Has this ever happened to someone you know? After some repairs and redecorations, a house is ready to go to the market for sale. Before listing, though, an appraiser must inspect the home to determine the property’s value for the potential buyer.
If the seller is dissatisfied with the appraised value, they may decide to make some cosmetic changes to their home. Perhaps they remove their African art or art depicting Black people of the diaspora. Others might remove their Black hair products and portraits of melanin-drenched family members and other folks from the walls. Occasionally, someone removes themselves or swaps out a partner before getting a second appraisal.
In a world that allegedly only “sees green,” making a home appear as though Black people don’t live there causes the property value to increase.
The stories of home appraisals increasing – sometimes doubling – when Black ownership is hidden have been reported in places as varied as Jacksonville, Florida, Marin County, California, Cincinnati, Indianapolis, Ohio, and elsewhere. In Prince George’s County, Councilwoman Monique Anderson-Walker, who is running as a democratic candidate for Lt. Governor of Maryland, has been open about her personal experience of having her family’s home under-appraised in the wealthiest county in the nation for African Americans. Her experience illustrates the reality that these cases of glaring bias cause millions of dollars in tax revenue lost to schools, roads, hospitals and the other necessities of government spending.
The Undervaluation of Black Homes
The issue is pervasive and blatant enough that a 2018 Brookings Institute report found that owner-occupied homes in Black neighborhoods are undervalued by an average of $48,000. Brookings calculates $156 billion in cumulative losses nationally.
The current White House took on the issue last summer, using the centennial commemoration of the 1921 Tulsa Race Massacre in which white terrorists burned and looted “Black Wall Street,” one of the most prosperous and affluent communities of any race in the 20th Century, as the backdrop. At least 300 Black people were murdered. The adverse economic effects of losing so many lives, so much land, and so many businesses are still measurable in diminished rates of homeownership and property values today.
Vice President Kamala Harris, Housing and Urban Development Secretary Marcia Fudge, and Domestic Policy Advisor Susan Rice unveiled a 21-point plan to assist Black homeowners negatively affected by bias in the appraisal process. The event, which acknowledged that Black American homeownership has been unduly and illegally suppressed for decades, also announced the creation of the new inter-agency task force called Property Appraisal and Valuation Equity (PAVE).
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Building Black Wealth through Homeownership
Homeownership is the primary way multi-generations of Black households build and maintain wealth. This is especially the case in today’s market, where home equity rates are rising.
Recent research from the Federal Home Loan Mortgage Corporation, far better known as Freddie Mac, analyzed more than 12 million housing appraisals. The findings underscored the growing body of research that determines racism, plain and simple, to be the cause of the appraisal industry undervaluing Black-owned homes compared to white-owned ones. Freddie Mac researchers also determined that in lowering home value determinations of Black homes, “appraisal gaps seem pervasive,”
to the tune of 12.5% of appraisals for home purchases in majority-Black neighborhoods, which results in a value below the price at which a home ultimately sells. Compare that with only 7.4% in predominantly white communities.
Answering the Demand for Black Appraisers
So then, why not have more Black appraisers who can come into a community and alleviate the potential for bias when judging home value? The Appraisal Institute counts 78,000 home appraisers nationally, with less than 2 percent of appraisers identifying as Black.
Frank Johns, Howard University alum and founder of Washington Appraisal, has some 30 years in the appraisal industry. He says the situation is a simple but not necessarily an easy fix. New blood is only part of the remedy, Johns explained. “Appraisers today are an aging group of white men. With the dearth of appraisers, banks have said we have to do something about this. The problem, however, is that folks don’t make significant income as a trainee,” Johns said.
Appraisers are trained through an apprenticeship model. Johns points out that this can cause issues because “1500 hours are required to work under a certified appraiser plus 200 classroom hours are required to be certified.” So, in addition to the trainee earning little for so much time, the certified appraiser also faces the fact that they are essentially training their future competition. But Johns is mostly optimistic. “The PAVE Initiative is definitely a good start. Especially if it will send money to the states to spur the recruitment of Black appraisers.”
Gail McCann Beatty, the director of assessment for Jackson County, Missouri, got her start as an apprentice appraiser literally at her daddy’s knee, helping to hold measuring tapes when she was a 5-year-old. Beatty says the real estate appraisal market could support more Black people who choose it as a career path. And she’s confident that it’s a career that can change people’s lives and their families for the better.
Beatty maintains that there are far more opportunities than people realize. “You can do appraisals that don’t relate to a mortgage,” she said. “There’s actually a market for those specializing in estates and divorces. Some people specialize in commercial properties. If someone’s doing shopping centers, they might be traveling all over the country. Golf courses and hotels are specialty areas where you could be making five, ten, or $15,000 each.”
Opportunities Exist for Black Appraisers
Frank Johns points out that the overwhelming majority of Black appraisers in DC are single-person companies. He and Gail McCann Beatty agree that this fact shouldn’t deter others interested in the profession because there is flexibility to choose to grow or to stay at whatever size is most agreeable to an appraiser and their company. Beatty said, “The reality is that work is out there. If you’re an appraiser right now, you are busy. You can make as much money as you want because the market is crazy. But so many of our shops are just mom and pop shops.”
And, that’s an important point, Beatty says. If Black people want to get into the industry and apprentice themselves to a qualified appraiser who is also Black, it can be hard to find someone with the bandwidth to take on a trainee.
“Quite frankly, it’s incumbent on more people like me to introduce others to the industry,” she continued. She pointed to her position as a government employee, urging, “Your assessor’s office is a great place to learn because if you commit five years, they will likely pay for your education, too.
“We appraise everything!” Beatty said. “So you will get exposed to a hotel, you will get exposed to a golf course, and get exposed to the hospital. You may not be totally experienced in it, but at least you would have touched it. And then you devote some time to that assessment office, learn the different areas, and then seek out a company to do it privately.”
Appraisal Bias Persists
In the meantime, as more Black families seek to buy homes, the sad reality is that more Black families could meet with the same under appraisal bias that others have endured. There’s some movement at the federal level to enforce the laws on the books that should prevent these situations.
In the more than 50 years since the passage of the Fair Housing Act, the racial homeownership gap is as cavernous as it’s ever been. The Census Bureau found that the Black homeownership rate was 44% last year compared with the white homeownership rate of just shy of 75%. But home appraisals fall within the federal fair housing and fair lending laws the act put in place.
And this February, the DOJ filed a statement of interest that argued appraisers might be liable under the Fair Housing Act for discriminating based on race.
With all the paperwork required to sell or buy a house, the under appraised and discriminated parties must be sure to have their receipts in order.