A Biased Line of Thinking
This ‘new’ bias story really ticks me off. Click the link below to read it:
When My Home Appraisal Came Back Low, I Realized We Need to Change the System (goodhousekeeping.com)
It was written by a notable self-promoter, the so-called “America’s Favorite Financial Educator”, also known as “The Budgetnista,” — Tiffany Aliche. I used to be in marketing. Those are clever. Perhaps even memorable. I question the first one, though, as I’ve never heard of Ms. Aliche until seeing the story and researching her. But I’m not black, either, so I guess that’s my problem.
Most of the story is based purely on emotion, playing the victim role, with just a smidgeon of facts about the appraisal she received on her home, which was to be used for a cash-out refi.
Ultimately, as the story relates, no refi was done, even though it appears that Tiffany, her husband and their lender could have ordered a second appraisal based on apparent errors in the first one. To me, there’s more to this situation than what is being revealed. But it makes for ‘good copy’ that promotes a structured… biased … line of thinking.
This is the first article I’ve seen that even provides a hint about the competency of the original appraiser. Why? Because, per the details, a second appraiser did a ‘review’ of the original report and definitely found issues with how the original appraiser qualified and apparently incorrectly reported the home’s quality and condition. That, of course, presumes the appraiser was given all the facts up front (during the home inspection or before), or really didn’t know anything about those until after the report was done.
The story also implies that new doorknobs and hinges drive the value. And that the hidden-in-the-wall copper pipes REALLY are copper. That demonstrates a profound misunderstanding of the appraisal process.
The other circulating stories have been about getting different values with a second or third appraisal. But the details of the first report have not been revealed.
Tiffany’s article is less a story about perceived or made-up racial bias, than it is about observations and analysis the original appraiser did, and apparently made, when making certain decisions about the property, and deciding the ultimate value opinion.
It’s far too easy for the ‘race card’ to be waved as it was in this article, and the others that have been circulating. “I’m black, and you, Mr. Appraiser, are white. Therefore, you must have built-in racial bias that I won’t be able to overcome.”
Unfortunately for appraisers, this story is all part of a pattern and planned events which began in 2018 or even earlier, during a time of hope for major political change in this country. It was nothing hidden, although the deep seated roots of the campaign were not well publicized at the time, or even understood. Now that change has happened, race issues and critical theories have become the indelible emphasis of a great many people. It’s much like the current virus, infecting many. Will pending ‘inoculations’ (mandated training classes) help reverse the trend? Remains to be seen.
Yes, it’s true. Racial bias exists. Perpetuated by just about every human race on earth towards others who are not the same, and among those of the same race. It’s not just a black and white issue. Divisions among people across the globe for eons are well documented.
Appraisers DID NOT cause the black housing issues in this country. Appraisers DID NOT cause other races and indigenous people to be segregated. Appraisers DID NOT do the original red-lining.
But because we appraisers are fragmented, and a small segment of the financial world, it’s very easy to become the targets of the race baiters who just want to keep people agitated. Boy have they established a beach-head over the past few months.
Appraisers have got to quit holing up in their basement, cowering in their bathrobes and bunny slippers. Appraisers have to begin fighting back, becoming proactive, and tell the real story about how appraisals are done and the regulations we have to deal with. Remind people that land use issues were begun by others, not appraisers. Demonstrate how ‘we’ gather and analyze facts, and then carefully work toward a value opinion. Start local, by sending letters to your local news organizations. Post on social media. Tell your borrowers more about the process when you see them at their home.
All I’ve seen so far from our associations and organizations is limp reactive defensive posture, buying into the desired game plan of forcing appraisers to be indoctrinated with new training, promoted by those that have their own bias toward ‘us.’
The critical element in all this is appraisers must do their jobs correctly. Focus on property details and leave ‘race’ out of any decisions. If you cannot do that, I’d like to suggest a different line of work would be more appropriate.
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13% of the population sure does promote a lot of narratives which have no bases in fact or reality. Remind me who has the privilege? Everything liberal or racist must be confronted with logic and fact. When we allow stupidity to have a voice the country will suffer! If you feel the need to be offended on behalf of a different group of people then you are the problem!
She thinks you can make up a number, any number, and it will stick. She doesn’t care to know the details of a valuation, if she did she would have never written this article. It’s click bait
This sounds way more like a C2/C3 issue with an appraiser scared to make any large meaningful adjustments so that the report gives the illusion of being “tight” than anything. Gut remodel? C2, its not hard; it’s literally in the UAD definition. However, in my review work I consistently see the same appraisers calling a 100 year old house a C3 or more often than not a C4 no matter what the condition is because its 100 years old. The same appraiser then calls a typically maintained 3 year old home a C3 vs. a 18 year old home with no updates as a C3. No adjustment needed, sails write through underwriting with low adjustments. Must be a “good” report right? Nobody seems to wonder why there is a 15% or 20% gap between the two properties post-adjustment. Gee, I wonder, it’s not like its screaming out from the page. Certainly wouldn’t want to explain breaking through the arbitrary 10/15/25 guideline issue for the millionth time (what intellectual giant came up with those %s anyway?)
Same issue with quality: Simple square 1950s ranch? Oh well now, that’s a Q3. Doesn’t match up with the Q3 definition, but to hell with it. Its easier with no explanations/discussion needed. They apparently can’t read the UAD definitions and is a major complaint FNMA has for the ratings monster they created. It’s beyond frustrating.
Side bar: 6 point scale that’s effectively become a near meaningless 2 point scale? I would have loved sitting in on that meeting. “So people, no to the 10 point scale that’s been suggested or the 20 point scale for 1/2 degree nuances, no? Ok got it. Let’s go with the 6 point scale that no one has ever rated anything with that John blurted out in his drunken haze at the last office party…perfect.” But I digress.
Did the property really have NO deferred maintenance, little or NO physical depreciation, was it similar in condition to NEW construction (per UAD definition addendum)? Are appraisers conducting complete pre-inspection interviews days in advance of the inspection date? Are appraisers demanding detailed breakdown of what was done, when it was done, who did it, how much did it cost questions? Are they getting this information before the inspection, so that photographic evidence can taken at the time of inspection? Are appraisers contacting outside agents and conducting similar interviews to gauge the true condition of the comparables they are using? I would rather review an appraisal report with a detailed breakdown of the varying conditions anytime (C3 versus C3 adjustment), versus the easy (lie) method of calling something a C2 when its not.
When people are coached to churn out 4 to 9 appraisals a day, and seek profits over principles, the results speak for themselves.
Seek the truth.
Several good points Bill. BIG difference in assignments today versus years ago is many appraisers do NOT conduct pre-inspection interviews of any kind. Some even think they are discouraged from discussion with owners.
Appraisal “management” companies don’t know the meaning of managing an appraisal. Seriously. They start with a false premise that license level determines competency. They rarely report any factual property data regarding renovations, permits or other important issues.
Their concept of ‘management’ is solely shopping for the lowest fee.
They got rid of using effective ages….the computers couldn’t figure them out…..The C ratings were the dumbest things, all they were really designed for was to find the fraud when an appraiser uses renovated (superior) comps compared to a fixer upper that the lender didn’t want to do construction loans on. This was told to me by an individual who was in the “think tank” to prevent appraiser fraud when appraising fixer uppers and describing it as average to get conventional financing.
The Good housekeeping article was by someone who had a complete misunderstanding of what an appraisal is. Lady remodeling of a house will never make it C2. No lady using comparables on the good side of the tracks is outside the neighborhood boundaries which is why houses in this area sell for less.
So….this isn’t a thing: C2:”..Virtually all building components are new or have been recently repaired, refinished, or rehabilitated.”
Guess there is no difference between a full remodel and updated. Yeah, that’s pretty much how buyers view it too. smh
“BY TIFFANY ALICHE AS TOLD TO LIZZ SCHUMER
Jun 2, 202”
It was a garbage article. Many exceptions to the allegations in the author’s own words.
One thing appraisers MUST STOP doing! Stop ASSUMING racial bias in appraisals exists. Even in this article though not stated as such, a reader is led to believe it exists in appraisal.
Unless you can cite a specific instance of a first-hand observed case of it OR a court finding it existed, STOP saying it does!
Racism of any kind. Even systemic racism that the President confessed to is a scurrilous crime AND a scurrilous accusation.
Just because the federal government has confessed to engaging in it for decades does NOT MEAN that I have or my profession has! I do NOT share ANY guilt in the alleged racism, nor will I quietly acquiesce to such guilt based on my own race.
I am neither proud nor ashamed of my race. I had nothing to do with its determination. I AM proud of my own views on race. Those are things that my mother and father instilled in me at a very young age.
If I like or dislike a person, it is because of their personality…not because of their race. Whether I like or dislike a person’s personality, it has nothing to do with how I appraise their house! It simply is not a consideration.
What the hell ? how did black loves matter make it to this profession hahah and I’m black but wth don’t start digging in my pockets
So a borrower actually wants to go into deeper debt and pay higher prices, voluntarily? 1920’s as a C2, instant revision request. C3 is the defacto landing zone for just about everything updated from one item to the whole home. C2 is for complete studs out and extreme re imagination projects. C1, only for new.
Let me tell you about the difference between an appraisal which goes through FNMA and underwriting, gets dropped in the CU system, is likely to get desk and field reviewed, may also end up at the HOC if FHA, and carries a much higher possibility of being subject to claims and complaints, vs a freelance independent order which simply goes to one person and never goes further than that… Different ball game when you have to abide the FNMA selling guide, all the state regs, TitleX, RegZ, FIRREA, answer to the panel manager and underwriting department, all of that.
People whom wish to qualify to write articles about the appraiser profession should need to like take a test on the basics or something. Want to learn what appraisal is all about? FNMA Selling Guide, 1,275 pages. Use Control+F for keyword searches. Front to back, memorize the concepts, then you have taken your first step to actual appraiser qualification.
After that we’ll review the HUD handbook, specific state regs for all 3 regulated specialties, dive into Dodd Frank, and FIRREA, some news and real world examples of the most substantial AG penalties which tallied hundreds of millions, how the origination and repurchase engines work, capital funding, liability protection, associated insurance industries and real property compliance standards, zoning coding enforcement, habitability and utility, effective age life principals, construction principals, real property value relationships, the force of the market and the invisible hand. Sometime after appropriate qualification is earned, we can loosen up and talk about the people whom live there. The broken record skips on.