Definition of steering in real estate

Steering refers to the illegal practice of directing a prospective homebuyer toward — or away from — a particular neighborhood or area based on protected characteristics. These characteristics include race, religion and more.

What is steering?

In a real estate context, steering is an illegal form of housing discrimination. The federal Fair Housing Act, passed in 1968 as part of the larger Civil Rights Act, prohibits real estate professionals from participating in this practice. This means they may not “steer” buyers either toward or away from neighborhoods based on any of the following:

• Race
• Color
• Religion
• Sex or gender
• Family status
• National origin
• Disability

How it affects homebuying and selling

The provisions of the Fair Housing Act were intended to prevent housing discrimination and ensure that all classes have equal access to affordable housing. As a result, real estate agents and landlords must take care when disclosing details concerning the demographics of a neighborhood, as doing so may be construed as showing favoritism toward a certain group of people.

The National Association of Realtors works to educate its members about Fair Housing. Its best practices for avoiding steering include communicating only objective information about neighborhoods to clients, and learning to recognize and pay attention to unconscious biases.

For example, a Realtor should not recommend a “good” or “nice” or “safe” neighborhood, but rather should ask the client for specific, objective criteria on what they are looking for. Similarly, Realtors are discouraged from having their clients write a “love letter” to a seller in the hopes of having their offer accepted, because revealing personal characteristics can affect the seller’s judgment in a discriminatory way (whether consciously or unconsciously).

Steering example

Here are a couple examples of how steering can impact a real-life real estate transaction. If you are originally from India, for instance, it is unlawful for your real estate agent or rental broker to try to persuade you to move into a neighborhood with a large population of Indian immigrants. If you would like to do so, you are certainly welcome to restrict your search to those areas, but your agent may not steer you toward them, because national origin is a protected class.

Familial status is also a protected class, so the same also holds true if, for example, you have young children — your agent may not steer you toward neighborhoods with lots of other young families, but you may research them yourself and request to look at listings in those neighborhoods.