USPAP’s Typical Buyer Standard in the Fair Housing Era

Introduction

I want to state plainly what the appraisal profession has been tiptoeing around since roughly 2019: an appraiser cannot simultaneously comply with:

1-  USPAP’s requirement to identify and analyze the most probable (typical) buyer of a property via market data AND…

2- comply with the current iteration of fair housing training that demands the appraiser blind themselves to the characteristics, preferences, and decision-making patterns of that same buyer.

These two mandates point in opposite directions. One requires the observation and prediction of actual market behavior. The other requires the appraiser to disregard that behavior. You cannot do both.  This is not a political statement. It is a professional and legal one, and I intend to demonstrate it.

What USPAP Actually Requires

USPAP Standards Rule 1-3(b) (current edition) requires the appraiser, when the assignment involves market value, to “develop an opinion of the highest and best use of the real estate.” The highest and best use analysis is not optional — it is a foundational requirement for every market-value assignment. The Appraisal of Real Estate, 14th Edition, defines highest and best use as the reasonably probable use that produces the highest value as of the effective date of the appraisal. Central to that analysis is the identification of the most probable buyer — what the profession has long called the typical buyer.

The typical buyer is not a theoretical abstraction. It is the identification of who is actually in the market for the subject property — what they want, what they will pay for, what they will not pay for, and how they make decisions. The appraiser must understand that buyer’s preferences, priorities, tolerances, and constraints, because those characteristics drive market value. Market value is defined in terms of what a typical buyer would pay — not what an ideal buyer, an enlightened buyer, or a socially optimized buyer would pay. The market that exists. Not the market that should exist.

Identifying the typical buyer is what makes the entire sales comparison approach function. Consider the practical implications:

• Is a third bedroom important? That depends on who is buying. A young couple without children may trade that third bedroom for a larger primary suite. A family with two children will not. Identifying the typical buyer tells you whether to adjust for bedroom count and by how much.
• Is a fenced yard important? In a neighborhood where the typical buyer has dogs and children, a fence is a significant amenity. In a retirement community, it is irrelevant.
• Are bright Caribbean colors of interior walls a positive or negative vs a vanilla shell? What are the cultural norms for people who buy in this area? Are they white college educated people working in pharma?  Or are they mostly Indian 1^st and 2^nd generation legal immigrants?
• Is proximity to a particular school district important? Only if the typical buyer has school-age children. This is a demographic fact, not a discriminatory one.
• Does the buyer care about proximity to public transit, or proximity to a golf course? These are opposite preferences held by different typical buyers. If you do not identify which buyer is typical for the subject’s market, you cannot properly weight these location factors.
• Does the typical buyer prefer a modern open floor plan, or a traditional compartmentalized layout? This is a generational and cultural preference. It is a real preference. It drives real dollars. Ignoring it produces an incompetent appraisal.
• Would the buyer of a flat in Chinatown consider a comparable flat in Little Italy? Until recently every appraisal text agreed that culture matters and that buyers express cultural preference through price. Public behavior has not changed. Pretending otherwise produces an incompetent appraisal.

Every one of these questions requires the appraiser to think about real people — their age, their family structure, their lifestyle, their economic position, and yes, their preferences, including preferences that may correlate with demographic characteristics. That is what USPAP requires. An appraiser who refuses to engage with the typical buyer’s actual psychology and priorities is not being fair. That appraiser is being incompetent. And incompetence is a USPAP violation — specifically, a violation of the COMPETENCY RULE.

The Disparate Impact Doctrine: What They Are Not Telling You

The current fair housing curriculum traces its authority to the disparate impact doctrine. The doctrine holds that a practice can be discriminatory even without discriminatory intent if it produces a disproportionate adverse effect on a protected class. The doctrine was first applied in the employment context in Griggs v. Duke Power Co., 401 U.S. 424 (1971), and was extended to the Fair Housing Act by the Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015).

But here is what the fair housing training materials do not tell you — and what USPAP’s own ancillary guidance (the Appraisal Foundation’s voluntary fair-housing supplements) conveniently omits. The Inclusive Communities decision did not give regulators an unlimited disparate impact weapon. The Court explicitly established three safeguards to prevent the doctrine from being misapplied. These safeguards are not optional commentary. They are the holding of the case:

Safeguard 1: Robust Causation. The plaintiff must demonstrate “a robust causal connection” between the challenged practice and the statistical disparity. A mere correlation is not enough. The practice itself must cause the disparity. (Inclusive Communities, 576 U.S. at 542–543.)

Safeguard 2: Legitimate Business Justification. If the defendant demonstrates that the challenged practice serves a “valid interest” or “legitimate business justification,” the burden shifts back to the plaintiff. (Inclusive Communities, 576 U.S. at 541, citing Griggs, 401 U.S. at 431.) The Court emphasized that defendants must be allowed to “maintain a policy if they can prove it is necessary to achieve a valid interest.” (Id. at 541.)

Safeguard 3: Less Discriminatory Alternative. Even if a disparate impact is shown, the plaintiff must demonstrate that a less discriminatory alternative exists that would serve the same legitimate interest. (Inclusive Communities, 576 U.S. at 527.)

These three tests are not footnotes. They are the framework. And they are systematically excluded from the fair housing training materials being presented to appraisers across the country.

Side-by-Side: USPAP vs. Current CE Messaging

The strongest evidence that something is wrong is the gap between what USPAP says and what current continuing-education materials tell appraisers to do. Set them next to each other:

Each row is a real, documented inversion. The CE materials do not cite these USPAP rules and reconcile them. They go around them. The reader is left with two rulebooks, one of which is unwritten and one of which is binding — and the unwritten one is what the regulator will reference at the complaint stage.

This is the load-bearing observation in the paper. Every appraiser who has sat through a 2023–2026 fair-housing CE module already knows it. Saying it out loud is not a political act. It is a professional one.

Why the Second Safeguard Ends This Debate (As to USPAP Compliance Itself)

The second safeguard is dispositive for the appraisal profession as to USPAP compliance itself. An appraiser who identifies the typical buyer — including that buyer’s age range, family structure, lifestyle preferences, and purchasing psychology — is not engaged in some rogue discriminatory practice. That appraiser is following USPAP. Following USPAP is not merely a business preference; it is an industry requirement. In every state, compliance with USPAP is mandated by law as a condition of licensure — the appraiser is licensed under the authority of Title XI of FIRREA (12 U.S.C. §§ 3331–3351), and that license requires adherence to USPAP.

This is a textbook legitimate business justification under Inclusive Communities. The appraiser is doing what the law requires, what the standards require, and what professional competence demands. The fact that a typical buyer profile may correlate with protected class characteristics does not make the analysis discriminatory. Demographic correlation is not causation — and the Court said so explicitly in Safeguard 1.

To put it concretely: if the typical buyer in a given neighborhood is a 35-year-old professional couple with two young children, and the appraiser identifies that profile to determine that school quality and yard size are significant value drivers, that appraiser has not discriminated against anyone. That appraiser has described the market. The market is not a moral argument. It is a set of observable, measurable human decisions. The appraiser’s job is to interpret those decisions — not to edit them for social palatability.

A Concession: USPAP Compliance Is the Defense; the Application Is Still Reviewable

I want to draw a clear line that critics of this paper might otherwise blur. There are two distinct questions, and a defender of the disparate-impact framework as it is currently being taught should not be allowed to merge them:

1. Is USPAP compliance a legitimate business justification under *Inclusive Communities Safeguard 2?* Yes. That is the argument of this paper, and I do not soften it. A federally-mandated professional standard, applied as written, is the paradigm case of a “valid interest” the Court contemplated.
2. Is the *quality of an individual appraiser’s application of the typical-buyer analysis subject to scrutiny? Yes. USPAP already had that language for decades citing the need for data when making any socially sensitive adjustments. Disparate-impact review of that application* — was the buyer profile evidence-based, was the segmentation supported by market data, were the adjustments traceable — is consistent with USPAP, not in conflict with it.

The distinction matters because it is the only way the legitimate-business-justification defense holds up. USPAP compliance is the shield. Sloppy work claiming the USPAP label is not. Conceding the second point does not weaken the first; it strengthens it. Regulators who want to scrutinize execution have every right to do so. But they do not have the right to declare the typical-buyer analysis itself off-limits.

The Constitutional Backdrop

It is worth remembering what the Constitution actually says about disparate impact. In Washington v. Davis, 426 U.S. 229 (1976), the Supreme Court held that the Equal Protection Clause of the Fourteenth Amendment requires proof of discriminatory intent — not merely discriminatory effect. Disparate impact, standing alone, does not establish a constitutional violation.

The disparate impact doctrine as applied through the Fair Housing Act is statutory, not constitutional. It exists because Congress created it and the Court permitted it — subject to the three safeguards above. Even under the statute, the doctrine does not require the elimination of every practice that produces different outcomes across demographic groups. It requires only that unjustified practices with unjustified impacts be remedied. A practice that serves a legitimate purpose — like USPAP compliance — is justified by definition.

What the Current Fair Housing Regime Demands

The current push in “fair housing” compliance — driven by the PAVE Task Force Action Plan (2022), amplified through state continuing education requirements, and enforced through the threat of HUD complaints and state-board investigations — tells appraisers something fundamentally different. It tells us that we must not consider characteristics of market participants that correlate with protected classes. The only way to measure disparate impact is to compare results across groups. So the framework, by its own logic, treats any difference in outcome across demographic groups as presumptively suspect — regardless of whether the market data supports the conclusion.

The training materials being presented to the profession assert this framework while omitting the safeguards that would limit it. That is the conflict.

The Pattern of Omission Across CE Providers

Desiree Mehbod‘s peer-review note flagged that the strongest pushback this paper will draw is on the claim that the omission of the Inclusive Communities safeguards from appraiser-facing training is intentional. I want to address that head-on.

I am not asserting that any single CE author has an intent to mislead. I cannot prove a state of mind, and I do not need to. What I can show — and what any reader can verify in their own state’s continuing-education library — is that the omission has the same effect regardless of intent, and that the pattern is consistent enough across CE providers that it warrants explanation.

Specifically:

• The PAVE Task Force Action Plan (2022) discusses disparate impact under the Fair Housing Act without reproducing the Inclusive Communities three-safeguard framework as a constraint on its application to appraisal practice.
• Multiple state-approved seven-hour fair-housing CE modules — issued in or after 2022 in response to the PAVE plan and the 2022 HUD enforcement guidance — present disparate-impact theory to appraisers as an enforcement standard while omitting Safeguard 2 (legitimate business justification) and Safeguard 3 (less discriminatory alternative) from the appraiser-facing modules. The same providers’ policy-facing or attorney-facing materials, where they exist, do reproduce the safeguards. Side-by-side comparison is straightforward; I encourage readers to perform it.
• The Appraisal Foundation’s voluntary supplemental guidance on bias and fair housing, where it discusses disparate impact, similarly emphasizes the doctrine without giving the safeguards equal billing.

The result: an appraiser who has completed every required fair-housing CE hour in the post-PAVE period is unlikely to have seen Safeguard 2 articulated as a defense at all. They have been trained on one half of the doctrine. Whether by design or by drift, the half they have been trained on is the half that exposes them to liability; the half that protects them has been left out.

That is the claim, and it is defensible without attributing motive. Readers who want to verify can pull two CE modules — one appraiser-facing, one policy- or counsel-facing — from the same provider and compare the disparate-impact sections. The asymmetry is the evidence.

A First Amendment Note (Secondary Argument)

The principal argument of this paper is the USPAP-vs-disparate-impact-application argument set out above. It stands on its own and does not require the reader to accept any First Amendment claim. Readers who prefer a doctrinal-statutory argument can stop here.

For readers willing to follow a secondary thread: the current fair-housing regime, as applied to appraisers, also raises a compelled-speech concern that should at least be flagged. The Supreme Court has held that the government cannot compel a private speaker to articulate a message the speaker does not endorse without satisfying heightened scrutiny. National Institute of Family and Life Advocates v. Becerra, 585 U.S. 755 (2018); Janus v. AFSCME Council 31, 585 U.S. 878 (2018); 303 Creative LLC v. Elenis, 600 U.S. 570 (2023). An appraisal report is the appraiser’s professional speech: a signed, certified opinion of value. When a regulatory framework pressures the appraiser to alter that opinion away from the value the market data supports and toward a value that produces a more demographically uniform outcome, the framework is operating, in substance, as a compelled-speech regime — the appraiser is being asked to certify, under penalty of license loss, an opinion the appraiser does not hold.  In addition, many states now require a CE class in Fair Housing where a 1-hour test is given at the end for trainees where the questions “correct” answer reasserts the imbalanced threat to appraisers and to get the “correct” answer, all students must regurgitate that incomplete/false/leading answer back, therefore internalizing the false information further.

I raise this only to flag it. The compelled-speech analysis is unsettled territory in the appraisal context, and I do not rest the conclusion of this paper on it. The USPAP / Inclusive Communities argument above is sufficient to establish the conflict and the defense. The First Amendment angle is offered as an additional avenue worth developing, not as a load-bearing premise.

The Practical Consequence of Blindness

If an appraiser is forbidden from analyzing the typical buyer — from understanding their demographics, their family structure, their cultural preferences, their economic constraints — then the appraiser cannot properly weight any feature of the property being appraised. Every adjustment becomes arbitrary. Every reconciliation becomes a guess.  And especially, specific and customized homes will be undervalued drastically, instead of market segmentation being properly developed.

Why did comparable 3 sell for $15,000 more than comparable 2, when the properties are nearly identical? Because comparable 3 is in a school district that the typical buyer — a family with children — values more. Remove the typical buyer from the analysis, and that $15,000 difference has no explanation. The appraiser is left with a number and no methodology. That is the opposite of competence.

The appraiser must understand the buyer’s psychology. Not in the abstract. In detail. What does this buyer value? What does this buyer tolerate? What does this buyer refuse to accept? These are the preferences that create market value. Some are universal. Some are generational. Some are cultural. Some are rational. Some are not. The appraiser’s job is to observe them and quantify their impact — not to judge them, not to endorse them, and not to suppress them because they are uncomfortable.

The Scale of the Problem They Are Claiming to Solve

The last time I sat through a state-approved fair-housing CE class, the instructor disclosed a statistic worth pausing on: fewer than one half of one percent of practicing appraisers have ever had a fair-housing complaint filed against them. That is an extraordinarily low rate by any benchmark. Compare it to other professions that touch race, housing, and lending — real estate brokers, mortgage loan officers, property managers, even municipal code enforcement — and the appraiser complaint rate sits at or below the floor of every reasonable peer comparison. Appraisers are not, by any honest measurement, an outlier industry. We are, if anything, an exemplary model that other industries should emulate.  So, why are we being accused instead of celebrated?

The lack of complaints is not evidence of a hidden problem. It is the most direct evidence available that the problem the current regulatory posture claims to solve is, at the population level, very small. A regulatory apparatus that responds to a sub-half-percent complaint rate with mandatory annual reeducation, threat-based enforcement messaging, and the omission of legal safeguards from the curriculum is not proportionate to the harm it claims to address. It is the opposite of proportionate.

The same picture appears in the public record. Below is a relative-coverage index of media stories alleging appraiser bias from 2015 through 2025, compiled from major outlets and trade publications.

Figure 1. Appraisal-bias media coverage index, 2015–2025. Compiled from major national outlets and trade publications; qualitative intensity index, not exact article counts.

The pattern is unmistakable. Pre-2020 baseline coverage was negligible. Coverage surged sharply in 2021 and peaked in 2022–2023, driven by a handful of cases (Connolly/Mott, Tate-Austin, Horton) and the rollout of the PAVE Task Force Action Plan. Coverage has since collapsed back toward baseline. The Lanham case has been dismissed. The PAVE task force has been disbanded. The wave that justified the current regulatory posture was a moment, not a trend, and the moment is over. The regulatory structure built on top of it is what remains — and it remains aimed at a profession that the data shows is not, and was not, a meaningful contributor to housing inequity.

What Is Actually Happening

A subset of regulators and advocacy organizations have taken the disparate impact doctrine, stripped it of its safeguards, and repurposed it as a tool to push appraisers toward results that reflect desired social outcomes rather than observable market conditions. This is not fair housing enforcement. It is social engineering wearing a compliance badge.

The fair housing classes being mandated across the country tell appraisers that if property values in predominantly minority neighborhoods are lower than values in predominantly white neighborhoods, the appraiser must examine whether bias influenced the analysis. Fine — bias should always be examined. But the training goes further. It implies that if the values are different and the demographics are different, the appraiser’s methodology is suspect — even if every comparable sale, every adjustment, and every reconciliation is documented, supported, and defensible. The numbers are not the problem. The presumption that it is the appraiser’s fault is the root of the problem, as is the prejudice of regulators who buy into this concept.  Appraisers are not social engineers, nor should they be.

That is not appraisal. That is advocacy. USPAP Standards Rule 1-2(b) requires the appraiser not to advocate the cause of any party. An appraiser who adjusts market-derived conclusions to achieve a socially preferred result is advocating. An appraiser who applies adjustments not supported by market evidence, in order to narrow value differences between neighborhoods, is producing a misleading report — a violation of both the ETHICS RULE and the COMPETENCY RULE.

The profession is being asked to violate USPAP in order to comply with a framework that misrepresents the law it claims to enforce.

What I Am Saying

I am saying that the current regulatory posture — requiring appraisers to both identify the typical buyer under USPAP and ignore the typical buyer under fair housing compliance — is incoherent. It cannot be done. No amount of training, no amount of good faith, and no amount of professional commitment can reconcile two mandates that point in opposite directions.

I am saying that the disparate impact doctrine, as articulated by the Supreme Court in Inclusive Communities, does not require appraisers to abandon the typical buyer analysis, highest and best use, or USPAP. The three safeguards built into that decision — particularly the legitimate business justification defense — protect USPAP-compliant appraisal practice from disparate impact liability. The fact that these safeguards have been systematically omitted from the training materials presented to the profession is not, in my view, an oversight. Whether that omission is the product of intent, inertia, or institutional preference, the consistency of the pattern across providers warrants the explanation I have offered: appraisers have been trained on the half of the doctrine that creates exposure and not on the half that creates defense.

I am saying that an appraiser who refuses to analyze the typical buyer and embody their decision making patterns (regardless of if they are socially palatable or not) is not being equitable; they are being negligent. You can produce credible appraisals, or you can pursue predetermined social outcomes, but in your professional life you cannot do both. Logic, the law as actually written, and USPAP, all agree.

Retain this document as a reference should you face a complaint grounded in disparate impact theory alone. The three-safeguard framework from Inclusive Communities provides a robust defense for any appraiser whose methodology is USPAP-compliant, well-documented, and market-supported.

A Note on Terminology: Why “Protected Class” Is Coming Back

A small but telling shift in the language of fair-housing enforcement deserves to be flagged at the end of this paper, because it explains a great deal about why the current regulatory posture takes the shape it does.

The older statutes and the older training materials use the phrase “protected class.” The Supreme Court in Inclusive Communities, USPAP 2024, the HUD FHEO 2025 enforcement memo, and most modern international anti-discrimination law (including the UK Equality Act of 2010) use the phrase “protected characteristic.” The shift is not cosmetic. “Class” describes a group of people. “Characteristic” describes a trait that every individual has. Under the “characteristic” framing, anti-discrimination protection is symmetrical: everyone has a race, a sex, a religion, a national origin; everyone is protected. Under the “class” framing, protection runs in one direction — there are protected groups (classes) and there are the groups that have no protection…

Here is why this matters specifically for disparate impact, and why the older language is being preserved in appraiser-facing materials even as the Supreme Court has moved past it. Disparate impact can only be measured across groups of people. It cannot be measured across individual characteristics, because individuals are not statistical populations. The doctrine requires that the population be sorted into “the protected group” and “the unprotected group,” that an aggregate outcome difference be computed, and that the difference itself be treated as the wrong. This is the working of a fashionable and popular economic and social ideology with a poor track record, looking through the facets of race, sex, national origin, etc.; in a way that Yuri Bezmenov predicted in 1984.^[1] The newer “protected characteristic” framing makes that math harder, because it dissolves the unprotected category — every appraiser, every buyer, every seller has a race, a sex, a national origin. There is no unprotected control group. There is just a population of individuals with characteristics. Everyone is equally protected, rather than some groups being favored while others are disparaged.

That is why the older “protected class” language is being preserved — and in some places revived — in the appraiser-facing training materials. The doctrine the trainer wants to enforce cannot function under the more accurate, more symmetrical, more FAIR, and modern framing. So the older framing is kept, and the reader is expected not to notice; and sadly, many do not.

It is worth noticing. The civil rights statutes prohibit discrimination on the basis of these characteristics, full stop, in both directions; positive or negative. Students for Fair Admissions v. Harvard, 600 U.S. 181 (2023), settled the symmetry question for the educational context, and the underlying constitutional principle is not limited to admissions. An appraiser who is told that disparate-impact enforcement runs only one way — that lower values in some neighborhoods are presumptively suspect but higher values in other neighborhoods are not — is being told something the law does not support; and nor do the drastic majority of American citizens.

Legal Citations

• Griggs v. Duke Power Co., 401 U.S. 424 (1971) — established disparate impact doctrine under Title VII
• Washington v. Davis, 426 U.S. 229 (1976) — disparate impact alone does not violate the Equal Protection Clause; discriminatory intent required for constitutional claims
• Texas Dep’t of Housing & Community Affairs v. Inclusive Communities Project, Inc., 576 U.S. 519 (2015) — disparate impact claims cognizable under the Fair Housing Act, subject to three safeguards: robust causation, legitimate business justification, and less discriminatory alternative
• National Institute of Family and Life Advocates v. Becerra, 585 U.S. 755 (2018) — heightened scrutiny for compelled professional speech
• Janus v. AFSCME Council 31, 585 U.S. 878 (2018) — government cannot compel subsidization of speech the speaker does not endorse
• 303 Creative LLC v. Elenis, 600 U.S. 570 (2023) — government cannot compel a private speaker to articulate a message the speaker does not endorse
• Fair Housing Act, 42 U.S.C. §§ 3601–3619 (Title VIII, Civil Rights Act of 1968)
• Title XI of FIRREA, 12 U.S.C. §§ 3331–3351 — federal mandate for state appraiser licensing and USPAP compliance
• USPAP Standards Rule 1-3(b) (current edition) — requirement to develop an opinion of highest and best use
• USPAP Standards Rule 1-2(b) (current edition) — prohibition against advocacy
• USPAP COMPETENCY RULE (current edition) — requirement for appraiser competence in the assignment
• USPAP ETHICS RULE (current edition) — prohibition against misleading appraisal practices
• PAVE Task Force Action Plan (2022) — interagency plan for property appraisal and valuation equity

Footnote:

• [1] Yuri Bezmenov, former KGB officer, described in his 1984 interviews and lectures how ideological subversion proceeds by amplifying divisions facet by facet across an open society — race, sex, class, region — until the population can no longer reason about shared facts. See D.C. Ludlum, “From KGB Defector to Political Commentator: Understanding Yuri Bezmenov’s Warning on Ideological Subversion,” Medium