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

Which of the following statements about blockbusting is true?

1. It is a legal practice in Texas.

2. It primarily helps stabilize neighborhoods.

3. It involves instilling fear to manipulate housing prices.

4. It is regulated by the Texas Real Estate Commission.

The correct answer is: It involves instilling fear to manipulate housing prices.

Blockbusting is a practice that involves inducing panic among homeowners in a neighborhood, particularly by suggesting that a change in the demographic makeup of the area will lead to a decrease in property values. This tactic manipulates homeowners into selling their properties at lower prices out of fear that the neighborhood will deteriorate, often leading to the resale of those properties at higher prices to new buyers. The statement highlighting that blockbusting involves instilling fear to manipulate housing prices accurately encapsulates the unethical nature of this practice. It is designed to exploit social anxieties, which can disrupt community stability and perpetuate racial and socioeconomic segregation. The other statements do not accurately describe the nature of blockbusting. For instance, it is illegal in Texas, contradicting the implication that it is a legal practice; it does not contribute to neighborhood stabilization, rather it has the opposite effect; and while real estate practices are generally regulated, blockbusting itself is prohibited rather than regulated. Therefore, the focus on fear and manipulation in the correct answer encapsulates the core issue surrounding blockbusting in real estate.