Key Takeaways
- Blockbusting is inducing panic selling by claiming protected classes are moving into an area
- Steering is directing buyers/tenants toward or away from areas based on protected class
- Redlining is denying services or financing based on neighborhood demographics
- All three practices are illegal under both federal and New York law
- Even subtle steering through school district comments can violate fair housing
Last updated: January 2026
Blockbusting, Steering & Redlining
These three prohibited practices are heavily tested on the NY exam.
Blockbusting (Panic Peddling)
Blockbusting is inducing owners to sell by claiming protected classes are moving into the area:
Elements of Blockbusting
| Element | Description |
|---|---|
| Inducement | Encouraging sale |
| Fear | Based on changing demographics |
| Protected class | Race, religion, etc. |
| Profit motive | Agent seeks listings |
Examples of Blockbusting
| Illegal Statement | Why It's Blockbusting |
|---|---|
| "Property values will drop when they move in" | Fear of protected class |
| "You should sell before it's too late" | Inducing panic |
| "The neighborhood is changing" | Code for demographics |
| "Better sell now while you can" | Creating urgency from fear |
Steering
Steering is directing buyers/tenants toward or away from areas:
Types of Steering
| Type | Description |
|---|---|
| Positive | Directing toward "their" area |
| Negative | Directing away from area |
| Subtle | School district, "you'd fit in" |
| Overt | "That area isn't for you" |
Steering Examples
| Illegal Action | Why It's Steering |
|---|---|
| Only showing certain neighborhoods | Limiting choices by race |
| "The schools are better here" | Coded steering |
| "You'd be more comfortable in..." | Directing by protected class |
| Not mentioning listings in certain areas | Steering by omission |
Redlining
Redlining is denying services based on neighborhood:
Forms of Redlining
| Form | Description |
|---|---|
| Lending | Refusing loans in certain areas |
| Insurance | Denying coverage by ZIP code |
| Appraisal | Undervaluing minority areas |
| Real estate services | Refusing to work in areas |
Modern Redlining
Redlining can be subtle:
| Practice | Issue |
|---|---|
| Digital marketing targeting | Excluding certain demographics |
| Loan pricing | Higher rates by area |
| Appraisal bias | Undervaluation patterns |
Penalties
| Violation | Potential Penalty |
|---|---|
| License action | Suspension, revocation |
| Civil penalties | Up to $250,000 (NY) |
| Compensatory damages | Actual losses |
| Punitive damages | Additional punishment |
| Criminal charges | Severe cases |
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Test Your Knowledge
An agent tells homeowners "The neighborhood is changing—you should sell now before property values drop." This is an example of:
A
B
C
D
Test Your Knowledge
A real estate agent only shows properties in certain neighborhoods to minority buyers. This practice is called:
A
B
C
D