What is Blockbusting in Real Estate?

Business Knowledge

Today we are here to discuss What is Blockbusting in Real Estate? and it all related aspects, Blockbusting is a blockage in properties through real estate agents or investors. If we describe it in simple words, we can say that it is a process of manipulating the homeowners to sell their property to the other one at a cheap price against racial minorities so that real estate agents can consume the commission between the homeowners and the buyers. This overall process is called blockbusting in real estate.

Blockbusting is an act that no one does by their own will, it is done by giving into pressure and fear of losing or by lying on social or economic things.

In the USA, Blockbusting has been declared illegal under the Federal Fair Housing Act (1986), also known as the Civil Rights Act of 1968. This act describes some penalties against violence or intimidation and for other illegal purposes. If we talk about blockbusting with an example:

In the USA, real estate business agents trying to convince white owners to sell their property or put a property on rent by telling lies such as people of other castes (black peoples) will soon shift in their area to scare them and they will make their private rules for society or land rates are going to be even cheaper in the coming time. So they adopt such crooked techniques which are also called cleverness. 

How real estate agent do blockbusting in real estate

Real estate agents or builders or investors are all the same and lying on the same platform in a blockbusting line because the motives of all are not different if they want to get a big commission for their earning purpose. 

They try to convince those people who don’t want to go anywhere by selling their home at a cheap price because they like their locality, neighbors. See, why do people live more in one locality? Because they love their locality, neighbors, environment, future investment on land.

Many things provoke homeowners by making them points so that they can agree and become consoles. The main motive is to convince the homeowners to sell their property at a discounted rate. It is a truly illegal process under federal fair housing law so no one can adopt this process, if someone tries to adopt this illegal process so everyone can file aginst these you can file a claim with HUD and as a qualified citizen, if you notice that people are doing the same things in your locality so you can also take legal action against it because everyone has right to go with right things and take action against discrimination such as:

Other illegal estate practices

Many other illegal estate practices include redlining in which any bank or other financial institutions or other lenders who don’t want to give a loan or do not help them to sell their house to someone because of low caste or religion, nationality. In simple words, they judge with their personality or religion so this is also called redlining.

Real estate agents tell clients that your living place does not suit you and your property will be down in the next few years.

  • The goal of the fair housing act is to remove the discrimination from the root. 
  • These real estate agents perform very carefully to get achievement in their business so that they can generate more commission through these types of misleadings.
  • Buyers should also support agents or dealers for their savings on land.
  • Break the client’s heart by telling them about property rates in the upcoming few years.

In which situation real estate agent take advantage of homeowners

A critical situation comes when these agents take full advantage of homeowners and manipulate them to sell their property at a cheap price as soon as possible.

When clients are going to be bankrupt 

In this situation, those people who have taken a loan from banks so if they are not able to return in a fixed time, they need to sell their house before they become bankrupt. In that case, they directly contact property dealers and dealers take full advantage of it and enhance them to sell their property at discounted rates. They can’t do anything because they need money to return a bank loan.

When Natural disasters occur

It is a very critical situation. In this situation, many people lost their houses and their property rate will also automatically decrease. When they come to sell, so everyone wants their property at a low rate. Natural disasters can be earthquakes, floods, tsunamis, tornadoes, etc.

What is a real estate commission?

Real estate commission describes the amount of commission distributed between the agents who stand for the home buyer and home seller. 

“Buyer’s agent” represents the home buyer.

 “Listing agent” represents the home seller.

If we talk about the real estate commission, it has come in real estate culture which accomplishes to meet agent requirements. 

It is not necessary that you have to hire any skilled real estate agent who helps to find the best seller and best buyer. We can do this ourselves but today 90% of people prefer to hire agents for better results.

Due to lack of experience, we can delay finding the best seller or buyer by which we can increase the chances to reduce the value of our house in the market

It is a realtor commission fee which we have to earn stability in the real estate market.

If you hire real estate agents, you can reduce the chances of losing your identity and get better results in less time because, under agents’ eyes, there are a lot of connections as a seller and buyer who interact with them daily. To become a good agent, making a networking connection is required.

Agents can be of two types:

Agents for a home seller

  • One, who ups the property by selling home in less rate.
  • One, who downsizes the property by selling homes at a high rate.

Agents for a home buyer

  • One who ups the property by buying a home at a high rate.
  • One who downsizes the property by buying a home at a low rate.

Agents are the only ones who promote your property in a market due to expertise in estimating the cost.

The average commission for a real estate agent

Normally, the rate of commission fixes according to a location such as country, state, otherwise, a normal rate of commission is 2% to 6%.

Who pays the real estate commission?

Real estate commission is paid by the home seller to both the parties and it is distributed equally according to the home value.

Homebuyers don’t pay any commission, they only pay the closing cost after the house sale. 

The Commission decides based on the economic rates of real estate in the country and home value. The commission fee is also called the realtor fees.

The amount figure is equally distributed among both parties as an agent because it has equal rights.

Why do real estate agents charge so high?

As a home seller, if you hire an agent so you can get knowledge of many other agents who work in the same field and get chances to increase your home rates in front of buyers.

Real estate agents help you to find the best high buyer dealer who is ready to buy a house at our fixed rate. Real estate has a trick to up and own the rate and also behave according to the real estate rate. They know the dealer’s behavior and their actions and they treat them according to their judgment.

As a home buyer, real estate agents who are known as buyer agents, represent the home buyer, helps to find out the legal property at a reasonable rate which has a better locality around. Also which can get a good rate in future.

Real estate charges their fees after knowing their customers or dealers. Sometimes, buyers and sellers who are going to hire agents, also intelligent in dealings so agents have to charge reasonable prices from them, they can’t be intelligent there.

Sometimes, agents stand for their known clients who can be of their friends, colleagues, and others known, so they need to charge a low fee as a real estate agent.

So real estate charges according to their clients, location, and legal rates or they charge low fees on permanent clients for getting better deals in the future.

And some real estate agents have a technique to charge low fees to collect clients for future permanent dealings and attract the clients by offering better service.

Relation between steering, Redlining, under blockbusting in real estate


These three terms are linked to each other to describe the meaning in the same world of real estate. The real estate world is unique from other worlds due to playing with clients’ minds.

Some real estate workers manipulate or unknowingly try to convince clients to buy a home or avoid the existing place based on caste, religion, sex for buying a property such as a house. The process of steering is an illegal practice that is done knowingly and unknowingly but it shouldn’t be done, if anyone tries to do they can be born in the future along with penalties. This activity is done by property dealers who are known for the important part of real estate.

Suppose, You are a property dealer or common people get clients who want to buy a well-maintained house in your locality so obviously you will follow some procedures like:

  • First, you will show your own house so that they can imagine their house and estimate the space of the house.
  • Then you can suggest some ideas to the clients for purchasing a land or house on a low budget.
  • Also, you will also try to make a property dealer so that you can eat commission in between them.

Or maybe, some property dealers try to manipulate some clients for not purchasing a house or purchasing a low-budget house, they try to manipulate them for illegal activities.


Steering is a part of redlining, redlining is a process of avoiding a client’s requirements for buying a house or refusing to provide a loan to the clients, illegal activities that happen in real estate, it is counted as blockbusting. It is performed under discrimination against buyers, borrowers, clients. The discrimination activities under the Fair Housing Act such as:

  • If real estate owners charge a high rate of interest on low properties.
  • If owners don’t want to offer mortgage loans to the borrowers due to different caste or religions in the housing industry.
  • Agents provide mortgage loans based on preferred identity and same caste or religion.

In simple words, property managers, property dealers, property owners, brokers, realtors, and lenders play in the housing industry for different performing roles. All these terms are counted in illegal activities.