Steering in real estate, a practice where certain parties guide buyers or sellers towards specific properties or services, can involve multiple entities. Real estate agents serve as intermediaries, facilitating transactions and potentially influencing decisions. Lenders and mortgage brokers, providing financial assistance, may have preferences that could shape the selection process. Homeowners and sellers have the ultimate authority over their properties, and their financial goals and personal preferences can guide the steering process. Builders and developers, offering new construction or developments, may have economic incentives to encourage sales towards their projects.
Steering in Real Estate – The Best Structures
Steering in real estate refers to the unethical practice of directing a buyer or seller to a specific professional, such as a lender or title company, with whom the agent has a financial relationship. While it is illegal in many states, it still occurs, so it is important to be aware of the different steering structures and how to protect yourself.
The most common steering structures are:
- Referral fees: The agent receives a commission or fee from the professional they refer the business to.
- Joint ventures: The agent and the professional they refer the business to have a joint financial interest in the transaction.
- Cross-marketing: The agent and the professional they refer the business to cross-promote each other’s services.
Here are some tips to protect yourself from steering:
- Ask your agent if they have any financial relationships with any professionals they are recommending.
- Get referrals from friends, family, or other trusted sources.
- Interview multiple professionals before making a decision.
- Compare the fees and services offered by different professionals.
- Be wary of any agent who pressures you to use a specific professional.
If you believe you have been the victim of steering, you can file a complaint with your state’s real estate commission.
| Steering Structure | Description |
|---|---|
| Referral fees | The agent receives a commission or fee from the professional they refer the business to. |
| Joint ventures | The agent and the professional they refer the business to have a joint financial interest in the transaction. |
| Cross-marketing | The agent and the professional they refer the business to cross-promote each other’s services. |
How to Protect Yourself from Steering
- Ask your agent if they have any financial relationships with any professionals they are recommending.
- Get referrals from friends, family, or other trusted sources.
- Interview multiple professionals before making a decision.
- Compare the fees and services offered by different professionals.
- Be wary of any agent who pressures you to use a specific professional.
Question 1:
What is the definition of steering in real estate?
Answer:
Steering in real estate refers to the act of a real estate agent or broker guiding their clients towards specific properties or neighborhoods based on the agent’s own financial interests or biases.
Question 2:
How can steering in real estate impact homebuyers?
Answer:
Steering can limit homebuyers’ options and prevent them from finding properties that best meet their needs and financial situations, potentially leading to housing discrimination.
Question 3:
What are the legal implications of steering in real estate?
Answer:
Steering in real estate is illegal under the Fair Housing Act, which prohibits housing discrimination based on race, color, religion, sex, national origin, familial status, or disability. Violators may face legal consequences, including fines, imprisonment, and loss of their licenses.
That’s a wrap for our deep dive into steering in real estate. Hopefully, you now have a clearer understanding of this unethical and illegal practice. If you ever encounter anything that seems like steering, don’t hesitate to report it to the appropriate authorities. By working together, we can make the housing market fairer for everyone. Thanks for reading, and be sure to check back for more real estate insights soon!