Sales Comparison Approach is Racist
Appraisers, here’s a YouTube video that you MUST view. This person’s, Dr. Elizabeth Korver-Glenn, PhD, work is one of the key reasons why there is so much chatter about racist appraisers in the US.
Her discussion of her book ‘Race Brokers‘ begins at the 8:30 mark, so you can scroll to that point.
At the 26:30 mark, she discusses the aspects of why she believes appraisers are responsible for the low property values in certain neighborhoods.
At the 28:30 mark, she claims that appraisers are required to discuss ‘race’ in reports. That’s a blatantly inaccurate statement. But the problem is, other people who don’t understand our CURRENT appraisal processes believe this stuff.
Ms., or should I say Doctor-Professor Korver-Glenn, PhD, has managed to almost single-handily tar and feather appraisers by totally misunderstanding what we do in our work. “We” are the convenient target, according to her.
I’m convinced, after watching this YouTube video, that this is where so many of the media article comments have come from that advocate appraisers abandon the current protocols, and use sales ‘from anywhere’ in the community, regardless of location or similarity to the actual subject neighborhood. This is dangerous stuff folks.
That said, if you are fairly new in this profession, you may not know that governmental sponsored racial redlining was the accepted lending protocol, backed by maps and the GSE’s, FHA and VA appraisal guidelines, from the 1930s until the Fair Housing Law was passed in 1976. Dr. Korver-Glenn cites the Appraisal Institute textbooks of that era which did give instruction about how comparables should be picked and used, which corresponded to the government edicts. How could they not do that??
So yes, those Appraisal Institute textbooks were still in use when the law changed. It took a while for the appraisal protocols to be re-written to match the Fair Housing Law and incorporated into new textbooks. But the Appraisal Institute and other organizations began teaching to the new law once it was passed. The GSE’s, FHA and VA also changed their Selling Guides to reflect the law.
That means nowadays, NO discussion of racial composition in neighborhoods is permitted to be included in reports. Certain words cannot be used to denote how the buyers, or appraisers, perceive the neighborhood. We are REQUIRED to discuss the type of housing only and other non-racial or religious amenities in the area in factual terms.
Yet both GSE’s produced white papers last year, released to the media, which used RACIAL census tract data as a justification for why we appraisers don’t, or should, consider RACE in our work.
The entire emphasis of this specious PhD “research project” is that if appraisers would just quit the current protocols, per GSE, FHA and VA instructions, of appraising properties, then racial inequities will be magically erased, and property values of homes owned by certain people will be much more ‘fair’ than what is current.
That is absolute bunk.
Humans of all races tend to associate with ‘their own kind’ as a normal occurrence, or buy properties according to their economic status. It’s been this way for thousands of years on this earth, depending on the historical data source used.
Independent appraisers, who look at sale properties similar to and proximate to the subject cannot be held liable for how people want to live, their socio-economic status, or for the inequality of appraised values across regions. “We don’t establish values; we only report what we find.”
In my continuing effort to evaluate Dr. Elizabeth Korver-Glenn’s hypothesis that virtually all appraisers are racist, I’ve been digging deeper into the academic papers she has authored, or co-authored.
You may have seen where some people high up in the cafeteria food line are advocating radically changing how appraisals are done, in an effort to ‘equalize’ values across communities. The belief is if that is done, racial differences will magically subside. The paper below is one source of that belief.
Korver-Glenn, PhD, was the co-author of this academic paper, published in Sept. 2020.
This paper discusses the original red-lining that was mandated by the US GOVERNMENT and local communities, starting in the 1930s. The paper mentions that the Sales Comparison Approach of nearby properties was one process to evaluate and conclude ‘appraised’ values, starting back then when appraising became a profession. This process continues to this day. And the academics hate it!
In their paper’s conclusion, it says this:
From our analysis, we conclude contemporary appraising practices contribute to ongoing inequality. We argue they do so in two ways. First, the continued use of the sales comparison approach after fair housing legislation meant appraisers used previous sales, which explicitly relied on neighborhood racial composition, to determine appraisals. Since no steps were taken to rectify the historic inequities, this approach has enabled such inequalities to persist. Second, appraisers continue to use neighborhood racial composition to help determine which homes are comparable. In this way, much like historical practices (Taylor 2019), contemporary appraisers are constructing a racialized housing market and exacerbating racial inequality. Addressing the inequality created by racialized home appraisals will require transforming the appraisal industry.
At the policy level, we propose swift, dramatic interventions to transform the existing appraisal landscape. New regulatory legislation should decouple neighborhood demographic characteristics from home values and appreciation rates (see also Howell and Korver-Glenn 2018).
Additionally, policy makers need to consider how we can collectively offer reparations for explicitly racist housing policies that contributed to the systemic hyper-valuing of White neighborhoods and de-valuing of neighborhoods of color (especially between the 1930s and 1970s). Such considerations should also grapple with the dramatic divergence in home appreciation rates observed in the last 35 years: since 1980, homes in White neighborhoods appreciated $194,000 more than comparable homes in otherwise comparable communities of color.
By addressing these stark historical and contemporary inequalities in appraisals, we can also reduce growing inequality in other spheres. Because home value inequality is at the center of wealth, health, education, and occupational inequities, fairly evaluating home and neighborhood value is a key starting point for dismantling the historical and contemporary racialized housing market and generating equitable opportunities for communities of color.
This is just one example of multiple ‘research papers’ that throw independent appraisers under the bus.
It’s one that the folks high up in the cafeteria food line are using to attack ‘us’. Academics, who think they have all the knowledge but no actual first-hand appraisal experience, want to dismantle the appraisal process, but if you carefully note what they write, they offer no valid way to replace the current process with something else.
Doing the research I’ve done last weekend, it has become abundantly clear to me that Dr. Korver-Glenn’s philosophy and perspective has become entrenched in the minds of high US government officials.
This work of hers, and of others, is the basis for why independent appraisers have been under attack since 2018. It’s not coincidental that this happened after her PhD dissertation was approved and circulated in 2017.
Her paper’s title is this: Under Construction: Race and Housing Markets in 21st-Century Urban America
Why is this person so fixated on this topic? Well, on page 6 of her paper, she says this:
“I study race because I want to deconstruct it, and I want you (and everyone else) to be a part of a world in which race can be stripped of its hierarchical human difference.
That’s an admirable and lofty goal, and I admire her for the desire to eliminate racism. But frankly, after about 8000 years of humanoid or human existence on this planet, is it achievable? After all, she admits it is “hierarchical”, which basically means it’s a philosophy or ranking built into human psychology.
Dr. Korver-Glenn’s dissertation offers no concrete implementable ideas or suggestions as to how to solve ‘race’ problems in the valuation process. Rather she says that the way things are done now is wrong, and based on two revealed interviews with Houston, Texas appraisers, implies that appraisers overall are racists.
On page 126, she states
…my findings point to the need for solving the challenge of finding a form of governance in the relatively loosely-arranged institutional space of the housing market.
This is why we have been hearing so much about doing away with appraisers and appraisals, having valuations done by AVMs, using third parties to ‘inspect’ homes, etc. This is also why Representative Maxine Waters is proposing legislation that will RADICALLY change the appraisal process.
Don’t let your guard down folks. Damnation has been underway for a while, and unless other ‘structural changes’ are made, it’s not going to get any better.
After you watch this video, and take careful notes of what she presented, you may want to send her a polite email to give her a working appraiser’s point of view on this race and appraising topic. Here is her email address firstname.lastname@example.org.