Diatribes Against Appraisers
Appraisers, this is a long article but it’s important, as it reveals how you are being discredited in the work you do. Yet, ‘we’ must begin doing some introspection of what we are or have been doing, and make necessary changes. Read all the way to the end.
Every time one of these diatribes against appraisers hits the fan, i.e., is in the media, the angrier I get. That’s not good for my, or others, psychological and emotional well-being!
And the problem is I keep asking myself “are ‘we’ as professional licensed appraisers really as bad as these diatribes show?” I certainly hope not. But as other incidences in society show, minority caused activity always adversely impacts the majority, and influences policy decisions.
What’s even more frustrating to me is none of the well-known appraiser organizations have offered any public rebuttal to any of these hit pieces, or explained how the appraisal process works as a way to defend appraisers. The only folks who have done so are the good people at the American Enterprise Institute, specifically Edward Pinto and Tobias Peter, who have blown holes in all the bovine substance being passed off as ‘evidence’ that appraisers are intrinsically and intentionally racially biased.
Most of this so-called ‘evidence’ is based on CENSUS TRACT studies, which I will disclose below.
Here is the latest hit piece by MarketWatch titled ‘Property appraisers valued an interracial couple’s home at $310,000 when they met the Black homeowner — but gave their white partner a $350,000 valuation’.
It is mostly a regurgitation of what has been previously presented over many months. But this hit piece has an imbedded 84 page ‘study’ titled ‘Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria.’ That study, released in January 2022, was commissioned by the Appraisal Subcommittee, released through the National Fair Housing Alliance.
The ‘study’ makes mention of these items which I will comment on in-line:
So, tell me why was the appraiser blamed for the loan being denied? This appraiser said the home purchase price was appropriate, and gave a valuation equal to the contract price. Where is anything about race involved? Did the court not understand the appraiser’s role for this transaction? The appraiser has nothing to do with loan underwriting or acceptance. The appraiser’s role is to provide a valuation based on market evidence. It’s up to the lender to make the lending decision.
You don’t say. AMCs don’t control how the appraiser selects comparable properties. If they do, then they are interfering with the appraiser independence requirements in the Dodd-Frank law.
As I have written over and over, backed up by a simple survey I did among appraisers, census tracts have little to do with how appraisers select and choose comparable properties.
…only ammunition the people doing these hit pieces can use to attack appraisers. Are you beginning to see a pattern here? Census Tract data delineating RACE of the population is the only ammunition the people doing these hit pieces can use to attack appraisers. This is precisely what the appraiser organizations are NOT telling the public. They are not telling the public that appraisers do not use Census Tract racial components to select comparables.
Because no one in the greater appraiser community is challenging any of this race baiting relating to Census Tracts, it has continued for several years, unabated. Appraisers have become the alleged and attacked villains in the real property valuation process.
The other nonsense about this is public Census Tract data does not identify specific addresses of homes within the Tract by the race of the people living there. Yet, that’s the kind of inaccuracy being promoted to discredit appraisers.
Another ‘study’ in the article done by the National Community Reinvestment Coalition incorporated what I consider multiple FALSE ‘mystery shopper’ appraisals. Although to be honest, I don’t know who the alleged intended user was or the alleged intended use as shown on the appraisal order. But these appraisals on the same homes owned by interracial people, using different appraisers, on separate days, were ordered by the NCRC as a ‘test’ to see if blackwashing or whitewashing made a value difference.
I have embedded the PDF of this NCRC study below.
This is how they describe the appraisal process, on pages 9 and 10 of their study, in only ONE metro city area – Baltimore, MD:
My presumption is the assignments were ordered to be completed on a standard GSE 1004/70 appraisal form, which is intended to be used for MORTGAGE LENDING. The participant home owners were ‘recruited’, which means they knew full well that they were to ‘play a role’ in this charade, and in fact, that’s what they did, per info in the study.
I want to know if the randomly selected appraisers were given info that the client was a ‘lender’ and that the purpose of the assignment was for a ‘mortgage loan.’ As NCRC describes the process, neither is a true statement. Therefore, in my view, the assignment process was based on fraud. The appraisers involved were duped.
…a common theme in these hit pieces. In reading through this report, it also makes specific references to demographics of Census Tracts. Again, a common theme in these hit pieces.
However, despite the fraudulent aspect, in my view, of how this NCRC testing was done, there does appear to be a tendency of certain appraisers to stray outside their responsibilities to avoid racial stereotyping in property valuations as delineated in this study. Some appraisers appear to be influenced by skin color rather than evaluating property characteristics and neighborhood location. That’s very distressing and should be of concern to all appraisers.
Despite my concerns about all these hit pieces, my view is that any appraiser who places ‘race’ ahead of property characteristics should be ousted from, or leave, this worthy profession, the sooner the better. That behavior cannot be condoned at all.
Appraising real property must be held to higher standards. But it’s also unfair to ‘us’ that we are being criticized by others who believe we don’t do our jobs properly when we don’t take Census Tracts into consideration.