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Steering is a term every homebuyer and Realtor should know. Bankrate explains it.

What is steering?

Steering refers to the illegal practice of directing a prospective homebuyer to or away from a neighborhood based on the presence or absence of protected classes.

Deeper definition

The Federal Housing Act prohibits real estate agents from participating in steering. Agents are not allowed to “steer” buyers away from neighborhoods based on the following:

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

The provisions of the Federal Housing Act were originally enacted to prevent housing discrimination and ensure that all classes have access to affordable housing. Realtors must take care when disclosing details concerning the demographics of a neighborhood, as regulators may construe this as showing favoritism toward a certain group of people.

It is important to note that it is not illegal for a homebuyer to seek or avoid a neighborhood in search of or avoidance of a protected class. However, the buyer’s real estate agent is not allowed to help the buyer do so.

Steering example

If you are originally from Puerto Rico, it is unlawful for your real estate agent to try to persuade you to move into a neighborhood with a large population of immigrants from Puerto Rico. If you prefer a neighborhood with certain demographics, you can use the U.S. Census website to learn about the characteristics of an area.

Assume that you have young children and want to find a neighborhood with other young families. If you ask your real estate agent to show you homes in neighborhoods popular for families with children, your agent cannot oblige you, as family status is a protected class.

Is it time to make a move? Compare mortgage rates in your area to get the best terms for your mortgage.

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