And Why Is the Second Appraisal Always the “Correct Value?”

And Why Is the Second Appraisal Always the Correct Value? On Friday morning, May 19, I was one of five expert witnesses (and the only as an appraiser) to testify on the topic of appraisal bias in front of the Appraisal Subcommittee (ASC).

During the first hour of testimony, our fourth grandchild was born. My wife was in the audience and stepped out of the hearing (the nerve!) to take the call from my oldest son on the news of our new granddaughter.

The Appraisal Subcommittee (ASC) held a second hearing on challenges facing the appraisal industry, including barriers to entering the profession and racial bias in home appraisals. The panel’s first hearing on such topics occurred in January. The ASC is an interagency committee under the Federal Financial Institutions Examination Council and oversees real estate appraisal regulations. The Federal Housing Finance Agency hosted the event at its headquarters in Washington, DC.

It’s a three-hour hearing, but if you are connected to the appraisal industry in any way, I encourage you to listen. You can hear my opening statement at about the 26-minute mark. The text on the C-SPAN website was generated from unedited closed captions. Here was my formal statement, but since the timing was strictly limited to 5 minutes, I read this abbreviated version, which in hindsight, was better and more to the point.

“Thank you for the opportunity to participate today in The Appraisal Subcommittee’s second Public Hearing on Appraisal Bias.

Having been a real estate appraiser for 37 years, I will share my concerns about barriers to entry and appraisal bias. I am a New York and Connecticut general certified appraiser who co-founded Miller Samuel in 1986, a real estate appraisal firm that covers the New York City metropolitan area.

It takes a minimum of two years to become a residential certified appraiser. The Appraisal Foundation (aka TAF) maintains minimum standards for the industry and has long required a two-year mentoring system where appraiser trainees need to find someone in the profession to take them under their wing – a mentor – and support them for two years because trainees add little value to the mentor if banks don’t accept their work. This is a key reason why the appraisal industry is devoid of diversity. This is also why the industry has been aging out for years, unable to bring in new appraisers in significant numbers. After the 2009 Home Valuation Code Of Conduct became embedded into housing policy to stem the influence of mortgage brokers over appraisers, appraisal management companies (aka AMCs) came to dominate the administration of the residential appraisal business as banks were looking to shed costs in the aftermath of the housing bubble and outsource their former in-house appraisal departments.

Since the financial crisis, most banks have required appraisers to be certified and rarely accept work by appraiser trainees. AMCs account for about 80% of residential appraisal orders from banks nationwide and often keep at least half of the appraisal fee the consumer pays at the time of the mortgage application. The consumer is generally unaware that the appraiser gets a limited portion of the appraisal fee. As a result, the financial condition of appraisal firms has deteriorated significantly since the GFC. Why does this matter? Because the two-year mentoring requirement became even more problematic after the GFC as appraisers were less able to carry an appraiser trainee for two years to get their certification. TAF has been unable to pivot as the world has changed.

The TAF mentoring system has perpetuated low diversity within the appraisal industry. In 2021 our industry was 98% white, dead last in the 400 occupations ranked by the Bureau of Labor Statistics. TAF has had only one person of color on its technical boards in over three decades.

Imagine an industry where a small business sees an opportunity to grow but has to invest two to three years to train new staff before they can even begin the expansion. That is my firm’s reality, which is untenable and severely impedes the commerce of all appraisers. The trainee, once certified, will often leave to start their own practice. That significantly disincentivizes experienced appraisers to mentor trainees.

Last year, after two years of being mentored and completing her coursework, an appraiser trainee at our firm submitted an experience log to the state. The appraiser checked in every month with the state and was repeatedly told her file was under review. The total process took nearly three years for this appraiser to get her certification and represented the amount of time she could not make a reasonable living without our company to supplement her income.

Certified residential appraisers must have 1,500 hours of experience in not less than two years. This multi-year window of experience requirements is an arbitrary time period. It is not based on any known research studies that show that this extended period of time is optimal.

There have been a series of national appraisal stories about people of color getting a bank appraisal, which comes in low. Then the homeowner asks a white neighbor to stand in their place and removes photos and other personal items from the home, and the second appraisal comes at the higher number needed to qualify for the mortgage. I’m sure this experience is awful for the homeowner. At the very least, the disparity in results shows a flaw in the appraisal process even before the issue of appraisal bias is addressed. And why is the second appraisal always the “correct value?” Bias and unconscious bias exist in our industry. With greater diversity within the profession, the frequency of these events would hopefully be reduced.

The two-year mentoring system limits access to the appraisal industry, severely limits diversity, and therefore is a disservice to the appraisal industry and deteriorates the public trust in the profession.

Thank you for your time.”


Jonathan Miller
Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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19 Responses

  1. Before the existence of the AMC’s, I was trained and paid over two years by a large local appraisal firm who reviewed and approved my work before sending it out. I was paid a decent wage once I knew what I was doing. That two year mentorship was key to my gaining the knowledge and skills needed to be a competent appraiser. With the creation of the AMC’s who now regularly take half the fee upfront, no one can afford to take on a trainee and the banks won’t accept their work. We do need a firewall between lenders and appraisers, but the AMC’s have created a role for themselves to make money and moved beyond being a middleman to disseminate work as was intended and have wrecked havoc on the industry and its ability to train new appraisers. Going back to the drawing board is what is needed, but with the AMC’s lobbyists and the fin tek industry in bed with the industry leadership who no longer represent our voice, it is hard to see a future for our profession.

    • Avatar don says:

      Mr. Miller,
      It’s wonderful to hear of your pride of having Grandchildren. look forward to having GREATS.

      I had a different beginning than most appraisers today, I began as a hireling to help with the scut work for a small multi appraisal office. My 2 Boss’s pride sustained all in the office and encouraged all of us to seek recognition thru our work. Two of the boss’s came from different Government agencies. They had just helped the previous leader accept a State Appointment, him coming from private industry.

      We all came from the terrible adversity of the 1930’s from individuals, corporations, and agencies trying to better themselves and the environment they sought.

      Ain’t that where we are at now?

  2. Avatar Bill Johnson says:

    Thank you for all you do Jonathan, but a little criticism. Without context, why would you state in part, “Bias and unconscious bias exist in our industry”? I’m afraid no matter what else you said, the powers that be will only hear that line and move forward with their agenda. Truth be told, a percentage of teachers (male & female) are pedophiles, a portion of any government is corrupt, and select people regardless of their chosen profession can be racist.

    Additionally, to say, “With greater diversity within the profession, the frequency of these events would hopefully be reduced.” is to make the assumption that minorities (by population) are not biased and or are at least less racist. History proves this false.

    Lastly and of note, keep in mind that in my state of CA Whites are a minority to Latinos by a 35% to 39% ratio.

    Seek the truth.

    • Avatar Mary says:

      Amen! I thought the same exact things. Jonathan did us no favors at all. By the very statement that diversity will help to resolve bias is a biased statement right there! Why would a minority Appraiser appraise a minority owners home higher because that is the assumption! It is about the sales not about the color of the Appraisers skin or the homeowners!

  3. Scott Taylor on Facebook Scott Taylor on Facebook says:

    Was taken off an approved list of a major lender back in the 2008 housing boom/crash for two or three appraisals that the lender has fields reviews performed. Thankfully the lender sent me the reviews for me to review. I found so much wrong with each review that the had no choice but to reinstate me to their list. But they would have loved to pin those loans on me

  4. Avatar Spencer Paul says:

    I’m personally struggling with this. I want to become a Certified General, but can’t locate anyone in my neighboring larger cities, Portland or Seattle to take me on. On flip side, I’m not willing to take on any trainees because I don’t want to share my income to train them when the leave. I would be fullish to assume any trainee would stay under me when when simple math shows the earn potential out on your own. So, why would I expect any General to take me on. I wouldn’t work under them one I get my license because I like working on my own and the thrive in that work environment.

  5. Avatar John Daley says:

    Thanks for the article, Jonothan. You bring up many good points….points that the industry needs to consider. I want to understand more what this means….Bias and unconscious bias exists in our industry. We took an oath as appraisers to have NO BIAS…..USPAP. Personally, I have no clue what it means to be bias nor has it ever affected my appraisal opinions…EVER. Maybe your area does. But don’t say the whole industry if it is not true. I quit appraising a year ago because this topic is a moot point. There is no bias. There may be incompetence….but no bias.

  6. Avatar Robert jones says:

    Thank you for at least trying to help. Granted your points are your own and i for one do not share your view. Appraisal bias does not exist, never did, and can never be proven. Its a recent buzz word that certain groups trot out when they feel they have been wrongfully treated An appraisal is never right or wrong. It is either well supported or not. You titled your post “why is the second appraisal the right one…” That was a position that i thought was much more relevant approach to combatting the claims of bias than allowing more trainee’s into the business. Educate these groups what we do and dont do

    • Avatar Todd Redington, SRA AI-RRS AGA says:

      Robert, I think it is important to separate individual bias vs systemic bias. I wholeheartedly agree that systemic bias as defined by the dictators of fact does not currently exist, nor has it for quite some time. However, bias did exist prior to the mid 70’s, if only because of zoning and lending guidelines that had to be “followed” by appraisers at that time (I am a 3rd gen appraiser so its not even a debate, my father and gfather both talked about how they were forced to do things they did not think was right in order to “comply”). And no matter how badly we want to believe that individuals are not biased, its just not reality. There are biased people out there who are appraisers by day and by night believe their green skin is better than someone else’s aqua skin….

      So no, systemic racism does not existing if one performs the appraisal process correctly regardless of whether or not by night you have differences of opinion, however, some of those nighttime beliefs rear their f=ugly heads once in a while and it is reflected in a biased appraisal.. It is the exception, not the rule.

  7. Avatar LaydeeTee says:

    Wow. I’m almost at a loss for words.

    Jonathan, as the only appraiser speaking at that hearing, you carried the weight of representing our profession as a whole. I’m sad to say that you missed the opportunity to actually speak on our behalf. Truth be told, I feel “thrown under the bus.”

    You had the chance to educate those unfamiliar with what Professional Appraisers do. You had the chance to make it clear that we are TRAINED to be neutral and not an advocate for any party. You had the chance to remind that committee that the Professional Appraiser is the ONLY party to a mortgage transaction that is in place to PROTECT THE PUBLIC INTEREST. That’s our job. No one is naive enough to believe that there is no such thing as a “racially biased appraiser”. There is no profession in existence that is able to claim that…regardless of what race. But the vast majority of us perform our professional services remaining neutral. That’s the only way to effectively perform our job. We needed you to stand up for us.

    While all of us can agree that the whole “AMC” thing is a broken system, I fail to see what that has to do with “diversity” in our profession the way you presented it. Historically, what attracts anyone to any profession, is the ability to make a living at it. AMCs indeed have changed that.

    However, you seem to place the majority of the blame on requiring a supervisor, a mentor, in order to enter our profession. The way you present that view, in my interpretation and reading between your lines, says to me that you are 100% on board with PAREA…and you believe it will cure our “diversity” issue. And according to you, diversity will cure our “bias” issue.

    I completely disagree with the majority of what you selected to present before that committee. I think that everyone of us reading your comments and those of us as Appraisers that take our Profession seriously, should write to the members of that committee to express our concerns about how you represented us. I’m so surprised…and frankly disappointed.

    • Baggins Baggins says:

      Most are in agreement the premise is illogical. However, consider that every industry in this country had ‘limited diversity’ for a very long time. The appraisal industry has been frozen in time due to consistent application of excess regulation as lenders time and time again over many decades successfully passed blame for their behaviors, down to the independent appraiser vendor. The appraisal industry was therefore unable to keep pace with general business trends, as attrition of licensed appraisers has continued to outpace hiring.

      Predatory market forces, restraint of trade practices, and pay to play schemes are the reason for limited appraiser industry diversity, not bias or unconscious bias. Watering down the requirements for entry will result in reduced reliability of PAREA graduate appraisals, and will not change any aspect of real property values. This industry has been frozen in time, mostly because of regulatory capture as monied interests pull the strings of the political appointees.

      In many of these industries only one degree away from licensed appraisers, the status quo exception of increased diversity is present, and appraisers continue to support those industries. Appraisers have supported diversity in as many ways possible, except for being able to have sufficient resources to build their businesses in such a manner that they could hire new persons themselves, to keep up with these status quo expectations.

      Now with the short sighted GSE policies which continue to restrict our access to work, attrition of appraisers will accelerate. The PAREA program, hybrid bifurcated appraisals, property data collector approach, interactive new forms, they are all meaningless in terms of answering the problems with GSE’s conscious bias against having checks and balances in place, independent accountability in the realm of price vs value considerations. The best trained most dedicated appraisers in this industry are quitting or retiring left and right all over again. This is likely my last year, I’m barely hanging on because I built my entire little business around GSE and default management work. Both of which the GSE companies, the TAF, and lenders whom guide their policies, consciously work to eliminate traditional reliable appraisal service, so they are no longer subjected to meaningful valuation review prior to origination of mortgage backed securities or disposition of assets. If there is anyone to blame, or anyone whom should be apologizing, it is the policy makers whom decided full service appraisals were no longer necessary, as well as those whom consciously ignored the ongoing racketeering between the appraisal management industry and the lenders and asset managers whom use their services. Mr Miller is highly competent, but in the end is just another appraiser attempting to navigate an incredibly complex and hostile landscape.

  8. The title is misleading, “And Why Is the Second Appraisal Always the ‘Correct Value?'” You basically said the mentor program is flawed which has caused appraisers to not be diverse. What about the “second appraisal always being the correct value.” It’s not. In the major media cases of alleged racial bias the first appraisals were the correct ones. I researched the histories, values and shared the results in my blog.

    You basically confirmed the government’s false narrative of the “racist old white male appraiser” low-balling appraisal values for black people. While I support diversifying appraisers it won’t stop the false narrative, bias or racism. I say this as a Latina in Los Angeles, California. In fact one recent little secret borrower study showed that the black appraiser actually came in lower than the white appraisers for a black family.

    I see why they invited you to speak. I’ve asked to speak at these events and no reply. You’d think they’d want to hear from a female Latina appraiser with 40 years of experience but I guess not. They chose an older white guy who fits the narrative. They are only allowing appraisers, speakers who support their made up story. That makes the administration look good for the upcoming campaign and election. It doesn’t educate others about what’s really happening with appraisers, borrowers and home loans.

    • Avatar Spencer Paul says:

      Wow. This is eye opening and thank you for the post. I’m saddened that he isn’t replied to anything that has been posted to help us understand his standpoint better, of which does not seem to be supported by his own peers. At all.

      • Avatar don says:

        A statement doesn’t always need an answer. Neither does an appraisal need a contradiction.
        One is adequate one is not.
        One needs an indictment.

  9. Avatar Mary says:

    Jonathan how can you say bias and unconscious bias exists in our profession? Speak for yourself please! I agree the second (usually higher) appraisal is not always the correct one. It was the one the bank and homeowners wanted but not reality in many cases. So they scream bias when value is low. Diversity should have zero bearing on reducing bias. That is a biased statement right there. Valuation should not change based upon the color of the Appraisers skin and/or the homeowners, but if it does that is biased appraising. How can anyone say a minority Appraiser will help values improve for their “fellow” minority homeowner? Yet that is exactly what you and others are saying when you say that diversity will improve things. That kind of thinking is about as biased or racist as you can get. I will let the podcast host that your appear on know that you threw us all under the bus. You were no help whatsoever.

  10. Baggins Baggins says:

    Granted it’s difficult to fit the entire issue into a five minute statement. How does the HVAC, electrical, and many other industries survive such barriers to licensing and continue to flourish, when those professions take even more hours and more effort than attaining an appraisers license? Trained persons constantly run out to become independent competition in every business sector out there, yet those industries have not contracted. Because they are allowed to market their services openly without arbitrary restriction. Most of the appraisal industries new hires came from firms whom refused to work with the amc model, and therefore were not subjected to amc industry restraint of trade and pay to play schemes. Yet because amc’s impose these barriers with the largest body of customers whom order appraisals (gse’s), our opportunities remain limited. For every person the amc industry hired, there was one less opportunity for appraisers to train the next generation. For every dollar the amc industry illegally junk fee raked (per the original intention of Dodd Frank Reg Z on C&R appraiser compensation), that was one less dollar of resources appraisers had available. Will make time to watch the full hearing and read the full statements.

    Missing the IVPI proposal yet?

  11. Avatar Chris wheeler. says:

    I applaud your efforts Mr Miller however you lost a golden opportunity here. Instead you chose to use this opportunity to reiterate your disgust for TAF, AI and others rather than dealing with the true issues.

    I mean I get it. You’re a smart man and why would you risk it all to actually defend appraisers and hurt your reputation. Hurt your chances of being on TV and more. You wouldn’t. Neither would I. Which is why you should have never accepted this opportunity in the first place. Your testimony was targeted. Your testimony had 0 to do with the real issues of bias, diversity and more. You simply used this to pad your narrative.

    Your testimony did nothing to help the profession yet it helped everyone else in making the appraiser profession obsolete and gave them ammo. What’s the end game here?

    What I saw and listened to was someone that that didn’t want to ruffle feathers, hurt their public image and well has some sort of other agenda going forward.

    Someone that only wanted to discredit TAF and AI.

    I know you only have a certain amount of time to talk yet you chose that time to go after the people who wrote the BATShit CRAZY LETTER and whatever else you state instead of actually bringing up points that could help this profession.

    While I respect you and your knowledge, I feel as if you aren’t qualified to talk appraiser issues cause you yourself have said you appraise other issues and not have to deal with AMCS and more. Therefore you chose your time to benefit yourself and not a profession.

    I’m just speaking for myself. But at the end of the day, you did nothing at all to help. Your focus was on the issues you have with others rather than a profession.

  12. Avatar Spencer Paul says:

    I may not, or ever, know as much as you do about appraising due to your experience Mr Miller. One thing that I do know is this letter is a joke and a jab at the profession. I seriously have to wonder how much you got paid to say what you said, to roll over on your back so the Fed’s have ammo to gut you, to gut this profession that I have enjoy for a meager 13 years. What I find even more offensive is you know you kissed the ring and you can’t even reply to any of appraiser’s in this blog to offer clarity for this maddening statements before a governing body that supposedly represented the appraisal community. Part of me just want’s to call you a sell out, but I can’t prove you took money from someone somewhere, but sure feels like a sell out.


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And Why Is the Second Appraisal Always the “Correct Value?”

by Jonathan Miller time to read: 4 min