Monday, May 1, 2023

Racial bias in appraising

Fair Market Appraisals

Racial bias in appraising is a significant issue that has been widely reported in the media and academia. It refers to the tendency of appraisers to systematically undervalue properties located in predominantly non-white neighborhoods, resulting in unfair treatment for minority homeowners.

This bias can be due to several factors, including historical and systemic discrimination in housing, personal biases and stereotypes held by appraisers, and the use of outdated and inadequate appraisal methods. For example, if an appraiser uses recent sales data from a predominantly white neighborhood to appraise a property in a predominantly non-white neighborhood, they may not consider the unique characteristics and amenities of the neighborhood and undervalue the property.

To address this issue, there have been calls for increased diversity in the appraisal industry, improved training and education for appraisers on racial bias and its impact on appraisals, and the use of more advanced and inclusive appraisal methods. Additionally, some advocates have called for the development of alternative methods for determining property values that rely less on subjective appraisals and more on objective data.

I have been appraising for 31 years. I have completed about 11,000 appraisals in that time. I have never had an issue with any appraisal I completed where racial bias was an issue.

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