Florida Broker Practice Exam

What does "blockbusting" involve?

1. Encouraging sellers to sell low due to neighborhood change

2. Improving community facilities

3. Promoting buyer's agents

4. Organizing real estate seminars

The correct answer is: Encouraging sellers to sell low due to neighborhood change

Blockbusting is a practice in real estate that involves encouraging property owners to sell their homes at lower prices by instilling fear or panic about neighborhood change. This often stems from the introduction of different demographics into an area, which some agents exploit to convince sellers that their property values will decrease. By promoting such fears, agents can persuade homeowners to sell their properties quickly and often at a loss, enabling the agents to buy them at lower prices, or to resell them for a profit after the neighborhood has been transitioned. The tactic is deemed unethical and is illegal under fair housing laws as it contributes to racial and socioeconomic segregation and discrimination. The other options do not capture the essence of blockbusting. Improving community facilities focuses on enhancing an area rather than exploiting fear. Promoting buyer's agents pertains more to the representation of buyers rather than manipulating sellers. Organizing real estate seminars involves education and awareness rather than the unethical manipulation of neighborhood dynamics.