For Black Homeowners, Unfair Appraisals Are All Too Common

published Oct 28, 2020
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Typically before someone sells their home, they’ll get an appraisal to see how much it’s worth. This allows a buyer’s bank to ensure it’s not lending more money than a property is valued at. An appraisal is an independent assessment that’s supposed to be unbiased—a simple inspection of the house and the local market trends. But discrimination in the process is all too common.

Home appraisal discrimination happens when a home is undervalued because of the owners’ race, ethnicity, or religion. Home appraisal discrimination is an especially insidious type of housing discrimination, acting as a form of modern-day red-lining

In the 1930s, red-lining was a process in which officials outlined neighborhoods in red on maps if they deemed them unworthy of home financing; these outlined neighborhoods were often Black neighborhoods. Since lenders were less likely to offer home loans in red-lined neighborhoods, home values didn’t appreciate like they did in whiter, more affluent neighborhoods. Thus red-lining’s effects are still present today: property values remain disproportionate in those outlined neighborhoods. In short, they called the neighborhoods “hazardous” then, in the same way some call neighborhoods “sketch” now.

Recently, homeowners have spoken out about their experiences with home appraisal discrimination. While trying to refinance their home in Jacksonville, Fla., Abena Horton, a Black woman, and her white husband Alex, had their home severely undervalued—and posted about their experience on Facebook. Abena wrote that the appraiser was rude to her from the beginning, and “expressed exaggerated surprise when he saw [her] working at [her] home office during the walk-through.” In the end, the appraiser valued her home at $330,000, much lower than smaller, neighboring homes with fewer amenities. 

The Hortons recognized what was going on and hatched a plan. They removed every bit of evidence showing that Black people lived there—family photos, books by Black authors, posters of Black history icons—and had another appraisal. The new value? $550,0000, a whopping $135,000 higher than the initial valuation.

Similarly, personal finance educator Tiffany Aliche set out to refinance her home this year. After reading about the Hortons’ story in the New York Times, she hid photos in her house before an appraiser arrived. Even so, she determined the valuation of her home in a majority-Black neighborhood in Newark, N.J., was at least $30,000 below what it should be, according to Business Insider.

“It is unfair that Black Americans cannot access the epitome of the American Dream, which is homeownership, due to long standing systemic racism dating back to red-lining. It is a shame that we have to hide our family portraits for fear that buyers and appraisers will discriminate against us,” says Charlane Oliver, founder and executive director of The Equity Alliance, a Nashville-based nonprofit that advocates for Black homeownership. “These discriminatory practices must end.”

Three out of every four neighborhoods that were redlined in the 1930s still struggle today, according to a 2018 study by the National Community Reinvestment Coalition. And on average, homes in majority-Black neighborhoods are undervalued by $48,000 compared to similar homes in other areas, per the Brookings Institution. What happens when a home is appraised for less because of discrimination? Gentrification, disproportionate loss of wealth in the Black community, more food deserts, and continued lack of community resources. 

“These neighborhoods with greater devaluation are more likely to be segregated than others. They also produce less upward mobility for the Black children who grow up in those communities,” notes Nicole Cardoza, author of the newsletter Anti-Rasicm Daily, synthesizing a study from Brookings. “This mobility is just a hint at the generational impact of this economic disparity and emphasizes why rebalancing this disparity is so important.” 

Antonio Cousin, a real estate agent with Service 1st Real Estate in Baton Rouge, says if you think you’ve had an unfair appraisal, you should report it to the lender, then the appraisal management company, and perhaps even an attorney.

As with other types of discrimination, home appraisal discrimination can be complicated to combat because it’s systemic. Even if appraisers are fair in their evaluation of a property, some of the factors they take into account—“attractive” neighborhood features such as walkability or top-rated schools—are unjustly concentrated in majority-white neighborhoods. Each unfair assessment also builds upon the next: if a home’s previous owners had their home undervalued, they may not have been able to get approved for loans to make timely upgrades and repairs to their property. 

A starting point to changing these systems is being intentional about working with Black appraisers and other real estate professionals. 

“The real estate community has a duty and ethical responsibility to dismantle housing racism to ensure a fair and just America,” Oliver says.