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During Black History Month, we not only honor the achievements and resilience of Black Americans throughout history but also take time to reflect on the ongoing work still needed to ensure equity in all aspects of life—including real estate. One critical issue we must continue to address is racial discrimination and bias in the appraisal industry.
What Is Appraisal Bias?
Appraisal bias occurs when a property's valuation is influenced by factors unrelated to its physical characteristics or market data—such as the race, gender, or ethnicity of the homeowner, or the racial composition of the neighborhood. This bias can result in homes in communities of color being undervalued, while similar homes in predominantly white neighborhoods may be overvalued.
These disparities can have far-reaching consequences. A biased appraisal doesn't just affect a home’s market value—it can limit access to financing, diminish generational wealth-building, and further entrench inequality.
The Roots of the Problem: A Legacy of Discrimination
To understand how we got here, it's essential to acknowledge the deep-rooted systemic racism that has shaped the American real estate industry for generations. While many discriminatory practices are now illegal, their impact is still felt today.
Key examples include:
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Blockbusting: A manipulative tactic where real estate agents convinced white homeowners to sell their homes at below-market prices by stoking racial fears, often suggesting that people of color were moving into the neighborhood.
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Steering: The practice of guiding prospective buyers or renters toward or away from certain areas based on race, religion, or national origin.
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Redlining: The systemic denial of mortgages or financial services to residents of certain neighborhoods—primarily communities of color—regardless of individual creditworthiness.
Though outlawed by the Fair Housing Act of 1968, the legacy of these policies continues to influence housing patterns and appraisal outcomes today.
Recognizing the Signs of Appraisal Bias
Bias in an appraisal can be explicit, involving direct racial references or considerations, or implicit, where unconscious attitudes subtly influence valuation decisions.
Some signs of potential bias in an appraisal report include:
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Language that references the racial or ethnic makeup of a neighborhood.
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Descriptions that rely on stereotypes or subjective, non-market-based terms like "desirable" or "high-risk."
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Inconsistent or inadequate use of comparable sales (comps) that don’t accurately reflect the subject property or neighborhood.
It’s important for both consumers and professionals to recognize these red flags and question when valuations seem off.
Addressing the Problem: Industry Response and Government Action
The good news is that both public and private sectors are taking steps to address appraisal bias. The Interagency Task Force on Property Appraisal and Valuation Equity (PAVE)—launched by the Biden administration—was created to identify, monitor, and reduce racial and ethnic disparities in home valuations.
Additionally, many states now mandate fair housing and bias training for appraisers, and professional organizations are increasing efforts to promote awareness and accountability.
Our Commitment to Fairness and Equity
At our firm, we are fully committed to being part of the solution. We have proactively completed additional Fair Housing and appraisal bias training to ensure we remain informed and vigilant. We stay up-to-date with evolving federal and state fair housing laws, and we actively incorporate best practices to recognize and mitigate bias in all aspects of the valuation process.
We believe every homeowner—regardless of background or neighborhood—deserves a fair and accurate assessment of their property. Upholding the principles of equity, integrity, and transparency is not just a legal obligation; it’s a moral one.
What You Can Do if You Suspect Appraisal Bias
If you believe you've been subjected to a biased appraisal, you are not without options. You can file a complaint with the U.S. Department of Housing and Urban Development (HUD) by calling:
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📞 (800) 669-9777 (Voice)
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📞 (800) 927-9275 (TTY)
Additionally, consider reaching out to your lender, requesting a second appraisal, and documenting your concerns clearly and professionally.
