In the past year, the appraisal industry has been under attack from various academics who claim “racial bias” on the part of real property appraisers providing appraisal services to lenders who provide home mortgages. These academics do not fully understand various types of valuation specialties, the appraisers who practice in these specialties, and the myriad of laws that must be followed. Help is needed to explain the appraisal industry, including the specialties and the types of reports. An understanding of the different components of the appraisal industry is necessary to assist various academics, journalists, the media, the public, and the public...
Appraisers, I have reached my boiling point about the negative press ‘we’ Independent Fee Appraisers have been receiving for many months – concerning supposed ‘systemic racial bias.’ It’s been done on purpose by a particular group of individuals whose main strategic objective is to keep many citizens teetering on their toes, always on the defensive, while the perpetrators claim they’ve been oppressed. It’s part of a new ‘culture’ of divisiveness promulgated by negative promoting people hell bent on disrupting society. There is no ‘unity’ in what they are doing. Only attacks. These stories make it seem like ‘we’ Independent Fee...
…the other side of things, the appraiser profession side since no other news media and organizations are willing to do so… Note: The following blog article is not to defend anyone or to place blame. It is simply a blog looking at this issue from the other side of things, the side that hasn’t been discussed in the media. A couple weeks ago, I was privileged to speak on The National Real Estate Post about appraisal issues. One of the issues we discussed briefly was the ever-growing number of articles being written about allegations of racial discrimination in the appraisal...
In virtually every single case of alleged racism to hit the media recently, admitted staged events were in play. One could argue staging was necessary to identify if a valuation difference resulted from perceptions of what race the occupants are. Fair enough. Provided that the staging itself does not alter the value scenarios. Provided that the results are being honestly reported. I’m skeptical. I’ve researched each case as far as can reasonably be done from the information provided. The American Guild of Appraisers has also offered (repeatedly) to conduct thorough reviews of each and every appraisal involved in the reported...
The following Redfin article is exceptionally offensive to everyone in the real estate business and related sectors, who actually know what they are talking about, to people that are not racists, and who are offended at being falsely called racists directly or by inference. Redfin Study: Homes in Black Neighborhoods Are Undervalued by an Average of $46,000 | Redfin Press Center REDFIN executives ought to know better than to permit their name to be associated with such levels of reckless dishonesty, deception, and misinformation. Hopefully, the marketplace will ‘reward’ them appropriately. Pay attention to the statements “after adjusting” for all...
The most weighted technique in most automated valuation programs comes down to one over-simplified formula, based on a guesstimation from an outside source that has no interest in the real estate system… Dear FHFA: Please accept the following comments in regard to Question A1.4. The response also includes comments on several additional questions. Thank you for taking the time to review these thoughts. Technology has made so many improvements in the last decade and we now have the chance to truly improve our home valuation system. With that being said, the last piece of the quality puzzle starts at the...
The appraisal professions should be the only ones to determine any modernization; whatever that is… When Things Don’t Go as Expected Like so many others, I have learned the hard way not to accept any assignment without a little due diligent research first. Make no mistake I do not shy away from difficult assignments. I am under the firm belief the more difficult, the better. I actually enjoy the challenge. I recently accepted a private assignment over the phone for a lot in the City. I was driving and did not have access to MLS or locality records. I knew...
Intentional and unintentional racial bias by appraisers on refinance loans is uncommon and not systemic… On January 4, 2021, the American Enterprise Institute (AEI) published a study titled “How Common Is Appraiser Racial Bias? An Analysis Using Big Data to Determine Whether It Is Common or Uncommon that an Appraiser’s Knowledge of an Applicant’s Race Results in Valuation Bias“. They concluded allegation that knowing the race of the applicant results in racial bias by appraisers on refinance loans is uncommon and not systemic. This same analysis supports the conclusion that unintentional bias based on race is also uncommon and not...
The FHFA is requesting input on appraisal related policies, practices and processes. We encourage everyone to submit comments. The Request for Input (RFI) is open to comment until February 26, 2021. The input received in response to the RFI will be used by FHFA to determine the necessary modifications needed to ensure Fannie Mae and Freddie Mac (the Enterprises) operate in a safe and sound manner. “Modernizing the appraisal process has the potential to create a more streamlined and accurate collateral valuation process. But if modernization is not properly adopted, it could have negative unintended consequences,” said Director Mark Calabria....
The first case about real estate appraisers to reach the U.S. Supreme Court in almost 60 years may concern the Federal Trade Commission’s price-fixing claims against the Louisiana Real Estate Appraisers Board. Would that be a good thing for appraisers? Well, maybe it’s not the best timing. Filed in 2017, the FTC’s administrative complaint asserts that the Louisiana appraiser board, “a state agency controlled by licensed real estate appraisers, has unreasonably restrained price competition for real estate appraisal services.” The FTC contends that the board carried out this price-fixing through its regulation of fees paid to appraisers by appraisal management...
