Avoid the pitfalls in steering housing prospects

Property Management

Property managers avoid the pitfalls in steering housing prospects by standardizing the intake process, applying identical eligibility criteria to every applicant, and using compliant software to document all unit offerings. Steering occurs when staff direct applicants toward or away from specific units based on protected characteristics, which violates fair housing laws. By enforcing uniform waitlist procedures and relying on automated compliance checks, teams eliminate subjective decision-making and ensure every prospect receives the same objective information regarding available inventory and income qualifications.

You might have heard of the term steering fair housing. It is a practice that violates the Fair Housing Act, and many in the field consider it unprofessional. It can create numerous societal issues, and before the laws, some people steered buyers to try and manipulate the market. Knowing all about it will help you prevent the same mistake and avoid the pitfalls that come with it. For related operational guidance, review property management tools and dashboards.

What Is Steering in Real Estate?

Steering is the act of trying to separate a real estate prospect through categories. For example, an agent or company may steer them away or towards a specific neighborhood because of their:

Any separation with these criteria violates the Fair Housing Act, applying to all states. Some states even take it further and add more classifications to prevent steering. You cannot steer in some areas based on income sources, sexual orientation, gender expression, or military status.

The truth is that even with these laws, some companies still practice steering. They try to influence their prospects in a direction that feels advantageous to their company. The real estate company will become vulnerable to violations and complaints in such cases.

Steering is illegal, even with good intent. Even if the company or agent is looking for the buyer's best interest, it is not for them to determine where someone should live. Any act to encourage or discourage is considered steering. Another term for it is redlining real estate. Some examples of it include:

The Best Practices to Avoid Steering

Steering complaints sometimes happen unintentionally. The reason is that some prospects often talk about house choices vaguely. For example, if a family is looking for a safe neighborhood, the real estate agent can recommend an area based on their experience. That alone can become grounds for steering because it involves subjective perception.

According to research, one out of every four persons gets steered into a specific community. There are ways where companies can avoid getting into this situation:

Another thing that companies should be aware of is when prospects try to steer themselves to specific communities. For example, a family is looking for a place near other people of their religious denomination. Others may ask about the type of people and families living in the area. You have the right to avoid answering those questions because it is illegal. Answering any of these questions creates an encouraging or discouraging effect.

Another pitfall is when prospects begin discussing schools in the neighborhood. Schools can also become a method for potential tenants to learn about the racial and national origins of people in the area. Never discuss those aspects or voice your opinions. Instead, talk about facts like the school’s achievements and even offer up the website. As long as you avoid talking about something subjective, you won’t potentially steer the prospective tenants.

The Effects of Steering

Steering affects an area because it can segment them and create societal barriers. People may experience living in places that lack many of the city’s amenities because they get steered into harsher environments. It reduces opportunities and stagnates the location, opening them up to issues like poverty and crime.

Different studies show several effects, as historically seen in steered areas. Some of them experienced:

What Happens When Someone Complains?

Residents can file complaints with the Department of Housing and Urban Development (HUD). Fair Housing and Equal Opportunity (FHEO) handles these cases. Once someone submits a complaint, they’ll send investigators to check if there is credence to the complaint. They’ll also allow the agent or company to respond to the issue.

Even then, it will be up to the FHEO to determine if the steering was a part of the equation. A company can defend itself to the best of its ability, but final judgment will be up to the investigators. If they find that steering occurred, the complainant may take legal action, or both parties may find a way to reconcile the situation.

These complaints can happen if there is a conflict in the contract. Reconciliation means the early termination of a contract and the ability to switch agents. If the case reaches court, it can even lead to damages, hurting the company financially.

Maintain a Clear Policy

Even with the best intentions, people in a company may not be aware that they are engaging in acts like steering. Having a clear policy that addresses it will reduce the incidents. Inform staff to describe units based on features and avoid answering anything subjectively. From there, a company should keep track of their paper trail that shows why they chose the property. This can help stave off any complaints that arise.

One of the best practices for companies is to show units with the highest length vacancies first. It removes the steering element, as the company only follows an objective policy. If you use a form to find housing solutions, having a copy of the questions can help with any investigation. Keeping notes and other relevant information to protect your interests is a good idea. 

Avoid the Pitfalls

The company's job is to profit by letting prospects lease their vacancies. However, the process of encouraging and discouraging clients based on vague preferences could lead to steering. Training is essential to avoid any of these issues. Every employee needs to be aware of how they can prevent it. If you need property management software to help with this issue, contact Exact Estate. 

We enable companies to have confidence that they’re showing properties without any intent of steering. Complying with the Fair Housing Act means navigating these issues and adapting your policy to avoid conflicts. A wrong step here can lead to lawsuits, contract breaches, suspension, and termination. Contact us today to ensure your company complies with the Fair Housing Act. 

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Frequently asked questions

How to avoid the pitfalls of steering housing prospects?

Teams can mitigate these risks by standardizing application criteria, training staff on Fair Housing laws, and using property management software to enforce compliant workflows.

What are the most common pitfalls in steering housing prospects?

The most common pitfalls in steering housing prospects include directing applicants toward or away from specific neighborhoods based on protected classes, providing inconsistent information about availability, and applying different screening criteria to different applicants. Using standardized workflows and compliant property management software ensures every prospect receives identical guidance and documentation.

How do affordable housing thresholds relate to steering complaints?

In affordable housing, misrepresenting eligibility requirements to discourage certain applicants is a subtle form of steering. Staff must accurately communicate income and asset limits to all prospects uniformly, as providing incorrect figures or applying stricter verbal criteria to protected classes can easily trigger a fair housing complaint. For instance, 24 CFR 5.603 defines a low-income family as follows:

How do payment standard limits impact voucher steering?

When managing Housing Choice Vouchers, staff must apply payment standards uniformly to avoid steering families to specific neighborhoods based on income or family size. Inconsistent application of Fair Market Rent thresholds across different demographics is a primary driver of steering complaints and fair housing violations.

Misrepresenting income limits or asset thresholds to discourage certain applicants is a primary driver of steering complaints. Staff must accurately apply income definitions during the intake process. Under 24 CFR 5.603, a qualifying low-income family is defined as follows: 'A family whose annual income does not exceed 80 percent of the median income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 80 percent of the median income for the area on the basis of HUD's findings that such variations are necessary because of unusually high or low family incomes.' Furthermore, under 24 CFR 5.618, heightened verification applies when the family's net assets trigger the threshold: '(i) The family's net assets (as defined in § 5.603) exceed $100,000, which amount will be adjusted annually by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers;' Providing incorrect thresholds to steer prospects away from available units creates severe fair housing liabilities.

Steering often occurs when property managers incorrectly tell Housing Choice Voucher holders that a unit is out of their price range based on a misunderstanding of payment standards. According to 24 CFR 982.503, 'A basic range payment standard amount is any dollar amount that is in the range from 90 percent up to 110 percent of the published FMR for a unit size.' When staff falsely claim a unit's rent exceeds these limits to discourage voucher holders from applying, they engage in illegal steering. Managers must train their teams on these exact boundaries to ensure prospects are evaluated fairly against the actual parameters rather than assumptions.