Blockbusting is an ugly practice. Although it is illegal under the 1968 federal fair housing law, under New York State law, and under the laws of various New York municipalities, it is still practiced in New York State by some unscrupulous real estate brokers and salespeople, and by business people who regularly engage in the buying and selling of residential properties.
As a business practice, blockbusting has been used by real estate agents and others to profit by playing on the fears of a neighborhood’s inhabitants in order to frighten homeowners into selling their homes at below-market prices; subsequent to the sale, the real estate agents or others engaged in the business of buying and selling homes re-sell the vacant homes at higher prices to members of a racial, religious or ethnic group that is different from the formerly predominant racial, religious or ethnic group that the real estate agents and business people have fraudulently induced to move from the neighborhood. The motive behind these illegal actions is simply to make a substantial profit on the sale of the now-vacant homes.
Blockbusting occurs when owners of residential property within a defined geographic area are subjected to intense and repeated solicitations by real estate agents or others to place their properties for sale because these solicitations have caused property owners to reasonably believe that property values may decrease due to an influx—currently or in the future—into the homeowners’ neighborhood of people of a different racial, religious or ethnic group. The perpetrators may frighten or threaten homeowners by describing various unsavory scenarios, such as an escalating crime rate; lowering of property values; a change in the racial, religious or ethnic composition of the neighborhood or deterioration in the quality of the local schools should the newcomers “take over” the neighborhood.
Here is a real-life example of how blockbusting works. In one small village in upstate New York, homeowners have so far brought to the village board in excess of 40 individual complaints against blockbusting perpetrators who are composed of two groups: real estate salespeople and brokers, and a businessman and his cohorts who regularly buy and sell residential real estate. Both the real estate people and the businessman’s group are seeking to introduce members of the same religious sect en masse into the village.
The businessman’s group enters onto the properties of homeowners, asks to buy the properties, and in some instances physically intimidates the property owners by touching them as the blockbusters continue to push the offers to purchase. They have driven around the neighborhood, peering at properties and taking photographs. These actions have frightened parents and young children at play as well as elderly residents. They have solicited the owners (including me) via letters and telephone calls. They have left little gifts on the properties. They have told homeowners that the neighborhood is going to change with the introduction of members of a religious sect who are “different” from the current homeowners so they are certain that the existing homeowners will not feel comfortable being surrounded by members of the religious sect. They say that many of the homeowners’ neighbors have already agreed to sell. They urge the homeowners to sell before the value of their homes falls below current market values. Often, the property is purchased in the name of a limited liability corporation (LLC) that masks the name(s) of the actual purchaser(s).
The real estate agents’ methodology is somewhat different. An agent will inform the homeowner, usually via postcard or telephone call, that he has a buyer who will pay $250,000 for the homeowner’s property. The agent may tell the homeowner that his neighbors are selling and that the agent has sales contracts for other homes on the block. However, when challenged by the targeted homeowner, the agent is forced to admit that the homeowner never listed his property for sale with the agent, that the agent has no other sales contracts for homes on the block, that he cannot produce the name of the person who is offering to buy the homeowner’s house, that he cannot prove that the value of the homeowner’s property will decline due to the introduction into the area of the members of the religious sect (it will actually rise!) and he cannot give the homeowner the promised $250,000 unless he first sees the inside of the house. Of course, the $250,000 offer is ridiculous: What homeowner would accept $250,000 if he does not know the current value of his house, which may be worth more than $250,000?
The answer is, a frightened homeowner who has been manipulated to believe that what the blockbuster threatens will come to pass and that the homeowner had better get out before disaster strikes.
Part 2 of this article will be published next issue.
By Vivian J. Oleen, Associate Broker, Sopher Realty