What Is Blockbusting in Real Estate?
Blockbusting is a fair housing violation in which an agent induces owners to sell by suggesting that people of a protected class are moving into the neighborhood. It is illegal under the Fair Housing Act whether or not the claim is true.
How the exam tests blockbusting
These mirror the phrasing you will see on test day. Answer them, then read the explanation whether or not you got it right.
An agent tells homeowners on a block that "several families of a different ethnic background are moving in, and values will fall. You should list now." This is:
Every blockbusting question, answered
Every question above with its correct answer and the reasoning behind it. Read the explanations for the ones you answered correctly too. A lucky guess and knowing the rule look identical on a score report. These are sample questions from our larger bank.
1. An agent tells homeowners on a block that "several families of a different ethnic background are moving in, and values will fall. You should list now." This is:
Why: Inducing panic selling by referencing the entry of a protected class is blockbusting, illegal under the Fair Housing Act. It remains illegal whether or not the claim about values is true.
Key term: Fair Housing Act
2. Telling homeowners they should list now because families of a different race are moving into the area and property values will fall is:
Why: Inducing owners to sell or rent by representing that the entry of members of a protected class will lower values or raise crime is blockbusting, and it is prohibited whether or not any sale actually results.
3. A licensee mails flyers telling owners that values will drop because a minority family has bought nearby. This conduct is:
Why: Inducing owners to sell by predicting decline tied to a protected class is blockbusting. Steering is the different act of channeling buyers toward or away from areas, and calling the flyer a market opinion does not help because the prediction itself is the prohibited inducement.
Key term: steering
4. Hoping long-time tenants will not renew so units can be upgraded, an owner tells them minority families are moving in and the area is going downhill. This conduct is:
Why: Using representations about the entry of a protected class to induce people to sell, rent or move out is blockbusting, and the prohibition covers rental transactions as fully as sales. The absence of a sale is no defense, and framing the remarks as opinion does not help.
5. Two brokerages agree that one will serve only the north side of the city and the other only the south. This violation is called:
Why: Dividing territory between competitors is market allocation, a per se Sherman Act violation. Note the trap: steering, blockbusting and redlining are fair housing violations, not antitrust ones.
Key terms: steering, market allocation
6. An agent shows a minority buyer homes only in neighborhoods with a similar demographic profile. This is:
Why: Directing buyers toward or away from neighborhoods based on a protected characteristic is steering. Blockbusting targets sellers; redlining is a lender refusing to lend in an area.
Key term: steering
7. A Maryland licensee mails homeowners a flyer urging them to sell soon because homes nearby are being bought by families of a particular national origin. How does 17-322 treat this conduct?
Why: 17-322(b)(16) makes it a ground for discipline when a licensee, "whether or not acting for monetary gain," knowingly induces or attempts to induce a person to transfer real estate by representations about the proximity of property owned or used by people of a particular race, color, religion, sex, handicap, familial status or national origin. This is blockbusting.
8. A person with no Massachusetts license advertises himself as a real estate broker. Under M.G.L. c. 112, s. 87CCC, what is the maximum fine for acting or advertising as a broker without the required license?
Why: Section 87CCC punishes acting or advertising as a broker or salesman without the license required by s. 87RR by a fine of not more than $500. The $1,000 to $2,500 range is the blockbusting fine in s. 87AAA, and $5,000 is the broker bond under s. 87TT.
Where blockbusting sits in the exam vocabulary
Related exam terms
Blockbusting belongs to the fair housing violation family of exam concepts. When it is solid, take the free real estate exam prep or browse the full real estate vocabulary.