Bias and Discrimination in Reports, Yes or No?

Bias & Discrimination in Reports.  Yes or No? Appraisers, should we include discussion of B&D in our reports? Wait, What?? Bondage and Discipline? No, not that. Bias and Discrimination.

Yes, it must be addressed very clearly.

Now, before you blow a cork or throw your mouse at the computer screen, let’s examine what’s really been impacting ‘us’ for the past 4 plus years.

One of our peers, who’s become somewhat famous for the way articles are written about appraisal and other topics, had a recent article ‘rebroadcasted’ in AppraisersBlogs, FTX Bought Government’s Silence; Did Fintechs Buy Attacks on Appraisers?

A statement in that article exposes some of what has been happening:

The nation’s 80,000 licensed real property appraisers should pay close attention to the manipulation of Washington by FTX, which turned out to have the characteristics of a Ponzi scheme. It may help the appraisers explain their own predicament as a result of a campaign underway since 2018 to weaken or eliminate appraisals in mortgage transactions through ad hominem attacks on appraisers by federal officials; robo-complaints to state boards by the politically compromised Fannie Mae; now-discredited research by the Brookings Institution (an organization that has itself been linked to influence peddling); formulaic lawsuits bankrolled by donation-seeking nonprofits; and attacks on time-tested analytical methods and economic principles.”

Another now-retired Certified General appraiser, who has a consulting and advocacy business designed to assist appraisers across the US, replied to me via email concerning this topic:

“I personally conclude this racial discrimination stuff is totally politics. The alt-left found that appraisers could be bullied since we have no organization, no champion, to protect us, thus can do nothing about their strategy or tactics. And, clearly, it has intimidated the entire industry from the ASC on down.

Quickly, the alt-left’s emphasis will move from racial bias (since, as we both know, it is no more prevalent in appraisal than in any other profession) to more subtle types of bias such as judgement bias, selection bias, and/or confirmation bias (details if you want them – but the reading is voluminous).”

The two appraisers are spot on. What we’ve been subjugated to for years stemmed from the statements of one person. Once that person was awarded a seat at the top of the food chain, underlings and associates have had to ‘toe the line’ and have become key players in this politically motivated chain of events discrediting appraisers.

We now know of two ‘lawsuits’ filed against appraisers, with the alleged claim being “racial bias and discrimination.” Both of these actions were formulated on basically the exact same game plan:

  • Borrower requests a lender loan using real estate as collateral
  • Lender, via an AMC, hires a local appraiser to appraise the property
  • Report is submitted; borrower get a copy; borrower disputes the ‘opinion of value’ and demands that another appraisal be done
  • Second appraisal is completed and delivered by a different appraiser, with the report miraculously stating an appraised ‘opinion of value’ thousands of dollars higher than the first appraisal; it is believed by the borrower to be the absolute correct authority on the subject’s value
  • Borrower then decides to file suit against the FIRST appraiser and AMC, claiming this appraiser was improperly biased in a discriminatory way against the borrower

So what can appraisers do to fend off claims of ‘B&D’ in their reports? While it’s true anyone can be sued by anyone else at any time, it’s my contention that additional verbiage in reports may help thwart the attacks. It’s also my contention that if the two appraisers in the aforementioned suits had had such language (shown below) in their reports, then the tactic used by the plaintiffs might have been relegated to the dustbin, as successfully proving a negative is problematic.

This is a good time for appraisers to thoroughly examine every line of commentary in reports used for ‘clones’, or in the templates from which reports are started. Make sure there is absolutely no language that either directly or indirectly states or implies anything to do with racial bias and discrimination of the subject property owner, borrower, tenant or of the neighborhood. If your reports quote Census data about neighborhood demographics or racial make-up, remove it.

Your reports must concentrate on the property CHARACTERISTICS only, unrelated to who lives in it, will live in it, or anything about who resides in the neighborhood.

I’ve been reading the 4th Exposure Draft to the upcoming USPAP, which we think will be implemented as of January 1, 2024.

The ASB has been wrestling with all the ‘stuff’ swirling around appraisers concerning alleged bias and discrimination, and the proposal is to add a new section (Nondiscrimination) into the Ethics Rule concerning this. A well-known Washington DC attorney firm has been working with them to get this implemented.

While we don’t know yet if the current proposed wording will be approved, either the draft or some other version of it probably will be.

Much of the verbiage in appraisal reports is there as CYA. We appraiser MUST address the issue of perceived bias and discrimination head on by making explicit statements in the report that we have NOT used that as a basis for the value opinion. If we don’t, we just leave ourselves exposed to attacks by borrowers and their attorneys.  Don’t just rely on the preprinted wording on the ‘forms.’ Re-state that in a definitive statement.

The wording I’m going to use in my reports is shown below. Use this if you like, or re-write it in your own style.

By including this in reports, it gives ‘us’ a defensible position in case someone decides to attack our report and use bias or discrimination as the allegation. The plaintiff will have to prove that the appraiser actually did the opposite of what is stated. In other words, prove a negative, which is very difficult. So this statement actually may discourage report users from attacking us for this aspect.

Below is the wording you may use if you like, some of which is ‘lifted’ from the 2024 USPAP 4th Exposure Draft. The bold print is the key to this article:

“The purpose of this appraisal is to form an OPINION of the subject’s Market Value based on market influences current in the subject’s market area. This process involves researching, evaluating and analysis of multiple properties considered to be similar to, or substitutes for, the subject, and are incorporated in this appraisal as the ‘comparable’ properties.

Consistent with appraisal requirements, the market area is researched based on the subject’s location, plus it’s physical, legal and economic characteristics. The market area is not confined to specific distances from the subject property, although close proximity is generally considered to be a more accurate indicator of the subject’s Market Value. And the development of Market Value can be based on comparable property sales with extended sale dates prior to the report Effective Date without being confined to a specific date range. However, sale dates closer to the Effective Date are generally considered more accurate determinants of the current Market Value. If extended sale date properties are used, the appraiser may have included a ‘market value adjustment’ to compensate for the extended time period.

In no case is the racial component of the market area (such as from Census Tract data), or current or future occupants of the subject property, researched or included in this analysis, or used as a basis to determine the Opinion of Market Value. Secondly, the appraiser has not based the value opinion in this report relative to any protected personal characteristics – per federal, state or local laws or regulations – of any persons connected by any means to this report – unless laws and regulations expressly permit or otherwise allow the consideration of such characteristics, the reliance on such characteristics is essential for credible assignment results, and the consideration is not based on bias, prejudice or stereotype.

The appraiser has reviewed the MLS listing sheets/photos, made drive by observations of the comparable properties and if necessary discussed with unbiased third party sources the condition and characteristics of the comparable sales/listings in this report. These details were used to help analyze quality and condition, and to make a decision about the comparable’s applicability to this assignment. Each of these comparables is considered to have appropriate similarities to the subject property, and are presumed to appeal to typical buyers due to their location, design and amenities, from which the subject’s Opinion of Market Value can be reported.”

Appraisers, you’ve basically been “hung out to dry” as the expression goes. Because none of the many appraiser organizations, the ASC, TAF or anyone else has publicly defended the work we do and how we do it as a nationwide campaign, individual appraisers will have to defend themselves. The above report language can be used as a start.

Dave Towne
Image credit flickr - Brett Jordan
Dave Towne

Dave Towne

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

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11 Responses

  1. Kathy Morton Bunting Hoey on Facebook Kathy Morton Bunting Hoey on Facebook says:

    Thank you! Excellent article!

  2. Avatar Diana Nytko says:

    Excellent says it all.

  3. thank you! good information!

  4. Avatar Norfolk Appraiser says:

    Great read.

  5. Avatar jaydee says:

    Anytime, EVERYTIME the R.E. Market takes a hit, 99% is because of banking and lending practices. The appraisers are the convenient escape-goats every time. During the 1980’s it was the commercial side, yet residential appraisers received both barrels of double-odd buck. Then in 2008 again: Stated income, 40 yr loans, predatory lending (REFINANCING), NO money down (no skin in the game); people used their homes as a slot machine that paid out every time; that is as long as the market values continued to rise. Predatory lenders had a filed day. Until the market topped out and prices became linear and started for fall. People who had a $500 dollar a month mortgage which they barely could afford, suddenly found themselves with a $1,350 per month loan. So they walked away. Others lost their jobs and had paid 22 years for their 30 year mortgage to have it foreclosed upon. So here we are again, this time it’s “racial discrimination – red lining”. NO appraiser compares a modest home to a shack to a mansion out side the general market area and calls them: comparable sales. I know that read absurdly stupidly, but this is EXACTLY the perceived discrimination. NO ONE is ever satisfied. NO ONE. Census tract(s) are used by “banks” not appraisers. I’ve never researched sales by census tracts. Why do you suppose they are in your reporting requirements? This is a banker/credit union item. So exactly who would be doing the actual discriminating? Now we find ourselves with yet another bulls-eye on our backs. So glad I’m nearing retirement age). Bankers want to do away with appraisers, yet won’t lend without assurances/insurance i.e. an appraisal for their risk. What a conundrum we find ourselves in. People who have expressed interest in becoming an appraiser: I tell them to FLEE!!!!

    • Avatar don says:

      Yeah man stuff changed, appraisers lost track of values and yet we trying to continue by using old stuff. Using, or justifying a 1031 trade in as a comparison is an impossibility justifying (BOOT) for residential or for other purposes than TAX considerations. And then only due to the stupid contradictions that the HOUSE has initiated. AND we just voted!

      All the old stuff in the appraisers’ books of the thirties is biting us in or asses. Each contract appraisal has to state the principles cited by Schmutz, McMichael’s, & The appraisal of R.E. published from 1935 of: the Function and the Use as well as the specific Definition of Value for that use and function.

      And cite a method of collecting our fees.

  6. Avatar PJTMC says:

    Outstanding insight. Thank you.


    I just listened to this podcast, if you have the time I recommend you do too. Jillian is a credible appraiser and is now in a position to address some of these issues, I think she will be fair but she does comes to the table with some bias herself. Most interesting thing to me about this is she is putting bias into two buckets. 1] placing racial bias at the foot of the appraiser. This is how most of us are hearing the message, and probably most of the country too, and 2] appraisal bias is the reason neighborhoods with predominantly black and brown peoples appraise at lower values. I was a bit surprised to hear this. IMHO blaming the appraiser for lower values in any neighborhood is like blaming the temperature on the thermometer. These issues are real, the fact that the President and Vice President of the US plus high level officials at HUD are blaming appraisers for the the fallout for things like redlining is a farce. HUD should look at the lending industry, what are the chances of that? 0.00%

  8. Research and/or analysis of demographic and/or racial composition have not been undertaken nor considered in this assignment. Investigation and study of externalities are limited herein to only those necessary for credible (worthy of belief) assignment results. Consideration of demographic and/or racial composition are not essential for credible assignment results; therefore, examination of historic, present, or prospective demographic and/or racial elements has not been undertaken nor considered herein.

  9. Avatar jaydee says:

    You know I find this all amazing in that ever since I started appraising at the end of 1996; it was “drilled into me” that we cannot discriminate about any race, color, creed, nation origin, sexual preference, cannot say that such and such is in a high crime area blah, blah, blah on and on it went. That we have to examine “the subject’s market”. Now this all stems from one mixed race couples complaint about discrimination by getting a 2nd appraisal which by the way was what I thought was not longer allowed under Graham-Bliley-Leach. But the AMC/Lender ordered another full appraisal anyway. Now with different results in hand about an “OPINION OF VALUE”. This MASSIVE uproar has commenced. Not that the original appraiser was discriminatory remains to be determined (I don’t believe she was). Was the 2nd appraiser influenced solely by the sanitizing of the home of all mixed race items? Or was the 2nd appraiser one of the “There is no value I cannot hit” school of thought and was that thought process influenced by the conversation that the 2nd appraiser had with the borrower/home owner. We’ll never know. But people now have a carrot to go after appraisers; a “field dominated by whites”. When I started, this was all “family and friends”. Recently retiring to the Pacific Northwest from the Navy; I had neither. I was taught by both black and white appraisers. In the service; no one cares about skin color, religion etc. Your ship is sinking your not going to pull you hand away from someone who is pulling you out of a flooding compartment or into the life raft. Ergo colorblindness is drilled into us. USPAP and the Ethics standards makes it CRYSTAL CLEAR THAT NO ONE OF CAN DISCRIMINATE ABOUT ANYTHING, or ANYONE at ANYTIME. FULL STOP. This is all I believe, is “the brass ring” on which the lenders are hoping to finally get rid of appraisers. This has always been the end goal. Change my mind. I’ll wait.

  10. Avatar Dan says:

    When a appraiser excludes homes under a mile away that are comparable and sold less than a year ago, cherry picks homes 4 miles away that were sold 2 years ago to lower an appraisal, and does this in a diverse area. The question of racial bias is valid. Not only is the appraiser liable, but the lender is to, according to the DOJ, since the lender is responsible for identifying a appraisal with bias flags.


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Bias and Discrimination in Reports, Yes or No?

by Dave Towne time to read: 6 min