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“Steering” in Real Estate: How to avoid it and stop lawsuits in their tracks

Steering is a method of discrimination in real estate. It happens when a real estate licensee influences a buyer or prospective tenant’s choice of housing because of their color, race, national origin, religion, gender, disability, or familial status. All of these characteristics are protected under the Fair Housing Act, which covers most housing. There are some exemptions from the Federal Fair Housing Act, but there are laws in many states that provide similar or extended legal protections for certain groups. 

As an example, in California, the Fair Employment and Housing Act covers discrimination based on citizenship, immigration status, primary language, age, gender identity, sexual orientation, source of income, genetic information, and veteran/military status. 

As a real estate broker, you need to be aware of the laws in your locality and ensure your team knows what is and what is not acceptable under the legislation. Steering should not only be avoided but actively prevented. Here’s what steering looks like and how brokers can stamp out steering behavior to stop lawsuits in their tracks. 

Examples of Steering Behavior to Avoid 

Steering limits choice. It influences, guides or directs property buyers or renters to specific areas because of their particular characteristics. As a broker, here are some examples of behavior you should instruct your licensees to avoid:

  • Only showing properties within a certain area, even if the client/buyer’s criteria indicates other locations would be just as suitable
  • Discouraging purchasers from buying into an apartment building or suburb because they are “different” from others who live there
  • Suggesting buyers stick to neighborhoods where there are others with the same religious background/race/familial status

Steering isn’t always as overt as this. Subtle hints that a suburb “isn’t a great place to raise a family” or that a house might be “too large” (when talking to a single woman) or that there are better schools in a certain area could all cross the line. 

In 2019, Newsday launched an investigation into steering. It found that some real estate licensees steered white buyers away from diverse neighborhoods. However, they did not  steer away people of color from buying in these same locations. 

The Consequences of Steering for Your Real Estate Brokerage

Even if one of your real estate licensees accidentally behaves in a way that can be interpreted as steering, your brokerage could be in trouble. A prospective buyer who feels one of your team has steered them away from a certain property or neighborhood may complain to their local or state human rights office. They may also file a complaint with the Department of Housing and Urban Development and/or the National Fair Housing Alliance. As a broker, you can be held accountable for the actions of your team. So, you might find yourself facing a lawsuit even if you aren’t personally responsible. This can have serious financial consequences and damage your reputation.

How to Prevent Steering at Your Brokerage

As a broker, it’s important to educate your team about both the illegal and unethical nature of steering as well as the serious consequences. Your team training should cover:

  • Why it’s important that licensees show listings based on a buyer’s (or renter’s) criteria and not let their own biases influence what they show. This means showing buyers (or renters) what the options are and letting them make their own choice. 
  • Why licensees should avoid giving any subjective information (opinions) to prospects. For example, saying things like “nice neighborhood,” “safe area,” or “close to a good school.” Instead, they should recommend prospects do their own due diligence and seek out independent, objective third-party information, for example, crime statistics, research on local schools, etc. 
  • How licensees can manage their own unconscious bias

Protect Your Real Estate Brokerage with Insurance

Because brokers can be sued for the actions of their licensees, you should make sure you have adequate real estate Errors and Omissions insurance to protect your business and your team against a lawsuit. 

Call the CRES Insurance team today to find the best options for protection for your real estate brokerage. As part of one of the largest insurance brokers in the world, we have access to policy options that others don’t!

We can customize policies to suit your business, including: Business Owners’ Policies or General Liability Policies, Cyber Liability, Worker’s Comp, and Surety Bonds.

Contact the friendly team at CRES at 800-880-2747 for a confidential discussion today.

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