Biased Appraisers? I Don’t Think So
Folks, after discussing this topic with and learning more about the appraiser who wrote this following essay, I have decided to distribute the essay below as a way to further support what we appraisers do in our work, and to expose the fallacies that have been presented to date by others with a vendetta against appraisers.
The author is Joanna Conde, an experienced appraiser and AQB Certified USPAP instructor from Arizona. If you wish to reply to her comments, use this email: firstname.lastname@example.org. And please share this article with your Congressional representatives.
Biased Appraisers? I don’t think so.
If you want to get really angry click on this link and listen in. This is the recording of the Hearing on Bias in Home Appraisals.
What appalled me was the lack of knowledge of our Congressional representatives (both Republican and Democrat) on what appraisers do, how we do it, and the government agencies and entities that are responsible for our guidelines (FHA, Fannie Mae, Freddie Mac, VA, the Appraisal Foundation, the Appraisal Sub-Committee).
The entire emphasis was on “anecdotal evidence” which is not documented or supported. Story after story was told about how appraisers had produced a “biased” report. No documentation and no evidence to support their claims was presented.
Neither Dave Bunton, TAF President, nor Pledger Bishop, III, current president of the Appraisal Institute, defended appraisers by simply stating something like, “I have not seen the two reports you are mentioning, and therefore cannot comment on the competency of either appraiser. Opinions of Values can be affected by many things, including when the appraisals were done, including the condition of the property at the time of inspection, assignment conditions, and whether the assignment was for a full interior/exterior inspection or a “drive-by”. Not all appraisers, or the appraisal profession, should be judged by the actions, especially anecdotal, of one or two appraisers.”
I also found it very interesting that both Dave Bunton and Pledger Bishop, III are representative of the demographic of older, white, male appraisers and both were non-responsive when asked how the appraisal profession got this way.
To judge an entire profession by anecdotal evidence is equally both stupid and harmful. I can provide a real-life anecdote about taking on a black trainee. She was lazy. Did not show up for appointments on time. Didn’t take direction. Didn’t make an effort to learn how to do things well or correct her errors. Should I judge all blacks who want to be trainees by her actions? No. That would be stupid. (I should also say I have had white trainees who did the same.) To judge an entire profession by anecdotal evidence is equally both stupid and harmful.
Here is another anecdote. The first single woman I ever knew to get a mortgage was Linda Jones. I worked with her at Xerox. It was 1978. She is black. It was in Rochester, New York. Five years later I applied for a line of credit for $300. I was turned down because I was a divorced woman and my (good) credit history went with my ex-husband. I am white.
You can find or create any anecdote you want to support anything you want or want others to believe. Anecdotes are not supported facts and aren’t supported statistical data.
Let it be known that I am a moderate with a tendency toward being liberal. However, attacking my profession, the appraisal profession, for being mostly white, mostly male, and mostly older, and then claim that because of those factors appraisers are biased is over the top.
The implication is that only black appraisers could appraise black owned homes accurately, and by inference then only women could appraise homes owned by women accurately, only Asians could appraise homes owned by Asians accurately, only Muslim appraisers could appraise homes owned by Muslims accurately, etc. Otherwise, anyone who is not of the same identity would be held under suspicion of bias. How stupid is that!? How paranoid is that?
I was discriminated against because I was a woman when I wanted to and then got into the appraisal profession over 30 years ago. Did that stop me? No. I got every bit of education I could, worked hard, and interviewed and interviewed until someone hired me first as a trainee and then as an appraiser. Does that discrimination still exist? I expect there are some people that still have discrimination issues. But, the formula I used still works: Keep trying. Get educated. Work hard. Do a good job. Don’t take “no” for an answer.
It was also suggested by a number of the Congressmen that qualification standards for entering the profession be lowered so that more minorities could enter the profession. That makes no sense and is offensive. It implies that minorities are not capable of meeting appraisal qualifications on merit alone. Nonsense.
One of the people who testified at the hearing was Lisa Rice, President and Chief Executive of the National Fair Housing Alliance. She claimed that appraisers are “subjective” and that the appraisal process needs to be more standardized. This would include using mega-data and other approaches such as the cost approach rather than the Comparable Sales Analysis Approach to value. She did not understand the concept of “neighborhood” and questioned why appraisers don’t go out of a neighborhood to find similar properties with higher selling prices.
Thankfully, there was one educated voice of reason that spoke up, Tobias Peter of the American Enterprise Institute. Mr. Peter stated that they had done an analysis of 240,000 appraisals and had determined “there was no systemic appraiser bias”. Mr. Peter asserts that the major cause in the discrepancies are based on socio-economic conditions, for example credit ratings. Credit ratings are neutral.
We all know that the higher your credit rating, the easier it is to borrow money, the more money you probably will quality to borrow, and the lower the interest rate. The lower the interest rate, the lower the mortgage payment all other things such as amount, term and down payment being equal. People with lower credit ratings typically live in less expensive homes and poorer neighborhoods regardless of their race, religion, or national origin. A Credit Sesame survey found that “About 54% of Black American report having no credit or a poor to fair credit score.” This compares to 41% of Hispanics, 37% of White Americans and 18% of Asian Americans in the same category (see link here).
On February 23, 2022 the National Association of Realtors published an article on U.S. Homeownership. Only Black ownership rates have gone down and is the only group that is below 50%. These statistics have to be attributable to something other than appraiser bias and it is logical to believe they are also related to credit scores and other factors such as income.
Appraisers are required by law to be independent and unbiased. They are required by USPAP to support their analysis and conclusions and document their findings.. This is critical to how we do everything from the initial inspection, where we document our findings with pictures, through the analysis process where we decide our Scope of Work, to the writing of our reports where we must document within the report, or have documentation in our workfiles to support for our analysis and conclusions.
Good appraisers do their job. They appraise properties, not the people who own them or live in them. I am tired of appraisers being the scapegoats for problems in the housing market that are the result of many different factors and many others involved in the housing market.
Joanna Condé, 5/16/2022