Objective Terminology


Objective Terminology - Avoiding problematic phrases - Appraisers Blogs

Appraisers should avoid using words that lend themselves to bias judgments. Instead, the appraisal report should document objective facts.

“Bias” in appraisals has been a ‘hot topic’ around nationwide water coolers since about 2018, and even earlier.

The GSE’s are particularly wary of any commentary in appraisal reports that appear to inject ‘bias’ into the value conclusion.

In the June ’21 FNMA Appraiser Update newsletter, there is this article:

Avoiding problematic phrases

Stories in the media about racial bias in appraisals have been on the rise. The Uniform Standards of Professional Appraisal Practice (USPAP) expects appraisers to “not perform an assignment with bias.” But how?

Beyond choosing comparables that best match the property’s physical and transactional characteristics, there are many areas of focus to reduce bias. In this article, we highlight one: what commentary to include in the report.

While appraisers may not intentionally factor race, gender, or other protected class information in the valuation, some words or phrases can undermine the credibility of the appraisal by implying that demographics influenced the outcome. Readers may perceive certain subjective words as proxies for demographic composition. Even if there is no bias on the part of the appraiser, the words used can still influence the bias of the reader.

Appraisers should avoid using words that lend themselves to bias judgments. Instead, the appraisal report should document objective facts. For example, while describing a neighborhood as “desirable” sounds like a good thing, it’s really a subjective judgment. What makes one neighborhood more desirable than another depends on the needs and wants of the purchaser.

Instead of describing an area based on subjective labels, the appraiser should document the features of the neighborhood. The table on the next page includes some examples. Phrases in the first column are subjective evaluations that can be replaced with objective descriptions such as those shown in the second column.


Problematic phrase        Objective description
Desirable neighborhood

Different families have different needs, which change what they will see as “desirable.”


List the neighborhood’s features or amenities that potential buyers would find of value. For example: Newly updated neighborhood swimming pool.

Crime-ridden area

Crime-ridden is a subjective assessment. All locations can experience some crime. Where does one draw the line between “ridden” or not?


“The crime rate in this area is x%” is objective and allows the reader to make their own judgment about the potential impact of crime.

Affordable neighborhood

While some may have enough to purchase this property, others may find it is outside what they can afford.


State whether the valuation of the property is aligned with the price range of the neighborhood.

Integrated community

Language pertaining to demographic composition, whether subjective or objective, should not be included.

The valuation should focus on the property, not the residents.

Appraisers should avoid using words that lend themselves to bias judgments. Instead, the appraisal report should document objective facts.

OK, fine.

If crime rates are increasing due to inability of local jurisdiction city or county attorney’s to prosecute criminals and support laws on the books, should appraisers quote published crime statistics and use graphs demonstrating exactly what’s been happening over a 5 or longer year period? (Looks like that’s allowed.)

If “unhoused homeless” people living in tents on the road median or sidewalks are on the same block as the subject, or are in very close proximity to the subject, perhaps in a park or on school grounds, should those be FACTUALLY mentioned… perhaps by stating the number of tents found on the Effective Date while ‘driving the neighborhood?’ (A peer appraiser buddy of mine recently was chastised by an AMC review appraiser for mentioning this detail in objective terms.)

If the neighborhood clearly has people of mixed races and genders, observed by the appraiser, and comps have different races living in them, should factual Census data be quoted in the report so that the Lender obtains a clear picture of racial composition in the neighborhood? Oh darn… we can’t do that. But if we could, wouldn’t that help protect the appraiser from a claim of a biased valuation? (Asking for a friend.)

Dave Towne
Image credit flickr - RCabanilla
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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6 Responses

  1. Avatar CJK says:

    Can I mention that a phonographic book store is located directly across the street, that drug dealers and prostitutes’ hang out on the corner, that many of the homes on the street are boarded up and that the gang bangers shoot up the street on the weekends? Do I need to make mention of the crack house next door and that people have vandalized the subject and broke into the house 8 times within the last 12 months. Or should I just say that everything looks good and compare the subject to properties in other markets that do not have these conditions. I do not want the guy from the Brooking Institute to call me names because his data source Zilliow does not mention any of this. When I use sales from the same area with similar conditions and the value is below other markets it must be my fault. I must have done something . 3 more years and I am done with this.

    • Baggins Baggins says:

      Although valid questions, the convenience of micro analysis in only a localized area helps the appraiser remain compliant with unbiased non judgemental language, and still provide realistic value analysis which incorporates area appeals, or lack there of. Those conditions would not be limited to just the one block, but rather would be apparent neighborhood wide. Buyers are clearly aware of this and if not, caveat emptor, it’s not the appraisers responsibility to help them make lifestyle decisions or measure acceptable living standards, that is the realty agents job and the buyers responsibility themselves. The convenient part of local analysis is that regardless if good or bad, the influence of the external conditions are theoretically already reflected in current sales prices. Hence the importance of not selecting comps beyond the local market area. The appraiser need only be concerned with value. You could say negative directly fronting commercial and apply a little adjust, beyond that, a non issue. Reasons why I stay focused on micro analysis and the local area. Instead of talking larger area statistics, talk about the high low margins of price and value potential, home type variances, and basic quality standards in ‘the target research area’. Clearly defined, place a value number on it, on to the next one.

  2. Avatar Eric Kennedy says:

    New section of 1004 – “# of violent crimes/robberies committed in a 5 mile radius in previous 12 months”??

  3. Avatar CJK says:

    Sorry should say “Pornographic book store.”

    • Avatar Bill Johnson says:

      Although its sad but statistically true, the number of homeless people counted from parking meter to downtown condo. In San Diego, from Broadway to Market St (4 blocks), its no joke but the count is often in the high dozens.

      Seek the truth.

    • Avatar Sky says:

      I thought they sold Audiobooks


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Objective Terminology

by Dave Towne time to read: 3 min