National Real Estate Practice Exam

What is blockbusting?

1. Encouraging investors to buy distressed properties

2. Encouraging owners to sell their properties due to an influx of minority residents

3. Promoting property investment in predominantly white neighborhoods

4. Inducing price reductions through fear of market decline

The correct answer is: Encouraging owners to sell their properties due to an influx of minority residents

Blockbusting is a practice that involves persuading property owners to sell their homes at lower prices by instilling fear or panic regarding the potential influx of minority residents into their neighborhoods. This tactic is often rooted in racial discrimination and seeks to exploit the fears of homeowners about changing community demographics. By using strategies that play on these fears, real estate professionals can buy properties at depressed prices, often with the intention of reselling to minority buyers at a higher market rate after the neighborhood's demographics have changed. The correct choice accurately reflects the unethical practice of blockbusting, which undermines community integrity and perpetuates division among different demographic groups. Understanding this concept is crucial for real estate professionals as it highlights important ethical considerations in their practice.