Lowballed and Appalled: Black Homeowners Fight Appraisal Bias
Our houses are being valued for much less than those of white homeowners. Here’s what we can do about racist real estate practices.
When Jacqulyn Priestly and her husband had a house built in Prince George’s County, Maryland, they knew the region was where they wanted to raise their three sons. However, in choosing to live in a predominantly Black county, the couple took a financial hit: Their home appraised for about half of what a similar house appraised for in a neighboring predominantly white county.
“We were like, ‘How is this? Who’s doing the math?’” Priestly says. Since banks typically won’t lend more than a house is appraised for, “We had to bring more cash to the table.”
Unfortunately, Priestly’s experience is not unique. Last December, Tenisha Tate-Austin and Paul Austin, a Black couple in Northern California, made headlines after fighting what they thought was a low home appraisal. When they asked a white friend to pretend to own their home, a new appraiser valued the property at nearly half a million dollars more than the initial appraiser had.
According a 2018 report by the Brookings Institute, homes in Black neighborhoods appraise for 23 percent less than similar homes in white neighborhoods, accounting for an average of $48,000 per home.
If Black homes are systematically undervalued, that meaningfully impacts economic outcomes.
A 2021 report by Clever Real Estate found the disparity to be even higher. According to their research, houses in majority Black neighborhoods were appraised for less than half as much as those in neighborhoods that had a Black population of less than 1 percent. In some parts of the country, houses in majority non-Black neighborhoods were assigned a value of more than 600 percent more than the homes in Black neighborhoods.
Priestly started talking to neighbors who also believed their properties were undervalued. That led her and other community leaders to start an organization called The Fair and Unbiased Appraisal Advocates. They are collectively raising their voices to call attention to appraisal discrimination on the local, state and federal levels. Their message and website: Black Homes Matter.
Unpacking the economic consequences
Homeownership is one of the biggest assets for many Americans, says John-Paul Julien, associate partner for McKinsey & Company and leader within the McKinsey Institute for Black Economic Mobility. “You can't have a conversation about Black economic mobility or Black wealth creation and not talk about housing.”
If our homes sell for tens of thousands of dollars less than comparable homes in white neighborhoods, we have that much less equity that can be used to pay for education, make other investments or get out of debt. “If Black homes are systematically undervalued, that meaningfully impacts economic outcomes,” says Julien.
Making matters worse, there are few Black appraisers in the industry. According to an analysis of U.S. Census data by research organization the Urban Institute, 89 percent of property appraisers are white, compared to only 2 percent that are Black and 5 percent that are Hispanic. The organization argues that increasing diversity in the appraisal industry could help to reduce bias in the long-term.
How we can advocate for ourselves
So, what can Black homeowners and homebuyers do to increase our odds of getting a fair deal?
We can learn what appraisers look for. Appraisers typically consider neighborhood home prices, the condition and quality of the home, lot size and home improvements among other things. The Black Homes Matter website lists other factors and resources that can help.
We can ask questions. While lenders typically pick the appraiser, home buyers can ask potential lenders who will do the appraisal if they give the lender their business, Julien says. Among the questions to ask:
- What are the appraiser’s qualifications?
- How many appraisals have they done in that particular neighborhood?
If an appraiser has complaints lodged against them, or if they are unfamiliar with a neighborhood, those would be red flags, Julien says. An appraiser who is unfamiliar with a neighborhood may not know how people in that particular district value certain amenities.
We can ‘whitewash’ our homes. As much as it pains me to suggest this, if your house is being appraised and you have Black art on your walls or family photos, consider removing them before the appraisal. Last year Carlette Duffy, a Black woman in Indianapolis, said her home appraised for $100,000 higher after she put away family pictures that gave evidence of her race, and had a white friend pose as her brother and meet the appraiser.
We can challenge the findings. Read over the appraisal and make sure you agree with it. Priestly knows of a case where an appraiser miscalculated a house’s interior square footage. If a lender refuses to order another appraisal, you can hire a different appraiser yourself to give their assessment of your property. According to HomeAdvisor, home appraisals typically cost between $313 and $420. That’s not a lot of money if it can prove that your home is worth tens of thousands more than it was originally appraised for.
We can report any bias. If you do suspect that you’ve been discriminated against, you can report it to the Consumer Financial Protection Bureau (CFPB), as well as to your state housing finance agency. Don’t be afraid to post experiences on social media or contact your local news affiliate to raise awareness.
When we speak out about injustices, “we're creating action and momentum because that, at the end of the day, is the only way things ever really get done,” Priestly says.