Definition: The act of creating or causing alarm among homeowners with the intent to make them sell their homes by stating or implying that persons of a protected class moving into the neighborhood will have negative results such as lowered home values or increased crime. Those who engage in this practice, known as blockbusters, attempt to profit by purchasing the homes of panicked people at less than market value, then reselling those homes at a greatly increased price. Panic selling is illegal according to the Federal Fair Housing Act (1968, 1974, 1988), which lists as protected classes race, skin color, national origin, religion, handicap status, familial status, and gender.
Same as Blockbusting.
Example: A real estate investor spreads rumors in a predominantly Lion neighborhood that a Tiger family is considering purchasing a home there, which will bring undesirable elements and lower nearby property values. The investor hopes that people in this area will sell their homes to him at a price that is less than market value because they are alarmed the arrival of the newcomers will result in even lower home values or other undesirable neighborhood conditions. Under the Federal Fair Housing Act, it is illegal even to suggest that changes will occur in a neighborhood because persons of a protected class have moved there or will move there.
Terms, Definitions, and Concepts: Real Estate, Legal, Management