The information contained in this article relates to the fair housing law standards set forth in state law, federal law and the REALTOR® Code of Ethics related to steering.
Steering overview
What is steering?
Steering is the practice of directing potential buyers toward or away from a particular neighborhood or community based upon a protected characteristic such as race, color or ethnicity. Illegal steering substitutes the judgment of the real estate licensee for that of the buyer and thus eliminates or restricts the buyer’s choice. For example, suggesting an African-American couple focus their search on a neighborhood because it is predominately African-American and discouraging them from looking in a nearby neighborhood that is predominately white is steering. The same is true when a licensee inconsistently applies prerequisites for providing services. Such examples of this include requiring a prequalification letter from African-American buyers but not from white buyers, only requiring buyers of a certain national origin to show ID, or requiring only Muslim buyers to sign a buyer agency agreement before showing them a home.
Laws and the REALTOR® Code of Ethics
What does the federal Fair Housing Act (FHA) provide with regard to steering?
Under the FHA, steering is the process of influencing a buyer’s choice of communities based upon the buyer’s race, color, religion, gender, disability, familial status or national origin. Steering on the basis of any of the characteristics defined under the FHA is unethical and illegal because it limits the housing opportunities available to that buyer.
One way that such “directing” can occur is through an agent’s comments — either positive or negative — about a community. For example, if an agent limits or does not provide housing options to a buyer in a community because of the community’s racial composition, that agent may effectively be making housing unavailable. Or if an agent expresses their own positive or negative views about certain communities or schools, the purpose of which is to direct a buyer either toward or away from a community, then that agent may be stating a housing preference based on race or familial status or religion. These would be violations of both the FHA and federal fair housing regulations.
How does the Wisconsin Open Housing law apply to steering?
Under Wisconsin law, in Wis. Stat. § 106.50, “discriminate” means to segregate, separate, exclude or treat a person or class of persons unequally because of sex; race; color; sexual orientation; disability; religion; national origin; marital status; family status; status as a victim of domestic abuse, sexual assault or stalking; lawful source of income; age; or ancestry. Specific prohibited discriminatory actions include falsely representing that housing is unavailable for inspection, rental or sale, or executing different or more stringent prices, terms or conditions, or by refusing to negotiate. Wisconsin practitioners agree with their clients in listing contracts and buyer agency agreements that they will not discriminate.
The penalties for Wisconsin licensees who discriminate and steer based on race are more severe than for other license law violations. Wis. Admin. Code § REEB 24.03(1) makes it clear that licensees may not discriminate against, may not deny equal services to, and may not be a party to any plan or agreement to discriminate against any person in any manner unlawful under applicable federal, state or local fair housing law. Under Wis. Stat. § 452.14(3)(jm), the Real Estate Examining Board (REEB) may revoke, suspend or limit the license of any licensee, or reprimand the licensee, if the REEB finds the licensee has intentionally encouraged or discouraged any person from purchasing or renting real estate in a particular area on the basis of race. In addition to these penalties, the REEB shall, for the first offense, suspend the license for not less than 90 days; and for the second offense, the REEB shall revoke the license.
What does the REALTOR® Code of Ethics provide relating to steering?
Illegal racial steering also violates the REALTOR® Code of Ethics; equal services are not being provided to each buyer when buyers are selectively shown properties based upon a REALTOR®’s assumptions or values as opposed to the stated desires and choices of the prospect. Under Article 10 of the Code of Ethics, a failure to provide equal services to all buyers and participation in any discrimination against any members of a federally protected class, or based on sexual orientation or gender identity, are unethical.
Article 10:
“REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity. (Amended 1/23)”
Standard of Practice 10-1:
“When involved in the sale or lease of a residence, REALTORS® shall not volunteer information regarding the racial, religious or ethnic composition of any neighborhood nor shall they engage in any activity which may result in panic selling, however, REALTORS® may provide other demographic information. (Adopted 1/94, Amended 1/06)”
Avoiding steering
What is the best way for licensees to avoid steering?
To avoid any steering or discrimination, licensees may wish to strictly adhere to the following guidelines and use checklists to ensure the provision of equal housing service to all buyers:
- Any prerequisites to providing services must be uniform, consistent and objective
- Licensees should have a standard list of questions they always ask all buyers to determine the type of property the prospect is interested in. These questions should be based on objective criteria such as price point; financial qualification; neighborhood amenities; distance from work, schools, parks and other locations; and any other factor the prospect identifies as important.
- Avoid giving personal opinions about a community or area, even if asked. Instead, guide buyers to third-party sources to answer their questions about neighborhood-specific information, like school ratings and crime statistics, allowing the buyers to research and come to their own decision regarding the neighborhoods they are interested in.
Buyers should be provided with information about a variety of neighborhoods and homes within their price range and then be permitted to choose where to look and, ultimately, where to live. Licensees should never assume that any area is off limits to anyone based on their race, color, national origin, ethnicity, religion, disability or any other factor that is treated under fair housing law as a protected class. Licensees may “steer” buyers to properties as long as they are guiding buyers to properties that match the buyers’ qualifications, search parameters, property features and specified needs the buyers have designated. Fair housing is about choice — the buyer’s choice.
If there is an allegation of an agent engaged in illegal steering, where could a consumer file a complaint?
The consumer may communicate concerns directly with the agent or with the manager or broker of the firm. Complaints maybe filed with the REEB if there is an allegation of a violation of Wis. Stat. Chap. 452. A complaint based on an allegation of a Code of Ethics violation would be filed with the REALTOR® association. The Equal Rights Division of the Wisconsin Department of Workforce Development also enforces Wisconsin Open Housing law. The same conduct may put an agent or licensee at risk for multiple complaints.
Learn more about steering
Newsday steering investigation
WRA resources