Census Tract Info Used Against Appraisers

Dave Towne

Census Tract Info Being Used Against Appraisers. 

“Census tract boundaries do not necessarily define the subject’s market…”

Appraisers, of all the issues I’ve written about or questioned since 2006, this topic about your knowledge of, and concern about, Census Tracts has overwhelmingly been the largest response ever, several hundred within just a few hours of posting! 

To refresh, the questions were these:

  • Do you know where the Census Tracts boundaries are in the areas you work?
  • When you research and select comparables for your reports, do you pay any attention to Census Tracts?
  • Do you know the racial composition of Census Tracts in the areas you work?

The vast majority of responses have been a resounding “NO” to all three, roughly 99%.

An extreme minority of appraisers do keep one eyeball on Tracts locations by using maps, but even for those, the answer to #3 was NO, except oddly, one appraiser revealed that racial components were examined. The why was not explained.

I have learned that in very rare cases, some MLS associations use Census Tract numbers to identify the “Area Number” for coding property locations, and for data research purposes – mostly in urban cities. But the vast majority of MLS services align the “Areas” with local geography or other details, which does not necessarily correspond with Census Tract boundaries.

In regard to #2 above, one appraiser provided this verbiage which is used in reports:

“Census tract boundaries do not necessarily define the subject’s market. When reasonable, comparables are selected from the same census tract, however, census tract location is not part of the primary search criteria.”

For most of our reports, our software downloads the Subject’s Census Tract number automatically into that field in the form. ‘Preferences’ in the software must be enabled to allow this. This is required per Federal Law, as explained below, because the appraisal is considered part of the mortgage application.

In rare cases, when the Census Tract field on the form is not auto-populated, appraisers can use this web site to obtain the Tract Number for the Subject’s address (and see the Tract map boundaries).

Geocoding System

The FFIEC Geocoding/Mapping System (System) helps financial institutions meet their legal requirement to report information on mortgage, business, and farm loan applications. Geocoding refers to the Metropolitan Statistical Area/Metropolitan Division (MSA/MD), State, County, Census Tract combination (address information) that must be provided for each reported loan application and the System allows institutions to enter a street address to determine the corresponding geocode. The System also provides Census demographic information about a particular census tract, including income, population, and housing data.

I decided to write about this topic due to the current political pressure surrounding ‘race.’ I’m starting to see more and more research documents, white papers, review software, etc., that use highly detailed Census Tract information about racial demographics (Question #3) used against appraisers who by law (USPAP and others) CANNOT use race, etc., as a component of their appraisal valuation decisions.

Per this very simple survey, the majority of appraisers apparently are doing what they are supposed to do. Unfortunately, “we” are being attacked – (mostly by extremists) for following accepted appraisal protocols.

Image credit flickr - Chad Kainz
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on e-AppraisersDirectory.com

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5 Responses

  1. Avatar Realist says:

    Maybe appraisers should go much more on the offensive. Whenever there is an attack on appraisers in print or court case, the first things that should be heavily documented, clarified and established in court is their: education with respect to the real estate/appraisal matter at hand; real world experience; political biases; mentors; manuscripts of speeches, teachings, etc; articles/books written; and on and on. Ultimately, do they have any realistic credibility – or just misplaced zeal without adequate knowledge. Do they have hidden goals/agendas. Going on the offense , however, is difficult for appraisers because we do not have: the bully pulpit that the accusers do; the size, organized effort or political clout; the press that is so willingly on board with almost anything left and without the ability to conduct true investigations; nor do appraisers have the gobs of money to fight against their mistruths and false accusations that the left has to fight us with.

    So often with the left, they take positions before all the facts are discovered. Then even when the facts are known and are proven to be wrong, they do not acknowledge their error(s) nor apologize. They carry on as if the crime was committed even though no crime was committed. In many cases they make up crimes with the hopes that real crimes will be discovered during the non-constitutional and illegal investigations. They do not care how many innocent people are destroyed in the process. They do, however, understand their lazy constituency that believe any ____ they spew without question and without any study/research to test the validity of the accusations.

    Unfortunately, They will get away with their agenda for a while. Good luck convincing the final judge of your “noble” endeavors in the most important courtroom drama in your existence.

    Why don’t these accusatory geniuses go after potential insider trading by members of congress. It is amazing how wealthy many politicians get while in office. Or why congress sets up lousy health care laws for small business that they are exempt from and instead have cushy perks. Or crony capitalism. But then they might be going after their own sizable funding sources by which to destroy small business!

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  2. Avatar BA says:

    GOOD GOD I am so far behind evidently. Can someone tell me how any Appraiser can use or perform Racial Bias in appraising? How about WHY? I have no idea of who owns the comparable or WHAT RACE OR SEX They are. AND I DO NOT CARE EITHER. I cannot find a way to alter facts that are clearly available to ANYONE searching the DATA. Really WHY WOULD ANY OF US RISK our licenses to keep any area down or lower in values….WHY? THIS is 2022. We do not choose where people want to live , how much payment they can afford, what sex they are or what RACE anyone is. We do not take a loan app and have no interest in risk or rates for any individual or any of that lender required factor information like LTI, LTV, VOI,VOD, ratios or any of that!! WE simply value the property with supporting data. That’s IT.
    What really needs to be addressed here is HOW BANKS/LENDERS HAVE HISTORICALLY chosen to act in biased ways against, LOWER INCOME INDIVIDUALS, WOMAN, RACE, AGE and the other protected Classes!! WHY do these people think there are protected classes in the first place? RED LINING, no credit for woman until the 70’s !! No consideration of a womans income for woman of child bearing age!! AND SO MUCH MORE!! EVEN don’t ask don’t tell came from the GOVERNMENT not the public. Certainly not any APPRAISER cause we don’t need that information to do our jobs!
    The banks/lenders set acceptable comparable distances with 0.5 mile radius of urban, 1 mile Suburban and 5 Rural most often preferred . They also set age, bracketing styles and a lot of other of their “preferred requirements” that they PFA that many times have nothing to do with market data.
    So how is it the Appraiser is biased or manipulating values? I don’t know how this is even possible.
    ALL THIS IS… IS Another effort to wipe us out, so they CAN be free of an outside person who inspects, reports and supports the REAL value with DATA and no other factors or biases present or considered! IMO

    6
  3. Avatar Caterina M Platt says:

    I wholeheartedly agree with Realist.

    We know why this is going on and we know who is driving it. The best defensive attack in this case is going on a counter offensive attack at the real culprits – politicians and activists who keep this topic stirred up and alive purely for their own job security.

    Appraisers do not consider race as a basis of ANY aspect in our valuation process. I wouldn’t even know how to begin to filter for such even if I wanted to, which I clearly don’t.

    The government bean counters and think tanks like the Brookings Institute keep this stirred up and alive to insure they have agencies and jobs going forward. What a piss poor thing to do with our tax dollars – instigate. Maybe it’s time we appraisers acted in the role of tax payers and citizens. Creating rifts where they don’t exist between different groups of citizens and wasting our funds is both evil and poor fiduciary policy.

    I say we need to fire these public officials intent on being dividers and instigators.

    6
  4. Avatar Pat Turner says:

    Dave
    Well done as always!
    Hmmmmmm….Redlining?
    Census tracts? AVMs? Desktop appraisals?
    AMCs ? Appraisers?
    Which entity relies most on census tracts?

    4
    • Baggins Baggins says:

      Tech people and lenders rely on this. For the vast majority of appraisers, census tract data is just an automated item we do not pay attention to. Census tract data has no relevance. Even if there is some correlation with census tract and different neighborhood values or different neighborhood characteristics, appraisers are never aware of this. Because the software automatically imports census data into our report for the subject, then does not provide any information on census tract data for our selected comps. So if we’re in a different census tract or cross mixing these areas, we never know if that’s happening anyways. Appraisers focus on similar markets for a variety of characteristics. We do not care what federal occupation zone zip code or what census tract they may or may not be present in. If we compare locally, there is no reason to care either, because developing appraisal values with sensible valuation theory is as simple as comparing locally. Additionally in the modern days and preceding decades, appraisers have not contributed to defining where census tracts end or begin, that’s someone elses department somewhere in government. Appraisers are tasked with market value analysis, not census tract analysis.

      https://help.alamode.com/appraiser/total/default.htm#!locationmapsettings.htm
      From the above Alamode appraisal software solicitation page:
      Get FEMA, census, and USPS information — Automatically inserts flood, census tract and USPS standardization into your reports.

      3

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Census Tract Info Used Against Appraisers

by Dave Towne time to read: 2 min
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