What Is Steering in Real Estate?

Steering is illegal under the Fair Housing Act, but it still occurs. Learn more about steering, its adverse impacts on people and society, and what to do if you feel a real estate agent has steered you.

Definition and Example of Steering in Real Estate

Steering in real estate refers to an agent who steers potential buyers to neighborhoods as a discriminatory measure based on the buyer's racial, religious, or other demographic. In the United States, there is a history of segregation based on race or ethnicity.

In the past, one of the methods used to accomplish the goals of segregation was to create property covenants that restricted ownership in specific areas. Many such covenants are still being uncovered and removed—for example, in 2021, discriminatory property ownership covenants were still being identified in some areas.

Any advice or guidance from a real estate agent that differs based on a buyer's protected status, like race, is discriminatory and illegal. As a result, real estate agents may choose not to comment on specific aspects of a community or neighborhood, preferring to give you resources on things like school system scores and crime statistics rather than offering something that could be construed as an opinion.

If you notice your agent providing you with resources or statistics rather than opinions, they are trying to be an unbiased resource for you—they're not withholding information.

How To Identify Steering in Real Estate

Steering and other discriminatory practices have lasting effects on society and the people that endure them. Its effects are long-lasting because health problems, income disparities, lack of opportunity, crime, and violence have been linked to discriminatory real estate practices.

Steering can present itself in different ways; it doesn't necessarily need to be done by the real estate agent. This discriminatory practice can be recognized relatively easily. It could be anything from an outright refusal to show you homes in specific areas to a subtle suggestion or statement like:

• "You'd be more comfortable in this other neighborhood."
• "You wouldn't like this house."
• "This isn't a great neighborhood for your (culture, family type, religion)."
• "This is a better neighborhood for you."

Steering can also occur if agents do not show all properties that meet your criteria. If they shuffle through the listings, saying something similar to the previous statements, it might indicate that they are doing something they shouldn't be. Realtors should make an effort to show you all properties that meet your criteria, give you information about the area, and let you decide whether you'd like it or not.

What Are the Impacts of Steering?

Steering has several impacts on a population segment and society. It limits housing options and generally focuses on guiding specific races to neighborhoods and areas that don't have as much funding for education, law enforcement, or other public services.

It also reduces the educational and professional opportunities for the population being steered. Many areas people are steered into have less educational funding, higher poverty, and fewer opportunities that reduce a population segment's intergenerational upward mobility. Additionally, the neighborhood peer effects created by the social structures that emerge in these areas negatively affect college attendance and job referrals.

Steering can also affect a population's overall health. For example, studies have shown a correlation between areas with pollution and mental and physical development.

When combined, these effects create a cycle of keeping targeted races in a society impoverished and unhealthy, with lower levels of education and fewer opportunities.

What Should I Do If I Experience Steering in Real Estate?

The Office of Fair Housing and Equal Opportunity (FHEO) within the Department of Housing and Urban Development (HUD) receives and investigates housing discrimination complaints, including steering. The FHEO process requires the following steps:

1. You file a complaint.
2. HUD assigns one or multiple investigators to your case.
3. Investigators may ask you to provide more information, including a timeline and location of events.
4. HUD gives the accused a chance to respond to the complaint.
5. HUD concludes its investigation, sends you a report of HUD's findings, and, when applicable, takes legal action against the accused or offers a voluntary conciliatory agreement you and the accused sign.

If you believe your agent is reluctant to show you homes but their behaviors or statements cause you to doubt whether you're experiencing steering, you can file a complaint with FHEO to initiate the process and let them handle the discovery of further evidence. You can also request to leave your contract with that agent.

Your agent may allow you to leave your contract if they agree the partnership isn't a good fit. When shopping for a different agent, or even in your initial talks with your first agent, it's a good idea to discuss the neighborhoods you want to consider before you sign a contract; then, talk with them first to make sure that they aren't the type of agent who will try to steer you.