Florida couple sees home appraisal jump 40 percent after they remove all traces of “Blackness”

[ruby sparks]

So just a bad appraisal. Sometimes people get a second appraisal because they’re not happy with the first. Nothing to do with race. Otherwise, Hughley’s second appraisal would also have been off.

Ok that makes literally no sense at all. No one is saying all valuers are racially biased.

 

[laughing dog]

Nor can the free market be racist. When it comes to buying goods or services, money talks and the bullshit (racism) walks.

Where do you get this ideas from? If buyers are racist, then a free market will be racist. If sellers are racist, then a free market will be racist.

 

[ruby sparks]

Nor can the free market be racist. When it comes to buying goods or services, money talks and the bullshit (racism) walks.

Where do you get this ideas from? If buyers are racist, then a free market will be racist. If sellers are racist, then a free market will be racist.

I was going to say much the same thing, but I could hardly be bothered. I thought, if this even needs to be pointed out, then.......

 

[Metaphor]

Ok, but it seems to me the bank were the lender here, and the couple were remortgaging with the bank. The valuation must have gone to the bank. And the bank thought the valuation was low. If the bank had gone along with the low valuation, would that not have affected the ability to either remortgage or borrow more against the property for improvements? What was the bank's role in this?

I don't know what the bank's role was. Did your (paywalled) link say they were remortgaging rather than looking to sell? If so, I've missed that detail.

I must say it's somewhat secondary. If anyone gets a low valuation because of racial bias, it's a problem, whatever way you look at it. So the question is not so much 'how did it affect this particular couple' but whether it was bias, and what effects that sort of thing might have generally, if (if) there is indeed racial bias involved. Saying 'it's not a problem because they can get another valuer' or 'it's not a problem because it'll sort itself out if they sell' seems a bit superficial. Surely we should still be concerned if it involves bias. Granted, we do not know that here, but still, the issue of how, if it was, it specifically affected this couple, would be secondary, because that sort of thing would not be harmless.

Yes, if there is bias and black home owners are systemically evaluated low because their house had black people living in it, that's a concern. But there's simply no way to get to that conclusion from the evidence.

Certainly the couple in this story already believed that to be the case before they conducted their 'experiment' (which was not an experiment). The couple already believed that when selling the house they should cover up their 'blackness' but were upset that they needed to do it for an appraisal itself.

 

[Metaphor]

Nor can the free market be racist. When it comes to buying goods or services, money talks and the bullshit (racism) walks.

Where do you get this ideas from? If buyers are racist, then a free market will be racist. If sellers are racist, then a free market will be racist.

The vast majority of people positioned to buy would have to be racist for it to make a difference.

If black-owned houses were routinely discounted compared to their true value simply because some buyers saw black people living there, then this undervaluation would be spotted by market players who would buy and flip for easy money. I would buy a house from a feminist in a heartbeat if it was undervalued solely because a feminist owned it.

 

[Metaphor]

So just a bad appraisal. Sometimes people get a second appraisal because they’re not happy with the first. Nothing to do with race. Otherwise, Hughley’s second appraisal would also have been off.

Ok that makes literally no sense at all. No one is saying all valuers are racially biased.

All white evaluators are racially biased, because all white people are inherently racist, like you and Robin DiAngelo.

 

[ruby sparks]

Did your (paywalled) link say they were remortgaging rather than looking to sell? If so, I've missed that detail.

'The Root' is paywalled?

But yes, it does say that.

 

[laughing dog]

Nor can the free market be racist. When it comes to buying goods or services, money talks and the bullshit (racism) walks.

Where do you get this ideas from? If buyers are racist, then a free market will be racist. If sellers are racist, then a free market will be racist.

The vast majority of people positioned to buy would have to be racist for it to make a difference.

If black-owned houses were routinely discounted compared to their true value simply because some buyers saw black people living there, then this undervaluation would be spotted by market players who would buy and flip for easy money.

If and only if market players were not racist as well. And, of course, if your scenario played out, the black sellers lose out because they get the lower price due to their race.

My point is that free markets cannot be racist is simply bogus.

 

[Emily Lake]

Appraisers are just as human as anyone else is.

Were it not for the fact that in blind resume studies, people with typically black names get less callbacks, and that during the run up to the subprime mortgage scandal, black people with identical financial status were offered more expensive mortgages, and that potential purchasers were steered, I might go easy on this one.

And then there is, for example (very easy to find similar):

"According to our analysis, differences in home and neighborhood quality do not fully explain the devaluation of homes in black neighborhoods. Homes of similar quality in neighborhoods with similar amenities are worth 23 percent less ($48,000 per home on average, amounting to $156 billion in cumulative losses) in majority black neighborhoods, compared to those with very few or no black residents".

https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/

I have not read the actual report.


That said, in the end, I think one has to come away with no conclusions in this case. Maybe suspicions, but even then, there are other possible explanations.

I'm well aware of the inherent discrepancies in the US. But those racial inequities are not always the only explanation. In this case, the composition of the neighborhood didn't change, only the composition of the house decor. It's plausible that the appraiser was racially biased - always a potential factor. But it's also likely that the change in value was driven by the interior decor becoming less personal overall, something that is also known to affect the perceived value of houses being sold. It's entirely possible that it's a combination of the two factors, or even something else altogether.

I try not to immediately jump to racism as the explanation. Racial bias is pernicious and a serious problem, but it's not the only factor involved in every situation.

 

[Harry Bosch]

The proof of the pudding is in the eating. If the house sells, they'll know which estimate was more accurate.

Exactly. Appraisals mean nothing and even less than nothing if a bank loan is not involved. A house is only worth what someone else is willing to pay for it.

Nor can the free market be racist. When it comes to buying goods or services, money talks and the bullshit (racism) walks.

Yea, this is correct. The agreed upon price between a willing seller and buyer is a far greater indicator of value than an appraisal.

 

[Loren Pechtel]

This situation seems similar to one recently where some black actor (forgot who it was actually) was trying to sell his house, but wasn't having much luck getting offers. Apparently, he had left personal photos of himself and his family all over the house. He was told by his real estate agent that it would help things if he took down the photos. So, he took the photos down, and shortly thereafter he got an offer. Of course, his rationale was that it was because of racism, but its standard practice in the RE industry for sellers, regardless of race, to remove personal photos as prospective buyers like to be able to imagine themselves living in the house, and if another family has their photos everywhere, it diminishes that feeling.

Exactly. There's far too much of a tendency to jump to bias as an explanation when there are often innocent explanations not known to the people jumping to conclusions. In the absence of a smoking gun discrimination should be a diagnosis of exclusion, not the first choice.

 

[Loren Pechtel]

So the moral of the story is "buy black"?

If I could buy a previously black-owned house that was deeply discounted solely due to the prejudice of estate agents, I'd take all my money out of the stock market and buy every suitable house I could.

Of course, people are not getting these houses magically cheaper, because the market doesn't work like that.

Exactly. If discrimination was as rampant as the left says it is the economy would be rife with arbitrage opportunities.

 

[Loren Pechtel]

This situation seems similar to one recently where some black actor (forgot who it was actually) was trying to sell his house, but wasn't having much luck getting offers. Apparently, he had left personal photos of himself and his family all over the house. He was told by his real estate agent that it would help things if he took down the photos. So, he took the photos down, and shortly thereafter he got an offer. Of course, his rationale was that it was because of racism, but its standard practice in the RE industry for sellers, regardless of race, to remove personal photos as prospective buyers like to be able to imagine themselves living in the house, and if another family has their photos everywhere, it diminishes that feeling.

It *is* standard practice to take down all personal photos and to only display generic art.

That does not mean that there is no bigotry or racism.

It's a really tough call between the two. When we sold our last house, we had lowball offers, quite a bit under what other townhouses in the same complex had been selling for. It seemed really odd, especially since we had moved out all of our stuff and the house was empty.

Our agent suggested we paint. Most of the house was already pretty neutral, but the kitchen was a light terra cotta, the dining room was a warm camel, and the master bathroom was sky blue with a yellow accent in the inset porthole window. We repainted, and offers rose by about $60K.

It's certainly feasible that bigotry was involved, but it's hard to say that for sure. Home-buyers are fickle, and a surprising number of people can't see past a color they dislike or decor they don't like, or anything that's personal to the current residents.

Speaking of lowball offers--there's another possibility here. Maybe there had been a distressed sale that created a lowball comp that was interpreted as what the market now was with Covid.

 

[Harry Bosch]

They knew the first appraisal had to be wrong based on the homes around them. That is why they got the second appraisal. The neighborhood didn't change, the home mostly didn't change, but the color did. This isn't about bigotry, this is about systemic racism. Racism so ingrained in society, it isn't even noticed or intended by those committing some of the acts.

Appraisals are simply estimates of value by a professional at a point of time. They are suppose to mostly based on comps. But the comps to use is what drives the appraisal, and it's a lot of educated guess work.

40% is a massive error. Or is it an error? Does a black family get a lower amount selling the same house a white family sells, and not because of their color, but because of implication that blacks live in the neighborhood? Is it too black... is it going downhill? Is a portion of that 40% viewed as risk loss?

Well, I do believe that everyone has biases. I actually think that many negative biases are more based on darker skin. My brother and I are very similar in size and demeaner. But I'm relatively light skinned, he's very dark. We've been in situations where he's been treated differently than I have. We've joked about it for years. But I don't think that it's really a joke for him. This is anecdotal of course.

But I do think that there isn't enough evidence to assume that it's solely based bias.

 

[Harry Bosch]

It's a really tough call between the two. When we sold our last house, we had lowball offers, quite a bit under what other townhouses in the same complex had been selling for. It seemed really odd, especially since we had moved out all of our stuff and the house was empty.

Our agent suggested we paint. Most of the house was already pretty neutral, but the kitchen was a light terra cotta, the dining room was a warm camel, and the master bathroom was sky blue with a yellow accent in the inset porthole window. We repainted, and offers rose by about $60K.

It's certainly feasible that bigotry was involved, but it's hard to say that for sure. Home-buyers are fickle, and a surprising number of people can't see past a color they dislike or decor they don't like, or anything that's personal to the current residents.

Speaking of lowball offers--there's another possibility here. Maybe there had been a distressed sale that created a lowball comp that was interpreted as what the market now was with Covid.

That could have been a factor. Another idea: the first appraiser could have just been an asshole. According to the story, "...The appraiser came by and he was immediately unpleasant - making one rude comment after another,' she wrote." He expressed exaggerated surprise when he saw me working at my home office during the walk-through." The bank recognized that it was a low appraisal right away according to the story. As a former banker, I can tell you that an appraiser who delivers bad and/or low appraisals won't be able to keep his job. The appraisals are paid by the home owner. But if the appraisal dosn't work (is too low, and buyer can't come up with the extra down payment) the bank will black ball that appraiser.

 

[Metaphor]

Did your (paywalled) link say they were remortgaging rather than looking to sell? If so, I've missed that detail.

'The Root' is paywalled?

But yes, it does say that.

Well it came up with an overlay for me and (even though I have an overlay remover) there was no story behind it.

 

[Metaphor]

If and only if market players were not racist as well. And, of course, if your scenario played out, the black sellers lose out because they get the lower price due to their race.

All it would take is two people who are not "racist" to bid up the house to the market value. Unless every player in the market is a racist who values whiteness over saving tens or hundreds of thousands of dollars (nobody I know would be like this), the existence of bias would not matter for the final selling price.

 

[TV and credit cards]

The first appraiser may not have been familiar with the area. It is best for appraisers to have their part of town they always work so they know the most desirable neighborhoods but this doesn’t always work out. It’s often a matter of who is available at the time to do the appraisal.
Also the comps could have skewed the appraisal. Recent foreclosures, bank owned properties, and a backlog of unrecorded properties at the county office could set the comps lower.
And don’t have the entire family in the house while the appraiser is trying to do his job. Clear out and have one person their to let the guy in so he can take his time. If it were me doing the appraisal and someone was working in a home office, I’d be hesitant to disturb the person and likely omit the room. I may even frown in the process. Not because the lady in the home office was Black but because she was there at all, that she could not be bothered to clear out during an appraisal for a bank loan that she wants. Get it? You’re asking for the loan. Don’t make it difficult for the bank to give you that loan in the process. Christ on a cracker!

 

[Don2 (Don1 Revised)]

The first appraiser may not have been familiar with the area. It is best for appraisers to have their part of town they always work so they know the most desirable neighborhoods but this doesn’t always work out. It’s often a matter of who is available at the time to do the appraisal.
Also the comps could have skewed the appraisal. Recent foreclosures, bank owned properties, and a backlog of unrecorded properties at the county office could set the comps lower.
And don’t have the entire family in the house while the appraiser is trying to do his job. Clear out and have one person their to let the guy in so he can take his time. If it were me doing the appraisal and someone was working in a home office, I’d be hesitant to disturb the person and likely omit the room. I may even frown in the process. Not because the lady in the home office was Black but because she was there at all, that she could not be bothered to clear out during an appraisal for a bank loan that she wants. Get it? You’re asking for the loan. Don’t make it difficult for the bank to give you that loan in the process. Christ on a cracker!

Right. It's this section:
"He expressed exaggerated surprise when he saw me working at my home office during the walk-through."

The exaggerated surprise I think was intended for her to pick up on as a social cue for her to then stop working 5 minutes...give access to the room...etc.

Let's delve into this critical point, though. Why didn't she pick up on the purported social cue? I think it goes to cultural learning. We take for granted many things we believe are intuitive expectations but are really learned. So, again, statistically speaking, white people may be more likely to have learned what is perceived as ideal behavior during an appraisal...learned it from discussions with friends or as youth from their parents. Now, this may also be economics and the white husband may ALSO have not had the opportunity to learn this.

I can tell you that what people perceive as normal and their rush to judgment over it often offends me. I grew up poor. My mother was poor. Her parents were working poor. Her mother's parents also were ripped off by a real estate company in some rent-to-own scheme that never materialized. My lack of knowledge about home ownership and all it entails is a product of multi-generational poverty and lack of wealth. My wife, on the other hand, comes from a family of real estate owners and home construction gurus. I have absorbed some of this knowledge over decades. How I would interact with an appraiser today is very different than 20 years ago, but still I don't know some things and may be perceived as "awkward" during an appraisal.

Next. Why didn't the appraiser just come out with it and say, "Excuse me, ma'm, could I bother to check this room out for a few minutes? It is really needed for the appraisal."

It seems if the visit were filled with rude comments as she says, then the reason may have been he was offended. He has an expectation he bases on how everyone else acts and deviations he perceives as impolite entitlements or hiding something or whatever. Here is where assumptions may interact with racial stereotypes, possibly, in addition to economic difference.

Lastly, I will add in my state there are different "codes" an office vs a bedroom vs some other room has to comply with. It seems within the realm of possibility that examination and questions about the room may have led to designation as an additional bedroom which could affect the value.

 

[TV and credit cards]

The first appraiser may not have been familiar with the area. It is best for appraisers to have their part of town they always work so they know the most desirable neighborhoods but this doesn’t always work out. It’s often a matter of who is available at the time to do the appraisal.
Also the comps could have skewed the appraisal. Recent foreclosures, bank owned properties, and a backlog of unrecorded properties at the county office could set the comps lower.
And don’t have the entire family in the house while the appraiser is trying to do his job. Clear out and have one person their to let the guy in so he can take his time. If it were me doing the appraisal and someone was working in a home office, I’d be hesitant to disturb the person and likely omit the room. I may even frown in the process. Not because the lady in the home office was Black but because she was there at all, that she could not be bothered to clear out during an appraisal for a bank loan that she wants. Get it? You’re asking for the loan. Don’t make it difficult for the bank to give you that loan in the process. Christ on a cracker!

Right. It's this section:
"He expressed exaggerated surprise when he saw me working at my home office during the walk-through."

The exaggerated surprise I think was intended for her to pick up on as a social cue for her to then stop working 5 minutes...give access to the room...etc.

Let's delve into this critical point, though. Why didn't she pick up on the purported social cue? I think it goes to cultural learning. We take for granted many things we believe are intuitive expectations but are really learned. So, again, statistically speaking, white people may be more likely to have learned what is perceived as ideal behavior during an appraisal...learned it from discussions with friends or as youth from their parents. Now, this may also be economics and the white husband may ALSO have not had the opportunity to learn this.

I can tell you that what people perceive as normal and their rush to judgment over it often offends me. I grew up poor. My mother was poor. Her parents were working poor. Her mother's parents also were ripped off by a real estate company in some rent-to-own scheme that never materialized. My lack of knowledge about home ownership and all it entails is a product of multi-generational poverty and lack of wealth. My wife, on the other hand, comes from a family of real estate owners and home construction gurus. I have absorbed some of this knowledge over decades. How I would interact with an appraiser today is very different than 20 years ago, but still I don't know some things and may be perceived as "awkward" during an appraisal.

Next. Why didn't the appraiser just come out with it and say, "Excuse me, ma'm, could I bother to check this room out for a few minutes? It is really needed for the appraisal."

It seems if the visit were filled with rude comments as she says, then the reason may have been he was offended. He has an expectation he bases on how everyone else acts and deviations he perceives as impolite entitlements or hiding something or whatever. Here is where assumptions may interact with racial stereotypes, possibly, in addition to economic difference.

Lastly, I will add in my state there are different "codes" an office vs a bedroom vs some other room has to comply with. It seems within the realm of possibility that examination and questions about the room may have led to designation as an additional bedroom which could affect the value.

I agree with your comments. While I've bought and sold a few time, I've never gotten an appraisal for a refi. Since it has been some twenty years since I've been involved with a full real estate transaction (agents, appraisals, etc), I searched "why is my apprasial so low" and read a bit at http://https://www.rubyhome.com/blog/reasons-low-appraisals/. Would it dawn on a person to read about appraisals prior to? Maybe, maybe not but the info is readily available. And appraisers are people too. Perhaps being overworked in a hot real estate market and/or homeowners unknowingly making his job harder than it needs to be can end in less than stellar results. But for the couple to claim racism right off the bat was unfair.