What Is Steering in Real Estate?

Every steering 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. 1. An agent shows a minority buyer homes only in neighborhoods with a similar demographic profile. This is:

   • ABlockbusting
   • BSteeringcorrect
   • CRedlining
   • DA permissible preference

   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.

   Practice of real estate

   Key term: blockbusting

2. 2. An Alabama licensee receives an unearned referral payment from a landscape contractor for steering the buyer to that contractor, and tells all parties. Under the Commission's rebate guidance, what is the effect of the disclosure?

   • AIt makes the payment permitted if the disclosure is in writing
   • BIt converts the payment into compensation for actual services
   • CIt makes the payment permitted if it is paid before closing
   • DIt does not legalize the prohibited rebatecorrect

   Why: The Commission explains that disclosure does not make a rebate legal and lists contractor referral fees as examples. Describing an unearned payment openly, in writing or before closing, does not turn it into an earned service fee.

   Practice of real estate

3. 3. An Arizona listing salesperson would earn a larger commission by steering the seller toward a quick offer, though a better offer is likely. Which fiduciary duty requires her to put the seller's needs before her own?

   • ALoyaltycorrect
   • BObedience
   • CAccounting
   • DConfidentiality

   Why: ADRE's curriculum defines loyalty as putting the client's needs before your own, which is what bars steering the seller for a bigger commission. Obedience, accounting and confidentiality cover lawful instructions, timelines and money, and protected information.

   Agency

4. 4. An Idaho lender offers a licensee an unearned fee solely for steering a buyer’s financing to it. No compensable service is being supplied. Does telling the parties in writing make that steering fee permissible?

   • AYes; any prohibited fee becomes lawful after written disclosure
   • BYes; calling the payment a marketing allowance removes the prohibition
   • CYes; the fee becomes lawful if paid after closing rather than before
   • DNo; disclosure does not legalize the prohibited kickback or unearned financing referral feecorrect

   Why: IC 54-2054(6) prohibits the specified financing kickbacks and unearned fees. Its separate disclosure rule for legally received service compensation does not make the stated unearned steering payment lawful.

   Practice of real estate

5. 5. An Iowa salesperson accepts a payment from a lender for steering a buyer client to that lender for a loan. How does the Commission's rule classify the payment?

   • APermitted when the lender is a bank or other regulated institution
   • BPermitted if the salesperson shares the payment with the broker
   • CA violation, because accepting it is not in the public's best interestcorrect
   • DPermitted when the buyer is told about the payment orally

   Why: 481 IAC 2007.5 treats a licensee's acceptance of a fee or anything of value from a lender for referring or steering a client to a loan as a violation. Disclosure or sharing with the broker does not cure it.

   Practice of real estate

6. 6. A Kansas licensee knowingly accepts a payment from a title agent as a reward for steering a title insurance policy, and no statutory exception in the insurance code applies. How is this treated?

   • AIt is allowed if the title policy itself is valid
   • BIt is allowed if the payment is routed indirectly through another person
   • CIt is prohibited as a direct or indirect rebate or benefit for title insurance businesscorrect
   • DIt is allowed if the payment is made after closing

   Why: Section 3062(a)(23) prohibits knowingly accepting, directly or indirectly, a rebate, reduction or abatement of any charge for title insurance business, except as authorized by K.S.A. 40-2404. Indirect routing or later payment does not remove the prohibition.

   Practice of real estate

7. 7. A Pennsylvania buyer's agent sees a chance to raise the agent's own compensation by steering the buyer toward terms that hurt the buyer. What does the duty of loyalty require?

   • AFollowing the seller's instructions when the seller contributes to compensation
   • BActing consistently with the buyer's interest in the transactioncorrect
   • CStaying loyal to the buyer until the first offer is signed
   • DTelling the seller about the opportunity and letting the seller decide

   Why: Section 606.3(1) requires a buyer's broker to be loyal by taking action consistent with the buyer's interest. A chance at higher compensation does not reverse that duty.

   Agency

8. 8. A Washington real estate licensee offers another licensee a reward for steering title business to an agency in which the first licensee has a financial interest. What does this provision prohibit?

   • APayments labeled kickbacks, while an identical bonus labeled marketing support is allowed
   • BThe direct or indirect thing of value offered as that title-business inducementcorrect
   • CCash payments, while non-cash rewards such as gifts or trips are allowed
   • DNothing, if both recipients hold real estate licenses

   Why: RCW 18.85.053(1) covers fees, kickbacks, payments and other things of value used as an inducement or reward for placing title business with a financially connected agency. Changing the label or the form of the reward does not remove the prohibition.

   Practice of real estate