Appraisers Don’t Use Race When Valuing Homes ~ by Ryan Lundquist
Last week in a congressional hearing on the future of the appraisal profession, some research was used to suggest appraisers are showing racial bias and essentially undervaluing black neighborhoods. I was not expecting the conversation to go that way during the hearing and I’ll admit I’m deeply concerned about the emerging narrative of appraisers being racists.
I know race is a polarizing topic, but I wanted to approach this today with humility to clarify a few things. Please join me in respectful conversation.
THREE THINGS:
1) Appraisers don’t use race: Appraisers cannot and do not use race as a factor when coming up with a value. This is 100% off limits – not to mention highly unethical and immoral. Race has absolutely nothing to do with value. Comps are never selected based on race or racial boundaries of any kind. Let me say that again. Race is NEVER considered during a valuation.
2) Have appraisers “devalued” neighborhoods by $48,000? In the congressional hearing a panelist talked about a study that shows black neighborhoods are devalued by $48,000 compared to otherwise similar white neighborhoods. That’s alarming and society needs to have some serious discussion about this, but this study has NOTHING to do with appraisers actually devaluing properties (read it here). When we hear the word “devaluation” it sounds like we’re talking about something appraisers are doing, but the $48,000 price disparity comes from the author studying price trends from Zillow rather than analyzing the actions of appraisers. In other words, appraisers are NOT devaluing homes by $48,000. Yet when congress members heard “devaluation” and the speaker saying appraisers are part of the problem, the impression is that appraisers are clearly showing bias by devaluing properties based on race. This impression has certainly been passed on via social media too. You can watch the hearing here.
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