Wednesday, 28 September 2022 | The Latest Buzz for the Appraisal Industry

Racial and Ethnic Valuation Gaps

In today’s Buzzcast, we dive into the racial and ethnic gaps within the home purchase appraisal. Today we have Jim Morrison, VP of Marketing and Sales for Allterra Group, Scott Reuter, Chief Appraiser and Director of Valuation of Freddie Mac, and Vivian Li, Senior Manager of Quantitative Analytics of Freddie Mac. We’ll be getting the inside scoop while they discuss the studies and data surrounding this hot button issue.

How was the research conducted for this Freddie Mac study regarding this topic? In what ways are we applying what Freddie Mac has shared? How is this information beneficial to the future of appraising? These questions and much more will be answered as Jim, Scott, and Vivian have their discussion on this subject.

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  1. I think that it is important to note that on page one of the 1004 the neighborhood section states: Race and the racial composition of the neighborhood are not appraisal factors. As appraisers we do not have “white tracts or minority tracts” we simply have neighborhoods. It is very possible that certain neighborhoods do have a higher variance than other neighborhoods. This “study” is completely ripe with flaws. They somehow want to take data from “neighborhoods” and convert that to specific “individuals” and cry racism.

  2. Each appraisal is different and you can see bias from across the room when it’s there. The idea of exploring thousands of appraisals to see if you can find some statistical representation is not the right way. Why not get the federal government to buy a Form 2000 review on each of these reports, it’ll probably cost less than a billion dollars. And the rubber does not meet the road with Comps Sir, rather it’s the adjustments that can be used to fulfill the bias of an appraiser. You need a review from a local appraiser to determine if there is bias. You can start with the statistical research to narrow the field but if you come at the profession with a bunch of statistics your argument won’t hold water. The best part is that you have plenty of appraisers out there who would take the jobs. It could be a new normal. Maybe develop a review form designed specifically for sniffing out biases. Just don’t come at me or my profession with a handful of statistics and the opinions of bean counters.


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