The Appraisal Blog

For the past several years a growing concern of appraisal bias towards people of color has been growing in the lending and appraisal industry.  It has grown so much that appraisers are now required to take a Bias and Cultural Competency (in CA) course as part of their basic and continuing education.

You've seen the new articles.  A black homeowner has an appraisal conducted by a white appraiser and the owner disagrees with the opinion of value.  So they "white wash" their house, have a white friend or agent stand in, and have the house re-appraised.  The second appraisal comes in significantly higher and the first appraiser is accused of racial discrimination.

Shocking, right?

Well maybe ... but maybe not.

I've been tracking this issue for several years.  There have been studies conducted claiming that houses in predominantly "black" neighborhoods are valued ~25% less than comparable "white" neighborhoods.  That appraisals in census tracts with primarily minorities are twice as likely to be appraised under the sales contract than other census tracts.  People point to the fact that 90% of appraisers are white as a basis for these inconsistencies.  And as a result, people of color are being robbed of American Dream, and that their children are being robbed of generational wealth.

I have some opinions about this.  I've looked at many of the specific accusations.  I've listened to some of the many hearings that have been conducted by the regulatory bodies that determine appraisal policy.  I've taken the racial bias classes.  I have some thoughts about what I consider the misconceptions about what people think an appraisal is, who it is for, and what impact it can have.

And, yes, I've been accused of racial bias in my appraisal work.  (I'll share that story another time)

I hope to shed some light on what we appraisers do.  Our work process.  What lending guidelines we have to follow.  What happens on the inside between the lender, the appraiser, the agents, and sometimes the seller and the buyer.  Who reviews the appraisal.  Who signs off on an appraisal.  What impact an appraisal can have on the buyer or seller.  And, importantly, what impact it does and does NOT not have on a homeowner or a borrower.

This is not to say that there are no issues of racial bias.  I would imagine that there is.  Just like in any industry, any profession, any group.  It is an unfortunate reality of life.

But is it systemic?  Are there hoards of appraisers under appraising the houses of black and brown people because ... because why?

I wholehearted reject that notion.  Stay tuned for why ....