CRIME vs Fair Credit Lending

[Michigan CG]

Why would discussing the effects of a high crime rate and active and obvious gang activity and their affects on marketability and indicated market value be prohibited? I've never heard such a thing. That would be like saying "We don't discuss chemical plants in the area". I think some Appraiser, Realtor, MB or lender who didn't want you to kill the deal told you that......

If one is afraid to go into an area to appraise a home due to criminal activity then how does one ignore those effects on value when someone is considering spending money to purchase a home there?!?!?

As long as the appropriate statistics are referenced I would think it would be perfectly acceptable.

CWD:

You may not call an area a high crime area, you may not call an area a good school district in an appraisal report or in an MLS listing. Those are OPINIONS.

What one calls a high crime area others would consider a low crime area (from their own reference). This is bad appraisal practice, and expressly prohibited.

The guy living in central city Ann Arbor Michigan will consider the central city of Detroit a high crime area, while the guy in central city Detroit will consider central city Ann Arbor Disneyland.

A homeowner sending their kids to school in Davenport Iowa will consider their schools to be great compared to schools in Rock Island. IL while people in Bettendorf, IA will consider schools in Davenport, IA terrible.

Those things are opinions.

The way to illustrate neighborhoods is through pictures. My appraisals contain "typical neighborhood views". If that neighborhood happens to have cars on blocks, broken refrigerators on porches and dirt yards that (the pictures) tells facts, not opinions.

For school districts I quote www.greatschools.net. The comparisons tell facts, not opinions.

Chemical plant is a fact, high gang activity is an opinion.

Bad test scores in schools is an opinion, statistics of surrounding schools is a fact.

Gang activity is an opinion, crimes stats are facts.

If you opine about these things without facts (stats, pictures, etc.) you are setting yourself up for disciplinary actions.

 

[REM sleep]

Wow!

I shook my head when I saw this list. Then, you all have to remember so of the utterly stupid comments realtors have put on MLS listings over the years. if you do not harness many of the realtors out there, you would see some unbelievable stuff. "colored" - i guess my grandfather is on the Mid Florida regional MLS board - Unbelievable. Way too much material....I want to go enjoy the weekend. enjoy everybody!!

 

[Mztk1]

It makes me just want to write something like this when I do an appraisal in Sun City Center:

The subject is a professional home with a mother-daugther floorplan located in a mature, private community of active adult living that has been integrated with children over the past several years, limiting restrictions. It is desirable for its quiet streets, executive homes, prestigious golf course, and is now ideal as a family neighborhood. Restrictions, though eased, remain supportive of the able-bodied, active mature living it was originally intended. But the ambulatory service and transportation system is excellent for the unusually large contingency of handicapped Hispanics. The gay, lesbian, bisexual and transgendered community is also present, integrating a fabulous mix of contemparoary lifestyles. There is a synagogue and other churches in the area, including a Mormon church, a Catholic church and several Protestant denominations, and right now a new mosque in under construction. Employment opportunity is not much of a factor as retired persons often prefer to stay unemployed, but the neighborhood is secure with a manned gate house and many of the retirees take jobs as neighborhood guards. The mixed community of seniors and many first-time buyers has worked well, and future marketability should remain stable.

 

[c w d]

CWD:
Chemical plant is a fact, high gang activity is an opinion.

Bad test scores in schools is an opinion, statistics of surrounding schools is a fact.

Gang activity is an opinion, crimes stats are facts.

If you opine about these things without facts (stats, pictures, etc.) you are setting yourself up for disciplinary actions.

Violent crime has the same potential effects on health as exploding refineries and chemical plants: death. Frequent violent crime, more so. How is this not considered external obsolescence?

Our local newspaper mapped the city's murders for the past year. I compared that map to sale prices for the past year. The prices were suppressed in areas with higher than average murder rates. How can you ignore this? Wait a second. I know. I've got it all backwards. The high murder rates are due to the low home values.....yeah thats it.....sorry.

 

[Mztk1]

The school rating website that is linked above is subjective in its own right.

And the reality is, we don't measure what effect crime, or good schools has based on their objective scores and stats; we measure how the market reacts to, that is, how the market perceives the crime and the schools to be. That in itself is very subjective.

 

[Michigan CG]

Violent crime has the same potential effects on health as exploding refineries and chemical plants: death. Frequent violent crime, more so. How is this not considered external obsolescence?

Our local newspaper mapped the city's murders for the past year. I compared that map to sale prices for the past year. The prices were suppressed in areas with higher than average murder rates. How can you ignore this? Wait a second. I know. I've got it all backwards. The high murder rates are due to the low home values.....yeah thats it.....sorry.

You don't ignore it, but you do not opine on it without facts and evidence. You cannot simply state in your report that there is a high murder rate. You however can include that map in your report and quote statistics. Why do you think you have to include the census tract in the report? It is not because the underwriter or mortgage broker cares about the census tract.

You might live in a wonderful neighborhood that the CEO of a local company thinks is crap because of your "high crime rate". Of course he lives in the McMansion and you are Joe Regular in Joe Regular neighborhood. However you would not live in certain parts of town because you think the crime rate is too high. The people in East St Louis would kill to live in any of those neighborhoods.

When you opine without statistics you are judging, and you are not allowed to do that. Appraisal is about facts. The fact is that there is high crime...compared to where?

 

[Mary Tiernan]

Ok, but I have an area where one school district is preferred over another. This school district is bounded by two school districts in my coverage area, and there is a noted difference in value between one school district and the next. Conversations with realtors, equalization personnel, and others in the area confirm this one school district is preferred.

Most of my reports state the school district maintains an adequate reputation, but in this area I usually state the school district has a preferred reputation.

Are you saying this should not be allowed in my reports?

 

[c w d]

You don't ignore it, but you do not opine on it without facts and evidence. You cannot simply state in your report that there is a high murder rate. You however can include that map in your report and quote statistics. Why do you think you have to include the census tract in the report? It is not because the underwriter or mortgage broker cares about the census tract.

You might live in a wonderful neighborhood that the CEO of a local company thinks is crap because of your "high crime rate". Of course he lives in the McMansion and you are Joe Regular in Joe Regular neighborhood. However you would not live in certain parts of town because you think the crime rate is too high. The people in East St Louis would kill to live in any of those neighborhoods.

When you opine without statistics you are judging, and you are not allowed to do that. Appraisal is about facts. The fact is that there is high crime...compared to where?

When did I say we need to discuss our opinion about crime? If you re-read my posts in this thread you will see that I said as long as the appropriate statistical information is used there should not be a problem discussing it in the report. Now what I'm saying is that one cannot ignore it as a factor that influences market value.

Oh, and just because Molly Workharder lives in an area that has high crime rates does not mean she is oblivious to that fact. Folks who live in area with high crime rates know that they have high crime rates. What Molly Workharder also knows is that perhaps she can't afford a home outside of areas with low property values and high crime rates. But, she is not oblivious to the fact that one factor is dependent on the other. What you are saying implies that because Molly Workharder lives in an area with high crime means it's normal to her and its effects on value are nominal. Perhaps you should get out of your car more often during comp inspections and talk to folks in those types of areas. If they could afford to live in a better location they would. Then drive to suburbia and ask some folks why they would not move to those areas. I can guarantee one of the top three reasons would be the high crime rate. And that is an adverse effect on value, my friend.

 

[Artemis Fowl]

Ok, but I have an area where one school district is preferred over another. This school district is bounded by two school districts in my coverage area, and there is a noted difference in value between one school district and the next. Conversations with realtors, equalization personnel, and others in the area confirm this one school district is preferred.

Most of my reports state the school district maintains an adequate reputation, but in this area I usually state the school district has a preferred reputation.

Are you saying this should not be allowed in my reports?

I address the issue this way:

Education: Math and reading MEAP scores for the Wayne-Westland Community Schools District run about 4% below state averages. Competing markets are Garden City Schools (3% below), Inkster-Edison Public Schools (22% below), Livonia Public Schools (13% above) and Taylor Schools (10% below).​

My wife works for Scholastic books and goes into schools every day. These stats are usually reflective of buyer preference. An "informed" buyer is going to check out the schools and their performance. RaMP (Reading and Math Proficiency) scores are a great statistic to cite.

 

[Michigan CG]

When did I say we need to discuss our opinion about crime? If you re-read my posts in this thread you will see that I said as long as the appropriate statistical information is used there should not be a problem discussing it in the report. That is what i said, it has to be supported. You cannot give your opinion about a high crime area, that is a unethical. Your opinion of high crime and other people's opinion about high crime could be totally different. Now what I'm saying is that one cannot ignore it as a factor that influences market value. I don't condone ignoring it, but you have to use facts to establish different crime rates.

Oh, and just because Molly Workharder lives in an area that has high crime rates does not mean she is oblivious to that fact. Folks who live in area with high crime rates know that they have high crime rates. What Molly Workharder also knows is that perhaps she can't afford a home outside of areas with low property values and high crime rates. But, she is not oblivious to the fact that one factor is dependent on the other. What you are saying implies that because Molly Workharder lives in an area with high crime means it's normal to her and its effects on value are nominal. Not implying that at all. i am simply saying you cannot label things like that. Perhaps you should get out of your car more often during comp inspections and talk to folks in those types of areas. i will sure consider that advice. If they could afford to live in a better location they would. Then drive to suburbia and ask some folks why they would not move to those areas. I can guarantee one of the top three reasons would be the high crime rate. And that is an adverse effect on value, my friend. I think we agree on that. But you cannot call an area high crime in your reports. It is unethical.

I really don't think you understand what I am saying You cannot label a school district good or bad, you cannot say an area is undesirable because of high crime or gang activity. Undesirable to who?

If i live an area where there is a shooting every night then the area with one shooting a week is desirable to me. Which one is a high crime area? Which one is a low crime area? Personally I think they both are. Labeling either one is a no-no.

If I live in a neighborhood where 25% of 11th graders pass the standardized tests I would consider a school district where 75% pass the standardized tests a good neighborhood. Personally I like the school district with the 92% pass rate. Which school district are you going to label as good or bad?