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Practice of Real Estate term

Blockbusting

The illegal practice of inducing owners to sell by suggesting a protected class is moving into the area.

Why Blockbusting matters on the exam

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Exam questions using Blockbusting

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The illegal practice of a lender refusing to make loans, or limiting loan terms, in certain neighborhoods based on the racial or ethnic composition of the area is known as:

  1. Redlining
  2. Blockbusting
  3. Steering
  4. Panic peddling
Show answer & explanation

Redlining — Redlining is the discriminatory practice of denying or limiting financial services, such as loans and insurance, to residents of particular areas based on race or ethnicity rather than creditworthiness.

Source: PSI National Real Estate Exam Content Outline §4 Financing

Encouraging homeowners to sell by suggesting that people of a particular protected class are moving into the neighborhood is known as:

  1. Steering
  2. Redlining
  3. Blockbusting
  4. Puffing
Show answer & explanation

Blockbusting — Blockbusting, also called panic selling, is inducing owners to sell by representing that persons of a protected class are entering the area. It is illegal under the federal Fair Housing Act.

Source: Federal Fair Housing Act (42 U.S.C. §3604)

An agent who shows minority buyers homes only in certain neighborhoods based on their protected class is engaging in:

  1. Blockbusting
  2. Redlining
  3. Dual agency
  4. Steering
Show answer & explanation

Steering — Steering is channeling homebuyers toward or away from neighborhoods based on a protected class, limiting their housing choices. It violates the federal Fair Housing Act even when done with good intentions.

Source: Federal Fair Housing Act (42 U.S.C. §3604)

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