Black Homeowners Face Discrimination in Appraisals

[Joe Flacco]

PR or educating the public about appraisals is not going to solve this issue. We have a general credibility issue. What we need to do is improve the communication/reporting. The appraisal reports need to show that the appraisal development while it does require judgement on the part of the appraiser it is mostly based on available facts.

We have been basically boiler plating away all the USPAP reporting requirements and ignoring the intent of the requirements. It's just been customary and accepted practice behind this mythical sophisticated user. We can't be doing that. The profession needs to respond to this issue with more credible and descriptive appraisal reports and show in the appraisal reports that while the opinions require some judgement on the part of the appraiser that is mostly based on available facts.

This is failure on the part of the profession and not a misinformed consumer or misinformed public issue.

 

[VALU8]

Haven't the journalists failed to point out that by law the appraiser is required to censor out anything that might indicate race, religion, sexual orientation, physical disability, political affiliation (am I missing any?)....So what items exactly did they remove?

Before anyone goes and points out last name= Run a search for your last name and notice the variety, even if there isn't a lot of variety- It's a not a guarantee that person is any given race. Mine for example, there's no guessing.

 

[Terrel L. Shields]

Run a search for your last name and notice the variety, even if there isn't a lot of variety- It's a not a guarantee that person is any given race.

Just a story.
In court, some Hmong poultry farmers sued in a large class action claiming they were being systematically swindled in the purchase of poultry companies that they had been sold. They sued the banks. The tort lawyers hired a ding dong. He was ex Farm Services guy. Didn't go to the MLS for anything, and appraised 22 poultry farms in 3 states. He used only sales he identified through FSA and USDA records...which are not necessarily bad sources. But he cherry picked the low (old) farms as comps for everything. He argued in court that sales involving Hmong were not "arm's length" because the Hmong were "not well advised" therefore all their sales were inflated. One farm he did use on that report I was involved was sold to a Stephen Lee. So he was arguing that "Stephen Lee" was obviously buying a farm cheaper than an Hmong would.

Well, I informed the lawyer at lunch (it was long trial) that if the guy had used the MLS he would have known that "Stephen Lee" was a real estate agent and just happens that Lee is a very common Hmong name...and I knew that Stephen Lee was, in fact, a young Hmong. The lawyer grinned from ear to ear...and she ripped that appraiser a new one after lunch. She carefully asked him to restate his proposition that Hmong were uninformed, then she pounced. It got so bad his sides lawyers were whack a mole until the judge chewed on both of them. To say the least the tort lawyers did not prevail. To the whole story, there were 2 pro poultry farm appraisers monitoring the trial and they were up next in Missouri. By the end of that trial, and a Daubert hearing, the appraiser was deemed no expert witness. His report in court went to both AR and MO and he was stripped of his licenses there. He limped back to OK with his tail between his legs but fees intact I presume, and still has a license there. The tort lawyers cut their losses and dropped the other 20 cases.

 

[2008 KC Royals]

I think the real answer is the simplest one, incompetence. I live in an urban neighborhood that is about 60% minority and is typically grouped together with an adjacent neighborhood with a bad reputation by people that don't live in or know the area despite it being on the register of historic places. I get a lot of calls from neighbors and realtors when they get crap appraisals. Way too many calls. They are always done by an appraiser from the suburbs. The neighbors have brought up the possible racial aspect many times but when I look at these reports they are complete trash. All boilerplate, the property could be located anywhere in the city because there is never a real neighborhood description, incorrect information, MLS photos, random comps, adjusted sale prices $150k apart and a value picked at random somewhere in between with no explanation at all. Maybe the appraiser picks a lower number in between the huge differences in the adjusted sale prices because of race, maybe even unconsciously does it, but I doubt it. It seems like they usually pick a round number that is around 80% of the highest adjusted comp. These guys are filling out a form, it doesn't appear that any thought went into it at all.

 

[George Hatch]

I am also. We have to Nip this in the Bud and fast. I can see already we are going to have Diversity Classes Jammed down out throats. I good with that if it helps.

Real Recently I heard comments on the News Channels about Appraisers low balling Minority Neighborhoods. I also heard the Word Gentrification a number of times.

Its impossible for me to imagine two appraisals being that far apart. Someone is in Trouble. Considering the current environment The Appraiser who appraised it higher will end up being right even though its possible is wrong. I am beginning to smell a set-up.

IMO the public allegation discriminatory conduct in appraisals on a systemic or regular basis is so toxic to our professional standing that this amounts to an emergency.

 

[George Hatch]

PR or educating the public about appraisals is not going to solve this issue. We have a general credibility issue. What we need to do is improve the communication/reporting. The appraisal reports need to show that the appraisal development while it does require judgement on the part of the appraiser it is mostly based on available facts.

We have been basically boiler plating away all the USPAP reporting requirements and ignoring the intent of the requirements. It's just been customary and accepted practice behind this mythical sophisticated user. We can't be doing that. The profession needs to respond to this issue with more credible and descriptive appraisal reports and show in the appraisal reports that while the opinions require some judgement on the part of the appraiser that is mostly based on available facts.

This is failure on the part of the profession and not a misinformed consumer or misinformed public issue.

A $135k difference between two appraisals of this particular property is so egregious that it indicates to a development problem, not a reporting problem.

It's literally just a subdivision house located in a well-defined neighborhood where there are plenty of apparently similar properties that have sold. There's nothing special or unusual about it. We even have a 2017 purchase with a known purchase price of $310k, so we can see how the property previously compared to other properties in this area that sold during that time frame AND we can see how the values have trended in this neighborhood over the last 3 years. There's no legitimate reason for any two appraisers to even be $50k apart, let alone $100k+.

IMO, something like this doesn't happen without somebody doing some lying, cheating and stealing in an appraisal. And that somebody is stabbing their peers (us) right in the chest.

 

[Joe Flacco]

A $135k difference between two appraisals of this particular property is so egregious that it indicates to a development problem, not a reporting problem.

It's literally just a subdivision house located in a well-defined neighborhood where there are plenty of apparently similar properties that have sold. There's nothing special or unusual about it. We even have a 2017 purchase with a known purchase price of $310k, so we can see how the property previously compared to other properties in this area that sold during that time frame AND we can see how the values have trended in this neighborhood over the last 3 years. There's no legitimate reason for any two appraisers to even be $50k apart, let alone $100k+.

IMO, something like this doesn't happen without somebody doing some lying, cheating and stealing in an appraisal. And that somebody is stabbing their peers (us) right in the chest.

It is both development and reporting problem. The fact that they are $120k apart is development problem and the fact that the readers conclusion is that one must be racist is a reporting problem. With sufficient content in both reports the conclusion would be one is incompetent or one is unethical.

 

[CindyR]

IMO the public allegation discriminatory conduct in appraisals on a systemic or regular basis is so toxic to our professional standing that this amounts to an emergency.

exactly. if we can't stop this publicity it will be the last box of nails needed for our coffin to replace us with those non-biased AVMs

 

[Terrel L. Shields]

Those racist architects...I guess that makes me one too since I am going to call the rooms just what the architects did...this weeks project.

 

[Renee Healion]

The charge by the author that appraisers steal black people's wealth came out before these cases.
THEN the FL case happens.
THEN in the article about these cases the same author makes the charge that white appraisers steal black peoples' wealth. That is a really important quote. It does not appear in some local papers because they edit for their own reasons. But do not let his words pass.

As I understand it, this author thinks Zillow is the answer to the problem of human appraisers.

But go ahead, crowd review appraisal results and self-flagellate.