Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What term describes the practice of encouraging the panic selling of homes below market value due to fears of minority group influx?

1. Redlining

2. Blockbusting

3. Gentrification

4. Price fixing

The correct answer is: Blockbusting

The practice being described is blockbusting. This term refers to the unethical real estate practice in which agents or developers induce homeowners to sell their properties at lower prices by instilling fear that an influx of minority groups will devalue their homes. This manipulation of homeowners creates panic, leading them to sell quickly and often below market value, which can subsequently allow the agents to resell those properties at a much higher price to new, often more affluent buyers. Blockbusting is a tactic that exploits racial or socio-economic fears, leading to discriminatory practices in housing markets. It contrasts with concepts such as gentrification, which involves the revitalization of neighborhoods leading to increased property values and the displacement of lower-income residents, but typically without the coercive tactics involved in blockbusting. Redlining refers to denying services based on the geographic area, particularly affecting minority neighborhoods, while price fixing involves collusion among realtors to set prices, which does not fit the context of inducing panic sales directly related to demographic changes.