The Pitfalls of "Steering" Housing Prospects

You might have heard of the term steering fair housing. It is a practice that violates the Fair Housing Act, and many in the field consider it unprofessional. It can create numerous societal issues, and before the laws, some people steered buyers to try and manipulate the market. Knowing all about it will help you prevent the same mistake and avoid the pitfalls that come with it.

What Is Steering in Real Estate?

Steering is the act of trying to separate a real estate prospect through categories. For example, an agent or company may steer them away or towards a specific neighborhood because of their:

• Race
• Religion
• Sex
• Nationality
• Status
• Disabilities
• Religion

Any separation with these criteria violates the Fair Housing Act, applying to all states. Some states even take it further and add more classifications to prevent steering. In some areas, you cannot steer based on income sources, sexual orientation, gender expression, or military status.

The truth is that even with these laws, some companies still practice steering. They try to influence their prospects in a direction that feels advantageous to their company. In such cases, the real estate company will become vulnerable to violations and complaints.

Steering is illegal, even with good intent. Even if the company or agent is looking for the buyer's best interest, it is not for them to determine where someone should live. Any act to encourage or discourage is considered steering. Another term for it is redlining real estate. Some examples of it include:

• Encouraging a tenant to live on a specific floor to lower complaints
• Encourage someone to live in an area because it is quiet or near their demographic
• Assuming a prospect’s race or gender and setting them up to live with someone similar
• Discouraging a prospect from getting a unit because they are concerned with a disability

The Best Practices to Avoid Steering

Steering complaints sometimes happen unintentionally. The reason is that some prospects often talk about house choices vaguely. For example, if a family is looking for a safe neighborhood, the real estate agent can recommend an area based on their experience. That alone can become grounds for steering because it involves subjective perception.

According to research, one out of every four persons gets steered into a specific community. There are ways where companies can avoid getting into this situation:

• Only talk about objective information when determining and recommending houses and neighborhoods.
• If a client is being vague with their description, ask them more objective questions. You can ask about the property features they’re looking for or the price.
• Only provide listings based on standard criteria. Do not create or recommend lists based on things like whether or not a neighborhood is considered safe.
• Be aware of why you’re recommending specific locations to clients. Avoid placing bias on places because of the prospect.

Another thing that companies should be aware of is when prospects try to steer themselves to specific communities. For example, a family is looking for a place near other people of their religious denomination. Others may ask about the type of people and families living in the area. You have the right to avoid answering those questions because it is illegal. Answering any of these questions creates an encouraging or discouraging effect.

Another pitfall is when prospects begin discussing schools in the neighborhood. Schools can also become a method for potential tenants to learn about the racial and national origins of people in the area. Never discuss those aspects or voice your opinions. Instead, talk about facts like the school’s achievements and even offer up the website. As long as you avoid talking about something subjective, you won’t potentially steer the prospective tenants.

The Effects of Steering

Steering affects an area because it can segment them and create societal barriers. People may experience living in places that lack many of the city’s amenities because they get steered into harsher environments. It reduces opportunities and stagnates the location, opening them up to issues like poverty and crime.

Based on different studies, several effects happen, as historically seen in steered areas. Some of them experienced:

• Little to no educational funding
• A lack of social structures that encouraged education or employment
• Lower health quality
• Lower physical and mental development
• Difficulty finding opportunities

What Happens When Someone Complains?

Residents can file complaints with the Department of Housing and Urban Development (HUD). Fair Housing and Equal Opportunity (FHEO) handles these cases. Once someone submits a complaint, they’ll send investigators to check if there is credence to the complaint. They’ll also give the agent or company a chance to respond to the issue.

Even then, it will be up to the FHEO to determine if the steering was a part of the equation. A company can defend itself to the best of its ability, but final judgment will be up to the investigators. If they find that steering occurred, the complainant may take legal action, or both parties find a way to reconcile the situation.

These complaints can happen if there is a conflict in the contract. Reconciliation means the early termination of a contract and the ability to switch agents. If the case reaches court, it can even lead to damages which can hurt the company financially.

Maintain a Clear Policy

Even with the best intentions, people in a company may not be aware that they are engaging in acts like steering. Having a clear policy that addresses it will reduce the incidents. Inform staff to describe units based on features and avoid answering anything subjectively. From there, a company should keep track of their paper trail that shows why they chose the property. This can help stave off any complaints that arise.

One of the best practices for companies is to show units with the highest length vacancies first. It removes the steering element, as the company only follows an objective policy. If you are using a form to find housing solutions, having a copy of the questions can help with any investigation. It’s a good idea to keep notes and other relevant information to protect your interests as well. 

Avoid the Pitfalls

It is the company's job to profit by letting prospects lease their vacancies. However, it’s the process of encouraging and discouraging clients based on vague preferences that could lead to steering. Training is essential to avoid any of these issues. Every employee needs to be aware of how they can prevent it. If you need property management software to help with this issue, reach out to Exact Estate for help. 

We enable companies to have confidence that they’re showing properties without any intent of steering. Complying with the Fair Housing Act means knowing how to navigate these issues and adapting your policy to avoid conflicts. A wrong step here can lead to lawsuits, contract breaches, suspension, and termination. Contact us today to make sure your company is complying with the Fair Housing Act.