Saturday, January 28, 2023 | The Latest Buzz for the Appraisal Industry

Race and the Property Valuation Industry

Many of you reading this are probably familiar with this case that recently went viral. A husband and wife requested a bank appraisal to refinance their Jacksonville, Florida home. The wife is African American, and her husband is white. Only the wife was at home to greet the appraiser when they arrived to inspect her home. When the couple received the final appraisal report of their home’s value, they were shocked! The couple could not believe that their home’s value was so low, and they instantly felt that the wife’s race played a role in the outcome. After getting over the initial shock and anger, the couple requested a new appraisal of their home. However, when  the new appraiser arrived at their home, only the white husband was there to greet the appraiser; also, the couple had removed family photos and all other evidence that an African American resided at the residence. The second appraisal indicated a $100,000 increase in their home’s value when compared to the first appraisal report.

Further reasoning might suggest that there could be alternative explanations for the $100,000 variance between the two appraisal reports, explanations that have nothing to do with the wife’s race. The first appraiser could have been incompetent, resulting in a lower value estimate for the couple’s property. The second appraiser could also have been incompetent, resulting in an over valuation of the couple’s property. The first appraisal report could have in fact been accurate, and the homeowner’s opinion of their home’s value could have been aggressive. These are all potentially logical conclusions; however, logic doesn’t go viral, doesn’t move people – emotions do. Let’s unpack this situation…

Beyond the Headlines: Residential Appraisal Review

The property valuation industry has a system for dealing with situations where a home’s appraised value is in dispute; it’s called the review process. In this process, contested appraisal reports are reviewed by an experienced review appraiser, often overseen by an appraisal manager. Appraisers who complete reports do so with the understanding that their work could and would be reviewed if a homeowner, as in this case, accuses the appraiser of being racially biased in their value estimation. This standard review process inherently reduces the likelihood that an intentional bias will significantly impact the values of appraisal reports.

However, the husband and wife in this article are not valuation professionals. They are neither aware of nor concerned with the nuances of the review process previously mentioned; they are homeowners who engaged the services of a financial institution. To add to the emotional angst, an interracial couple’s African American wife felt that it was because of her race that their home’s value estimate was so low. By requesting a second appraisal report, removing race from the equation, and subsequently receiving a higher value estimate for their home, in her mind, the wife’s suspicion was validated. If reasoning could interject alternative explanations (other than race) for the couple’s home value to be appraised significantly lower than the homeowner’s expectations, why did the wife instantly point to her race as being the culprit? The answer…


First, a little bit about history. The term “redlining” comes from the development by the New Deal by the federal government of maps of every major metropolitan area in the country. Those maps were color-coded first by the Homeowners Loan Corp, and then the Federal Housing Administration (FHA), and adopted by the Veterans Administration. These color codes were designed to indicate where it was safe to insure mortgages. Anywhere African Americans lived or lived nearby, were colored red to indicate that these neighborhoods were too risky to insure mortgages.1

During this era, appraisers utilized comments regarding race that directly impacted home value estimates. Comments made by appraisers such as “Colored infiltration a definitely adverse influence on neighborhood desirability,” were common practice during this era. The FHA manual of this time also detailed segregationist policies stating, “incompatible racial groups should not be permitted to live in the same communities.”1 These policies led to white families having the ability  to take advantage of the federally subsidized housing in newly built suburbs with a government- insured mortgage, and African American families being systematically shut out. The inability to build wealth through home equity has been the primary contributor to the wealth gap in our country, with African American wealth being around 5% of white wealth (vs. an income gap of 60%).1

So, an African American homeowner, who is in an interracial relationship with a white man, has her house appraised by a white appraiser (assumed) and receives a far lower valuation than expected. To develop further context, we know that she is an educated lawyer (who undoubtedly knows her history), and has been living life in America as a black woman. As we contemplate the history of discrimination against African Americans, such as redlining, etc., it becomes abundantly clear why the homeowner would instantly assume that her race factored into the lowered appraisal value estimate of her home. But, what else played a role?


Given that the race of the appraiser in the article was assumed and not specifically mentioned, what is the likelihood that the appraiser in the article was black? What is the likelihood that the appraisal reviewers or appraisal managers, if called on to intervene in the value dispute, were black? To examine these questions, I’ll need to tell you just a little bit about my experience and perception along my journey in the property valuation industry.

My Journey

I’m an African American male with an MBA degree, concentrating in Real Estate and Urban Affairs. I’m also a Certified Residential Appraiser. My first real estate job as a staff appraiser was  with a firm that was a precursor to the modern-day Appraisal Management Company. The company employed twelve staff residential appraisers. I was the only African American appraiser.

I was assigned to appraise properties in the predominantly black areas of Atlanta, GA. When I showed up at a homeowner’s residence, the first reaction was joyful shock that a black appraiser was appraising their home. For most of these black homeowners, I was the first African  American real estate appraiser that they had ever encountered, and they told me so. What I also  remember from those conversations and interactions with those black homeowners was the relief  expressed on their faces, the pride felt in their voices, those unsaid, silently felt assurances that they felt that they would be treated fairly in this process.

In my next staff appraiser job, I worked for a major financial institution, first as a Staff and Senior  Staff Review Appraiser, and later as a Collateral Services Manager. While at this financial institution, all the bank’s appraisal managers were required to attend a meeting held in Seattle, Washington. As we gathered, I looked around, hoping to glance someone, anyone who looked like me. As I mingled and observed, “the only one” syndrome was reflected here as well. I was the only African American Appraisal Manager in the entire country for this major financial institution. But, why?

Diversity Hindered by Industry Structure

The structure of the property valuation industry is an impediment to creating equal opportunity for diversity in its ranks. To obtain a residential appraisal license, in addition to meeting the education requirements, etc., an appraiser trainee must be mentored and trained by an experienced licensed or certified real estate appraiser. The real estate appraisal industry is fragmented, dominated by relatively small residential appraisal firms. The fragmented nature of the industry is what gave rise to Appraisal Management Companies that function as “management middlemen” between residential appraisers and financial institutions needing appraisal services.

Most fee appraiser shops are relatively small, white owned, and typically train people who are known in some capacity by the business owners. As these large financial institutions seek to employ staff appraisers, review appraisers, and appraisal managers internally, they look within their companies, which typically reflect the market’s lack of diversity. Alternatively, they may look  directly to the market to fulfill their hiring needs, which serves the large financial institutions up a  mixture of potential employees who are void of diversity. This market structure assures that a lack of diversity as it relates to African American staff appraisers, review appraisers, and appraisal  managers is the norm because the structure hinders or limits equal opportunity for diverse appraisal trainees to enter the field and transition to other jobs such as staff appraisers, review appraisers, and appraisal managers.


The story associated with the interracial couple was included in print and digital newspapers, blogs, and articles throughout the country. It was also posted on social media where it went viral,  being seen by millions of people. The reputations of financial institutions involved in these type situations can be negatively impacted, not necessarily by the logic or facts associated with such cases, but by people’s emotions – the way people feel when things go awry. And often, people feel this way because they never see anyone who looks like them providing these services to them. History, perception, and the lack of diversity in the current environment drive this feeling. No amount of logic will change that.

I’m reminded of something Lester Owens said during a town hall meeting. He said, “Once you understand that there’s an issue, you can always solve the problem.” Well, there’s an issue.


1. NPR– A ‘Forgotten History’ Of How The U.S. Government Segregated America

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Jeff Bradford

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