Finding of Bias in Home Valuations Fails by Own Measure
To the surprise of no one, their redacted study found that what Perry et al. had characterized as race-based differences in home valuations were almost entirely due to socio-economic status, not racial bias by real estate appraisers.
In an updated refutation of the findings of Brookings Institution researcher Andre Perry, Edward Pinto and Tobias Peter of the AEI Housing Center demonstrated just how broken the Brookings research was.
Perry’s 2018 research, titled “The Devaluation of Assets in Black Neighborhoods,” pinned the nation’s racial wealth gap on 80,000 state-licensed real property appraisers.
Unfortunately, these now-discredited findings have been levered by housing-industry lobbyists, partisan policymakers, agitators and grievance groups to malign the nation’s 80,000 real property appraisers and hollow out America’s mortgage underwriting safeguards.
A dataset provided to Pinto and Peter earlier in the year by Perry allowed the AEI Housing Center to fully refute the latter’s conclusions.
While their original refutation was still largely correct, Pinto and Peter have now updated their key findings and takeaways using the new dataset. To the surprise of no one, their redacted study found that what Perry et al. had characterized as race-based differences in home valuations were almost entirely due to socio-economic status, not racial bias by real estate appraisers.
Using the dataset and Perry’s own methodology, Pinto and Peter created a simple case study of so-called “entirely white” tracts (tracts demographers rate as 97.5% white or greater). In those tracts, racial animus, by definition, is ruled out as a factor. The duo then compared high and low socio-economic status in these so-called all-white neighborhoods and found differences as large as – or even larger than – the ones Perry et al. incorrectly attributed to racial bias.
But much damage has been done by Perry’s now-discredited findings. Perry’s 2018 report took the nation’s real property appraisers from the table and onto the menu. The flawed findings have most recently served as a pretext to justify the current administration’s whole-of-government effort to insert race into every corner of the mortgage underwriting process, including collateral valuation.
Although few thought it possible, the focus on the facile notion that appraisers are responsible for socio-economic differences between property owners, buttressed by Brookings’ botched findings, has exposed the taxpayer to unimaginable risks and superimposed layers of Ottoman-style bureaucracy on what was already an expanding regulatory labyrinth directed at appraisers – one that generates steady income for lawyers, consultants, nonprofits, demagogues and 50-odd state and federal bureaucracies.
Adding an Equifax Risk Score as a control, Pinto and Peter were able to reduce Perry’s devaluation assertion from 23% to -0.3%, a 100% reduction. The -0.3% figure is not significantly different from zero. In other words, by adding just the Equifax Risk Score – which is related to socio-economic status – as an explanatory variable, the devaluation claimed by Perry et al. disappears.
Besides finding what Perry et al. misinterpret as race-based differences in home values when socio-economic status was largely the culprit, Pinto and Peter determined:
- That while lower socio-economic status may leave blacks at a large income (and wealth) disadvantage relative to most whites, this is not due to any statistically relevant bias in home appraisals
- The primary remedy would be policies that work to address the income and wealth gap, not those that scapegoat appraisers.
- The focus should be on increasing financial security, creating generational wealth, and shrinking the socio-economic gap through sustainable home ownership. This is largely a buying power issue, not a valuation one. To do otherwise risks repeating the mistakes of the past.
- How Deep Fakes Have Burrowed Into Home Finance - October 14, 2024
- Stoked by HUD, Cottage Industry Shakes Down Mom-and-Pop Appraisers - September 6, 2024
- Objectionable Valuations Become Hate Speech, Inflating Home Prices - August 21, 2024
https://appraisersblogs.com/the-real-cause-of-the-home-value-gap-is-the-income-gap#comment-38867
Another great article from Mr Bagott, much appreciated. Above link, an essay I wrote this morning on hard vs soft costs, burying QE in amortized lending packages, and how the public at large is fooled into using terms like equitable imbalance or thinking some racial factor is the reason for housing affordability barriers.
Mr Perry started the ball rolling claiming bias by appraisers. It continued with Fannie and Freddie. We have suffered professionally and have lost income. Class action is warranted.
You are correct, Sir.
I have been appraising for 50+ years and have always maintained , it’s the neighborhood, not the residents that indicate the values based on sales. That’s why the comps were always supposed to be within 1 mile or if not available, sales in a comparable neighborhood were to be used.
The price is not the same thing as value argument, something these people consistently overlook if not purposefully ignore. They insist on maintaining this illusion that because two similar homes, in different locations, sell for different amounts, one home has been ‘de valued’, and the other has not. The market participators drive the value of housing units in one location to the next. If people thought those homes were worth more, they’d pay more. The locals do not pay more, therefore those homes have less price and less value in market. Three types of value; value in use, value in income, value in market. One could also argue those whom paid less for their homes have better value in use, on account of not being sacked with higher taxes and higher mortgage payments. Homes with lower price tags have better value in use in this regard, if one can exist safely and harmoniously with the other community members in that location. How can it come to this that we’re giving basic market value 101 lessons to the HUD director?
Agreed with Fed Up, Perry’s statements have been used and repeated as a basis for all these industry changes from everyone from hud, to fnma, fannie, freddie, taf, nar, and beyond. This has caused irreparable harm so long as parea, pdc’s, avm certification programs, and more waivers are utilized, which are right now in this very day, causing gse appraisers to experience dramatic reductions in working opportunities, a restraint of trade. There is proof positive his now debunked assertions did cause this harm. The people agreeing there are problems with the fictitious ‘racist appraisers’ theme, have made purposeful enemies of the appraisers, destroyed our careers, as we patiently continued to educate them on simple market value principals which they refused to listen. People whom should have known better such as TAF and NAR leadership, the amc industry insiders whom pounced on this as an excuse to fulfill their long term goals of replacing subbing appraisers entirely, they are all culpable and obviously guilty. Class action? Where do I sign? Because myself, and tens of thousands of other appraisers certainly will sign.
So what, It will fall on deaf ears. Does anyone really think HUD, Fannie, Freddie and all the rest are just going to have a press conference, admit they were wrong and reverse course?
Fannie and Freddie had to have the Securities and Exchange Commission come down on them the last time the market had trouble. We took the brunt of that mess because we had no one to represent us, not even the Appraisal Institute. The SEC focused on fraud with FNMA and FHLMC. Just more of the same. It’s awful.
Thank you King Cobra. Can we get a quote on CNN from Maxine Waters on this????
We all know the home valuation gap is caused by the income, wealth gap and not race. AEI had another piece out this last week dealing with the racial income, wealth gap. It stated there is almost no white, black income, wealth gap for poor and lower income individuals. There is a 3% wealth gap for all households under the median. Most of the income, wealth gap is caused by the top 10% of earners.
“What this shows is that 97 percent of the overall racial wealth gap is driven by households above the median of each racial group.” It’s a class gap. I would bet that most of the income, wealth gap is coming from the super rich who are mainly white. “The richest 10 percent of white households who own 75 percent of all white wealth. Indeed, over two-thirds of racial gap reflects the differences in assets held by the top ten percent of households in each group. Class, not race is the major driver of wealth inequality.” https://www.aei.org/op-eds/the-racial-wealth-gap-myths-and-realities/
Most of the wealth gap is caused by some very rich white people. More importantly most of the wealth gap is not caused by home valuation gap. It’s caused by stocks, bonds, business holdings by the very rich.
“According to a 2023 Federal Reserve report, average white wealth is just about four times average black wealth. However, if we only looked at real estate holdings, the ratio is only 2.5. What drives the larger overall disparity is private stock and business holdings, reflecting 38% of white but only 11% of black wealth. However, these holdings are overwhelmingly held by the richest 10 percent of white households who own 75 percent of all white wealth. ”
Most of the wealth gap is coming from some super rich white people who own stocks, investments, business holdings. Most white people are experiencing the same income, wealth gap compared to those super rich people. AEI clearly showed white people experience the same home value differences. Most importantly none of this gap is caused by appraisers. This is a class gap which all lower class groups, white, black… are experiencing.
Every single person employed at HUD, FNMA, Freddie, Fannie, most of the lenders I work with, every member of the PAVE task force, and every politician in this entire country earns more than me and outpace my ‘white wealth’ by leaps and bounds. This is me, waiting for my white privilege to kick in. Any day now…
Enough with the bias. Your fight against bias is biased. Stop it. Y’all ain’t gonna win. Y’all are making it worse with articles like this. Move on and figure it out.
Your fight against those defending themselves from being falsely accused of bias, is biased as well.
Y’all ain’t gonna win? Y’all are making it worse? Please specify what battle is being fought and whom we are supposedly winning or losing against? Move on to where? We live here too.
Now what?
Amen!!!
Making it worse? I’m sure we are nearing the bottom if not there already. To take your advice would mean to keep quiet and keep taking it in the rear. Not my style, Sam.
Here’s the thing. Y’all ain’t gonna combat bias with bias. Simple. Appraisers continue to state there is no bias. I agree. However appraisers are up against government and more.
So what is the solution? I don’t know. But the more you go against the bias claims without any actual and factual data, you won’t get anywhere. You are going to continue to be in the same place you are now. Let’s also post to appraisers vs the national news etc. what good is telling appraisers we aren’t biased or we are etc when it needs to go higher than the blogs. Come on now.
Why not point out the differences such as inexperienced appraisers vs ones that are. Point out how these programs are leading more towards bias and how this new narrative has led to a new bias… Black appraisers only in black areas? Isn’t that biased? But yet that’s what they want. They want the black appraiser to ONLY appraise black areas. Why? Cause no one is going to question it. Period. Hard truths.
Shit there is a company in Atlanta called 10k black appraisers that is trying to train them to do just the opposite of what is supposed to be done. They even built their own algorithm. Lmao . That is train them to appraise properties in minority areas in the wrong way so they can get values higher. Shame. See the link below.
https://10kblackappraisers.com/
This is what the appraisal profession has come to. All the so called experts and more trying to influence the markets due to race. Making it that other races have to make new companies. Why?
Race. Really? Morgan freeman said it best.
“Race today should play no part in anything. You either work for it or you don’t. There are just as many blacks that are successful as whites and race is just an excuse for those that can’t find it in them to work harder”.
Bias exists. But it doesn’t exist in housing. Period. It only exists n the profession because of Fannie, Freddie, AMCS And more. Take them away it’s not a question. The government created this once again by going overboard with regulations and ignoring the real issues as to not piss off any of their banks etc.
Shame. Go after the appraiser because well it’s easy and because homeowners don’t get it.
I believe appraisers are just as biased. Biased against themselves. But not against their work. I also believe we just created a new platform. One not we can control. ApprIsers need to focus on what they want and not the other shit. Focus on you. As one person who tired to help everyone. It can’t happen.
I agree with combating bias with bias isn’t good. The AEI has over 150 scholars on their panel and only one is Afro-American who is only on the panel as guest contributor. Citing studies from the AEI can be a double edge sword.
10kblackappraisers.com is worrisome. I’m all for education, diversity but that group is a fundraising group only. I doubt it’s a legal nonprofit. Thaddeus also has a history. Wanting to change AVMs to increase value of homes for no reason is frightening. It would negatively upset the industry, banking and economy.
Mark, the author Mr Bagott refers to the higher property values for lower income communities as ‘debt traps’. You see, the issue at hand is not really race, but that of the last independent group in real estate, the appraisers, still daring to stand up against lenders lining up minority tracts, and everyone else for that matter, from the debt trap machine. aka; predatory lending. Same old activity, now rebranded with an illusionary justification of bringing equity in lending under the illusionary premise the appraisers are responsible for equity differences in housing by race. If these companies wanted equity in lending, they’d stop charging exorbitant interest and fees, setting citizens up for debt traps, scooping up all these properties to hold as reits, working with GSE’s to get first purchase opportunities ahead of regular citizens whom could have had those discounts. Trillions of real property equity in houses and lower mortgage loan amounts which could be in the hands of regular citizens where foreclosures occur, instead funneled directly to big corporations via auction courtesy of gse policies. That is happening right now in real time.
That is quite an interesting website. Well, if any particular group of people want to pay more houses, nothing stops them. They can start offering higher price offers right now, and volunteer for higher taxes, and higher mortgage payments. I would counsel them to first ask the question; What exactly is wrong with lower priced housing? The same Port Authority working with them also focuses on subsidizing housing for the poor. I fail to see how ten thousand appraisers will change anything, unless they’re functioning as financial and career counselors. They need to define value in use vs value in market, and prioritize one over the other. Personally, I’d prefer lower mortgage payments and I’d bet most other people would too, because that brings superior value in use and an easier life with more spending cash in hand.
https://www.cincinnatiport.org/impact-2020-affordable-housing/
‘affordable housing programs’. I posted a very special link describing that particular debt traps end result the other day.
https://pagetwo.completecolorado.com/2021/07/21/caldara-affordable-housing-scheme-a-con-job-on-the-poor/
Also don’t miss this video. Cube on Tucker.
https://rumble.com/v32lztw-tucker-carlson-ep.-11-ice-cube-x-tucker-the-studio-interview.html
As far as the proper focus for whom to care for, that’s an easy one.
“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
Government already set up lower to mid income people with tons of student loans. Now they’re loading them up with home loans at higher interest rates at the peak of the market just like before the Great Recession. Lenders, AMCs are kissing HUD’s behind to allow these easier predatory loans. Lenders brag on LinkedIn about lobbying Washington for these things. Lenders resell the loans so they don’t care if, when they go bad. Feels like pre GR.
I’ve noticed a new stream of tax lien infomercials as well. It’s all going down behind the scenes and market values are not being allowed to adjust downward with what we thought was ‘the market’. Because lenders give first purchase opportunities to corporate investors ahead of regular citizens. When these activist groups talk about ‘billions of lost value in housing’. They must not realize that billions are flowing monthly, to corporate investors, upstream of regular citizens. Trillions in lost value back to regular citizens. None of the vested interests want to be fair because they artifically propped up housing, blew up the housing bubble with low rates and continued fiat money printing, and most everyone cashed in on the illusionary market gains. So to avoid personal losses with market deflation, they just allow all the foreclosures to go to big corporate investors whom hold them as rentals indefinitely. How many can they buy before they’ve bought enough? Don’t worry, international investors are allowed to purchase at those auctions too. Ingeneous really. Blame appraisers for with holding value from the black community. Funny, I don’t see hispanics, asians, american indians, or any other group complaining about this. Appraisers are an easy target because gse managers have put forth policies which prohibited most appraisers from hiring anyone new for twenty years.
Set up. Swing. Home run. Racketeering. Collusion. Violations of RICO. Restraint of trade. Our dear government service managers are behaving like mobsters. They brought in a steady stream of WEF and globalist bankers to set this up over the past decade, all whom hold top and key positions.
Mark it is so good to hear your voice again. Government was designed to protect but I haven’t seen that in quite some time. The Appraisers are responsible for the general public and the government’s agenda is to stop that from happening because of their vast agendas and it has been my experience that those quasi governmental agencies will swiftly remove anything that gets in their way. Just watch what they called the news and their so call journalists. Agenda based propaganda. Most people haven’t a clue because they don’t want one, they want their way. In the world today people lie, cheat and steal and ruin an industry when they don’t agree with it. The exception to that is The Fed, FNMA and FHLMC and the other alphabet quasi governmental agencies. The Uniform Standards of Appraisal Practice, our ethics, only allow us to advocate our work. Not a gang mentality of political hacks whose agenda is to be re elected.
I guess I wonder what the real problem is with someone advocating for change in an industry that has had a history of some bad actors and behaviors. USPAP and State Level Regulatory bodies came out of bad behavior and bad actors and 1989 was not that long ago. We had a repeat in 2008-2010…Dodd Frank. Again, bad actors and bad behavior. I have witnessed it first hand. I have also sat in a USPAP class and a student who was in his early 60’s, made comments that I was uncomfortable hearing concerning “those neighborhoods”. I am all for communities of people advocating for themselves. I haven’t seen anything or read anything that would lead me to believe the 10Kblackrealestateapprasiers is going to disrupt an appraisal industry; seems they want to make it better. The fact that they are touting someone’s research does not make that research 100% false. I think it makes for great discussion and debate. What I am learning is that there are some folks who believe they have gotten a raw deal. That is their perception. I am not sure they haven’t. I haven’t lived their life. I do know that we have a lot to gain from how they have advocated for themselves. We spend more time telling a wall that everything that is happening out there is wrong. We need to turn the learning and listening part of our brains on more often than we do.
Sure. There is a saying; Nobody goes to jail. Just search this term; The Holder Doctrine, nobody goes to jail. Too many articles to post.
In the latest series of untouchable white collar criminals SBF from FTX, charges related to illegal campaign finance contributions dropped. Of course they were.
It’s not like Pam Crowley went into witness protection after blowing the whistle on appraisal management companies in the lead up to HVCC or anything.
Reference; Appraisal Scoop.
https://appraisalnewsonline.typepad.com/appraisal_news_for_real_e/2007/06/post.html
And if you’ve ever seen this photo… I suppose human nature has just simply changed. Safeguards such as locking files or using watermarks, closed source encoding, no longer a big deal. Because the regulators said to the bankers and their big box amc’s, you can’t do that anymore. Mismo and ucdp came around, who needs report signing security anyways? And now everything is right as rain. That whole protest on wall street, yesterdays news. Have a cookie Neo.
Prayers to Pam Crowley. I got to meet her once and very proud of that opportunity. She is missed
https://money.com/housing-bubble/
Article about unraveling housing bubble via 2015. History repeats. They’re going to transform something, that’s for sure. Having learned lessons from the past, now instead of flipping out foreclosure notices left and right, we get artificially propped up markets where the foreclosures are staggered, and never seen by regular citizens, because, like always, like before, the lending communities primary obligation is to investors, not borrowers. Investment class gets first dibs on all defaults. Problem solved. Nevermind that’s trillions of savings possible to the people, held with banksters instead. They just have to eliminate independent checks and balances to get there. From below article, the four billion dollar a year appraisal industry. Most people will never get their minds around how much the amc industry stole from all of us, and how compromised the lending markets have become due to their presence.
The coin has now flipped, as pdc people will storm borrowers homes, bifur and desktop appraisals from half a world away, avm’s and waivers will rubber stamp every hopeful deal. We’ll hear new stories of deceit and deception. Lenders are maintaining a false sense of security because everyone is not mad at them yet. Give it time. These moves towards automation are offensive and intrusive. As if society shifted and we’re cool with dealing with artificial intelligence on every stop, screw the humans, who needs them, authoritarian model or bust. We as a country are really losing sight of the goal, We The People, not we that answer to machines. An AI chatbot called me sweetheart in an old ladies voice at wendy’s and I’ll never use a wendy’s drive through again. Terminator vibes.
Soon that AI will be telling you at the behest of it’s programmers, what your home is worth, if you’ll keep the home or lose it, if you deserve freedom and liberty, or even food and access to medicine. They’ll have a complete 3d scan of every home eventually. Your privacy? Not their concern. People need to take a big giant step back from this automated bull crap and consider what it means to be human, to care bout others, and to have sensible manual processes involved. To believe in fairness that we should all have jobs. We’re in 1980 again, when all the slimebag company owners are offshoring everything possible and doling out pink slips to employees as fast as humanly possible. Great news guys, you’re fired, AI is here.They’re worshiping the next golden idol right now. Replace an entire industry of licensed professionals with AI, sure why not. Valuation, sales, taking orders, phone support, art, science, literature, screen writing, delivery, engineering, drafting. Gone. Welcome to our dystopian future. The real pandemic is how stupid everyone is to continue subscribing to these models.
Excerpt; a machine with cogs called brokers and bankers, fueled by money poured in by investment banks, bond traders and hedge fund managers. The system prospered and grew, introducing new players into the financing transaction and transforming the roles of others. Finally it ran amok, creating huge incentives at every level of a home sale or a refi to sacrifice prudence in pursuit of a killing. Market checks and balances should have prevented the process from getting out of control. But they were corrupted, co-opted or simply steamrollered.
Eric, what happened to Pam?
I can’t say for sure about Pam Crowley, it’s been a long time since HVCC and the IVPI Proposal and battle – which we lost. She was under a lot of pressure, probably litigation from AMC’s and there were some health issues with her husband if I remember correctly. I think she ghosted herself from the industry after working selflessly for years from what I saw. She deserves a medal are at least a Hall of Fame nomination. . From Back to the Future 2008 – READ THIS THREAD https://appraisersforum.com/forums/threads/time-for-the-dodd-crowley-ivpi-proposal.143700/
Oh yes, I’m posting this alternate link to the full document all the time. As her site is no longer active.
My repeat statement whenever amc’s come up; Missing the IVPI proposal yet?
https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf
Imagine if the tens if not hundreds of billions the appraisal management companies stole from appraisers went to appraisers instead. How diverse our industry would be, how many quality well educated experienced new hires there would be. Imagine the entire mortgage lending industry having to go through one central location to order appraisals, and all appraisers willing to participate received a fair and evenly balanced portion of those orders. There would never have been slimebag cut through undercutting appraisers reducing fees in order to get ahead in line and more volume than the next guy. We could have all made it, just like the old days when appraisers could simply appeal to mortgage people directly for work. Again; Missing the IVPI proposal yet? People need to give that a full on read front to back to understand that was the popular model prior to the whole sale sell out by taf and hijacking of our industry by tavma, now revaa, and their supporting conspirators like alterra. This one deserves a meme from the crypt.
Crowley 😉
Great points Bags about the decimation of our “industry”. In 2007 they were raising education requirements to try and lower the # of Appraisers entering the “profession”. If anyone is owed reparations in this country it is the Independent Fee Appraiser.
Agree, she truly deserved a medal. Per Joyce Potts, she’s alive and kicking!
https://web.archive.org/web/20230607075514/http://www.stopmortgagefraud.com/
Her old domain name is up for sale in case anyone wants it.
How to use the way back machine.
1. Know what the way back machine is.
A dedicated effort of pioneers in the internet and tech industry whom understood that now there is so much content being proliferated via digital media which is not in long lasting physical media form, this could cause a dark ages missing ages type of effect in the future if the data was not somehow maintained in a dedicated digital media repository. Because the internet is monetized, and it costs money to host, they felt it was an altruistic effort worthy of expense, such as that of a library, to retain this data. The way back machine is your digital library assistant for websites from the past. Bot cralwers surf the net relentlessly and follow various random links to assemble partial digital profiles of popular websites. An additional note is that nefarious actors are starting to wipe archives in a manner similar to the living nature of the now so discredited and biased wikipedia efforts. So we hope the Way Back Machine continues to stand the test of time, it can be an invaluable resource and will only gain value as time passes and domain ownership shifts. Personally, this is why I still buy books, in support of traditional long lasting physical media models of informational sharing. Modern day book burning is all around us but people are unaware that’s happening, because; digital. People go to Way Back to see the content as it was at a specific point in time, such as reviewing a civil war event, from a rare book published at that time. Other similar data repository formation efforts have been ongoing with twitter facebook and such but are nowhere near as helpful as way back.
2. Type in the website name to see if there are results (link provided for pams website above.)
3. Observe the top bar chronological time line of data saving and content saving.
Note the ability to hover over, use calender tool, and then randomly select. You can often just go to the obvious high point highest traffic range, then click in. I picked a few from 04/22/2006, which is where I randomly clicked to this time.
4. Attempt to navigate the pages and see what works. Click away. Save as image snips if wanted. Use right click open image in new window to review small texts, if the image is condensed on the page, otherwise sometimes the effect is similar to a non reversible zip file and permanently reduced in pixel density and size. Use calender option upper right to observe site changes in chronological order if desired.
Other times, you may see interactive calendars with little bubbles like heat maps sort of tracking, depending on how many site scrapes the auto bots acquired. Just click away and see what you find. Now you know how to use the way back machine and there are many more functions and capabilities there as well.
Oh sorry, I picked the wrong website, just going by memory. Above I researched stopmortgagefraud dot com. But Pams site was;
http://www.mortgagefraudwatchlist.org
Let’s do the same thing again instead.
https://web.archive.org/web/20230000000000*/mortgagefraudwatchlist.com
Oh yes, far less content here, so we get the interactive calendar instead. Click and go, screen save image with snipping tool, and that’s how it’s done.
Oh the links to appraisers petitions! Appraisers used to care. We can’t even get but a handful of people to write in about avm’s subbing us out completely, and today is the final day of letter writing.
https://appraisersblogs.com/dazzled-by-wizardry-federal-mortgage-regulators-ignore-zillow-debacle
https://web.archive.org/web/20090221025846/http://www.mortgagefraudwatchlist.org/
O.k., dot org not dot com. Third times a charm. Many more hits too. That’s how the archive works, just keep at it and eventually you get there.
Below, three in a row, the ‘about us’ commentary from Pam.
two of three
third
And one more, this from the first accidental hit.
Borrowers bill of rights.
Flash forward today, modified the goal to; ‘borrowers bill of entitlements’ instead.
People in this industry used to actually care about consumer protection. We did not have industry insiders whom masquerade as appraisers, trying to tell us our service was to the lender and the lender alone regardless of how they treated and deceived consumers. Appraisers whom play along with the new status quo of today would have been kicked right out of this business a mere decade ago.
Look at this one! Another example of an unreliable AVM. It is technical faults like this which can really confuse people whom don’t understand real estate and all the possibilities up and down.
Situation; In Denver, multi families were common. Meaning, singular ownership of multiple units, income properties. They required renters to be in place, because there were multiple units under one singular owners deed. This is the proper definition of a ‘multi family’ property.
But over time, investors and others do ‘party wall agreements’ where they buy all those units, in one simple sale, then separate the individual ownership of all units at once, into every unit having it’s own owner and it’s own singular deed for each singular unit. So no longer multi family, but now they all become single family attached. And then if it’s a duplex, they sell two units, if it’s a triplex, they sell three units, quadplex, they sell four units. These will never again be multi family properties because their use has changed to single family attached.
The sales records indicate much higher pricing previously, because those higher prices reflect a singular deed, which conveyed three or four units, all at once. But now they’re parsed out and separated each with their own individual deed, they sell for less per individual unit. And although the market keeps ticking up, the actual cost per unit goes down compared to them all selling at once as a multi family group.
This confuses the hell out of avm systems, exacerbated by the fact the dullards at MLS Corelogic Matrix, as well as the RESO group (real estate standards) can not even define these properties correctly and are calling single family attached units as multi family units, simply due to attached structure. Multifamily is income, multiple units under one singular ownership. And attached single family is correct for multiple attached units, each with their own singular owner.
This is also a mechanism for investors to defraud home owners because the owners do simple research for multi family and find results which indicate single family attached, described improperly as multi families, which leads to incorrectly interpreted data. The program is so wildly successful due to Corelogics improper building type descriptions, the majority of multi families have been targeted by investors whom make damned fortunes tricking people into selling multi families for far less than they are really worth.
What’s a nearly 100% higher avm value or $200k spread being off, with a 91% confidence score by the avm, and a very high sell score prediction, among friends? Image attached.
It takes additional research to identify the units are now separated to single families, to correctly interpret the now qualified data. Especially confusing when the subject property, still carries the main address which used to describe all three or four properties in that multi family. With proper party wall agreements, also comes postal service address adding, a technical challenge the investors are aware of but most individuals are not aware is a possibility after separating the deeds. Like with multi, they’ll often all have the same address, with a unit # a,b,c,d, after or something like that. But after parsing, they may all then get a 1/2 or a number tick down for a new address for each individual unit. The avm systems are simply not sophisticated enough to properly qualify and then interpret this data.
Another clear as day example of the avm systems being so unreliable in many common situations. And an example of how people relying on avm systems, may confuse inadequate programs for some form of biased interpretation by the appraiser. ‘Let my check the avm and see if you did this appraisal right.’
In case no one has noticed, loving the United States or just being white is now “racist”