PSI New Jersey Real Estate State Practice Exam

What is the term for limiting the neighborhoods in which a licensee shows houses due to a buyer's race?

1. Redlining

2. Steering

3. Blockbusting

4. Predatory lending

The correct answer is: Steering

The term that refers to limiting the neighborhoods in which a licensee shows houses based on a buyer's race is known as "steering." Steering occurs when real estate agents guide prospective homebuyers toward or away from certain neighborhoods based on their race, ethnicity, or other protected characteristics. This practice is discriminatory and violates fair housing laws, which aim to provide equal access to housing for all individuals, regardless of their background. In the context of this question, steering is the correct answer because it directly describes the action of influencing a buyer’s choices based on racial demographics. It contrasts with other terms such as redlining, which historically refers to the practice of denying services, typically financial, to residents of certain areas based on race or ethnicity, usually by banks or insurance companies. Blockbusting involves convincing homeowners to sell their properties at a loss by promoting the fear of neighborhood change typically associated with racial integration. Predatory lending refers to unfair lending practices that can lead to borrowers being trapped in high-cost loans. Each of these terms describes significant issues in real estate, but they address different practices from steering.