint with FHEO outlining all your concerns.

2. Must provide specific details about the incidents, such as dates, times, and locations.

3. HUD assigns investigators who may request additional information or documentation. You must diligently cooperate with them.

4. The person accused of steering will have an opportunity to respond to the complaint.

5. After concluding their investigation, HUD will send you a report. It summarizes the findings along with any legal actions taken against the guilty party. HUD would also offer voluntary agreements for resolution.
Initiating this process will allow specialized professionals to investigate further on your behalf. HUD also provides resources such as fair housing hotlines. It includes contacts at local government agencies who are experts in enforcement efforts.

What Are Some Things Your Real Estate Agent Can’t Talk About?

Steering is not always very clear to understand. We have already gone through some direct signs, but there are instances where it may not feel like the agent is biased, but the law forbids doing those.  

Crime Situation

While it's understandable to be concerned about the crime rate in a new neighborhood, your real estate agent may not be able to discuss this topic directly. According to the Fair Housing Act, discussing crime stats could potentially lead to discriminatory practices. 
However, your agent can provide you with resources such as the local government's website or apps like Neighbors. You can find public records and check out the crime rates yourself. 

School Systems

When evaluating school systems in a particular area, your real estate agent can't give you their personal opinions or guide you toward specific schools. Instead, they can provide public information such as test scores and programs that schools offer. 

It's important for you as a buyer to do some research on the school district and schedule tours to see if it aligns with your child's needs. Even if everything looks promising online, visiting the school in person will give you a better understanding of whether it is the right fit for your family.

Neighborhood Demographic

A real estate agent has limitations in what they can say about neighborhood situations and demographics. 

Suppose you're nearing retirement and prefer to live in a community with fewer young families. Your agent cannot explicitly state that certain neighborhoods may not be suitable for someone of your age group.

There are ways for you to gather information about the residents living in an area. You can take the initiative by visiting the neighborhood and speaking with current residents about their experiences. Another useful method is joining local Facebook groups where you can get insights into what life is like within that community. When you do that, you discover areas where homeowners of similar ages reside.

Just make sure to communicate this preference with your real estate agent so they understand your focus.

Places of Worship

Your real estate agent is there to assist you in finding the perfect home, but place of worship is one such topic they cannot talk about due to Fair Housing Act regulations. 

The best your Realtor can do is provide a list of nearby places of worship. They cannot express opinions or preferences based on religion. If living near a specific place of worship is important to you, it's advisable to reach out directly to leaders at your current place of worship for recommendations and connections in the new area.

What Can Your Real Estate Agent Talk About?

When working with a real estate agent, it's important to understand their role and the boundaries they should maintain. Avoiding steering and remaining within legal limits is crucial, but your agent can still provide valuable information about different neighborhoods. Here's what your real estate agent can talk about:

  • Your agent should offer you objective data and statistics regarding the local real estate market.
  • They should have resources available for you to learn more about schools, safety measures, lifestyle amenities—whatever aspects are important to you.
  • A great realtor will be well-informed about various neighborhoods so that they can guide you based on facts rather than personal biases.

By helping you without bias and following your choices and preferences, an ethical agent makes sure that any advice or ideas they give are suitable for your transaction and don't go too far into steering.

How Can You Avoid Being Steered in Real Estate?

Knowledge is your most powerful tool to tackle any sort of steering in real estate. Here are a few strategies to help you stay informed and make the best decisions for yourself:

  • Gather all the necessary facts about a property before making an offer. Don't rely solely on your agent's information. You need to conduct thorough research of your own.
  • Trust your instincts. If you feel that your real estate agent is not being fair or withholding important details, be prepared to walk away from the purchase.
  • Do some independent investigation into any neighborhood or home you're considering. Look up recent sales in the area and familiarize yourself with local amenities.

Having a competent real estate professional by your side can be greatly helpful. But what's more important is that you remain an educated consumer who knows when they're being steered.


Q. What is the Fair Housing Act?

The Fair Housing Act is a crucial piece of legislation that ensures equal housing opportunities for all. It was passed in 1968 and has since been amended multiple times. Under this act, it is illegal to discriminate against individuals based on their race, color, religion, sex, disability, familial status, or national origin.

This law applies to both public and private entities involved in real estate transactions such as rentals and home sales. It serves as a protective shield against discriminating practices that could harm your ability to find the right property.

To enforce the Fair Housing Act's guidelines effectively, the U.S. Department of Housing and Urban Development (HUD) oversees its implementation. You have to report any instances of discrimination you face during your real estate journey directly to HUD.

Q. What is the Difference Between Steering, Redlining, and Blockbusting?

As we are discussing steering in real estate, you also should understand the differences between other related illegal practices like redlining and blockbusting. 

Redlining is another discriminatory practice where agents guide certain individuals or communities away from accessing housing opportunities or mortgage lending based on their race, color, or national origin. 

On the other hand, blockbusting is a tactic used by unethical agents who instill fear into homeowners about an upcoming inflow of minority groups moving into their neighborhoods. Realtors do it to convince the owners to sell their homes at lower prices.

To put it simply: 

  • Steering involves influencing a buyer's choice of neighborhoods based on protected characteristics.
  • Redlining restricts access to deserved facilities based on racial bias.
  • Blockbusting plays upon prejudices for financial gain.

These practices have undeniable outcomes for marginalized communities and were sadly prevalent in the past but are now illegal under federal law.

Q. How Are Real Estate Agents Trained? 

Becoming a real estate agent involves a series of steps and training. To start, individuals must complete licensing and training courses that vary from state to state. These courses provide the necessary knowledge about laws, regulations, and best practices in the industry. Prospective agents can also choose to join the National Association of Realtors (NAR) to become a realtor.

Realtors abide by a strict code of ethics that restricts any form of illegal discrimination, including steering. This code ensures fair treatment for all buyers regardless of their background or protected characteristics under fair housing laws.

As part of these ethical guidelines and legal requirements, real estate agents are generally not permitted to provide demographic data about neighborhoods to potential buyers. They also can not guide them based on discriminatory factors. Instead, they should offer objective information while respecting equal access for every customer.

Final Thoughts

Now that you have a clear understanding of what does steering mean in real estate, it is crucial to be aware and vigilant when navigating the homebuying process. Always be cautious, recognize the signs of steering, and know your rights under the Fair Housing Act. 

If you ever encounter any form of bias or steering in your real estate journey, don't hesitate to seek legal advice or report such incidents to relevant authorities like the Department of Housing and Urban Development (HUD) or local fair housing organizations.

Remember, as a buyer, it's important to work with a reputable and trustworthy real estate agent who values fairness and upholds ethical standards. 

At Excelsior Realty, we believe that all buyers should have the same opportunities, no matter who they are or where they come from. We are dedicated to giving our clients unbiased details about different neighborhoods so that they can make smart choices based on their desires.

Empower yourself with knowledge about fair housing laws and receive unbiased guidance throughout your homebuying journey. Contact us today for any needs regarding your homebuying here in Beautiful Minnetonka!