Real Estate Sales Fair Housing and Ethics Questions and Answers — Questions and Answers
Question 1: A real estate agent approaches homeowners in a diverse neighborhood and warns them that property values are likely to fall due to an increasing number of minority families moving in. The agent then offers to list their properties for a quick sale. This illegal practice is known as:
- Panic peddling (Correct answer)
- Steering
- Redlining
- Price fixing
Correct answer: Panic peddling
Panic peddling, also known as blockbusting, is the illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular protected class into the neighborhood. This tactic creates 'panic' to generate listings.
Question 2: A licensee is working with a couple and, based on their national origin, decides to show them properties only in neighborhoods with a high concentration of residents from the same background. The licensee assumes they would be 'more comfortable' there. This is an example of the illegal practice of:
- Blockbusting
- Steering (Correct answer)
- Redlining
- Puffing
Correct answer: Steering
Steering is the illegal practice of guiding or channeling prospective homebuyers towards or away from certain neighborhoods based on their protected class status, such as race or national origin. This limits their housing choices and perpetuates segregation.
Question 3: Under the Fair Housing Act, a landlord is required to make changes in rules, policies, practices, or services to afford a person with a disability an equal opportunity to use and enjoy a dwelling. Which of the following is the best example of a required reasonable ACCOMMODATION?
- Allowing a tenant to install a wheelchair ramp to the front door at their own expense.
- Completely renovating the kitchen with new appliances for a tenant with severe allergies.
- Assigning a specific, conveniently located parking space to a tenant with a documented mobility impairment. (Correct answer)
- Paying to install grab bars in the bathroom for a tenant in a wheelchair.
Correct answer: Assigning a specific, conveniently located parking space to a tenant with a documented mobility impairment.
A reasonable accommodation is a change in rules, policies, or services. Assigning a parking space is a change in policy. Installing a ramp or grab bars are considered 'reasonable modifications'—physical changes to the property—which are typically paid for by the tenant.
Question 4: The Federal Fair Housing Act prohibits discrimination based on seven protected classes. Which of the following characteristics is NOT a protected class under the federal act itself, although it may be protected under some state or local laws?
- Religion
- Familial Status
- Disability
- Sexual Orientation (Correct answer)
Correct answer: Sexual Orientation
The seven federally protected classes are race, color, religion, national origin, sex, disability, and familial status. While HUD now investigates complaints of discrimination based on sexual orientation and gender identity under its interpretation of 'sex', it is not an explicitly listed protected class in the text of the Fair Housing Act itself.
Question 5: A REALTOR® is representing a seller. The REALTOR®'s own brother submits an offer to purchase the property. According to the NAR Code of Ethics, what is the REALTOR®'s primary obligation?
- To advise the seller to reject the offer to avoid a conflict of interest.
- To recommend their brother's offer over others, as they can vouch for his reliability.
- To reduce their commission since a family member is involved in the transaction.
- To disclose their personal relationship with the buyer to the seller in writing. (Correct answer)
Correct answer: To disclose their personal relationship with the buyer to the seller in writing.
Article 4 of the NAR Code of Ethics requires REALTORS® to make their true position known when they or their immediate family members have an interest in a property or are parties to a transaction. This disclosure must be in writing and ensures all parties can make informed decisions.
Question 6: A mortgage company has an internal policy of denying all loan applications for properties located within a certain neighborhood because a majority of the residents are minorities. This is done without considering the creditworthiness of individual applicants. This illegal discriminatory practice is called:
- Steering
- Redlining (Correct answer)
- Blockbusting
- Appraisal fraud
Correct answer: Redlining
Redlining is the illegal practice of refusing to provide financial services, such as mortgage loans, to residents of specific geographic areas based on the racial or ethnic composition of that area. The term comes from the historical practice of drawing a 'red line' on a map around neighborhoods considered undesirable for investment.
Real Estate Sales Fair Housing and Ethics Questions and Answers
A real estate agent approaches homeowners in a diverse neighborhood and warns them that property values are likely to fall due to an increasing number of minority families moving in.
The agent then offers to list their properties for a quick sale.
This illegal practice is known as: