Black appraisers call out industry's racial bias and need for systemic change

It didn’t sit well with Michael Tidwell when an appraisal report he submitted for a large commercial property in a predominantly Black neighborhood in Los Angeles was rejected by a bank reviewer who insisted the lot was valued too high.

Tidwell, a Black appraiser who is also a valuation and advisory director at the global real estate services firm Cushman & Wakefield, said it took months of back and forth, with the issue getting escalated to the bank’s top brass, before they ultimately agreed with his initial assessment.

“The reviewer didn't respect the community because he felt like, ‘Oh, it's a Black neighborhood. It's crime-ridden and violence and all of that. There's no way this place is going to be able to make money,’” he said. “It’s frustrating because even when you do your job or you may know the value of the community, somebody that's not from that community, a lot of times, they're not going to see the value.”

Tidwell is in a unique position on the inside of a tiny and largely insular appraisal industry of 78,000 whose membership is more than 85 percent white, with less than 2 percent of appraisers identifying as Black.

The appraisal industry continues to be criticized for racially based bias against Black homeowners, like in the case of a Black Indianapolis homeowner who after concealing her race received an appraisal value of more than double that of two previous appraisals where her race was known, according to the Fair Housing Center of Central Indiana, a nonprofit that filed a housing discrimination on the woman's behalf. The three assessments were performed by different companies with the first two coming in at $125,000 and $110,000 and the third coming in at $259,000 after she had a white friend pose as her brother.

But Black appraisers have also encountered difficulties navigating similar issues from inside the industry. Many say that while the valuation divide is symptomatic of a larger racial issue, addressing challenges and barriers in a profession with an apprenticeship model — which makes it difficult for people of color to break in — may be one way to widen the industry lens.

Racially based appraisal bias is a well-documented and pervasive issue that has long contributed to the widening wealth gap for Black families, and much of it has been driven by “historical racialized appraisals that influence contemporary values and appraisers’ racialized assumptions about neighborhoods to drive appraisal method,” according to a study published in the journal Social Problems.

The study found that from 1980 to 2015 homes in white neighborhoods appreciated almost $200,000 more than comparable homes in similar communities of color.

A different study by the Brookings Institution in 2018 found that in the average U.S. metropolitan area, “homes in neighborhoods where the share of the population is 50 percent Black are valued at roughly half the price as homes in neighborhoods with no Black residents,” and that there is a level of “implicit bias” in an individuals’ perception of members of an oppressed class. The study also found that the “value of assets — buildings, schools, leadership, and land itself — are inextricably linked to the perceptions of Black people.”

It was around 70 years ago when the appraisal industry opened up to African Americans, said Jacob Faber, a professor of sociology and public service at New York University. So there is a not-so-distant history of fairly explicit racial exclusion that not just purposefully kept African Americans and other people of color out of the appraisal industry, but also hampered the ability of African Americans to own property.

Since there are so few Black appraisers, it's not clear what impact diversity would have on the industry, Faber said, but he added that other research on the benefits of diversity in institutions does suggest that it could help alleviate some of the racial bias in individual appraisals even though there are bigger structural problems with the way that homes are appraised.

The apprenticeship model blocks diverse applicants

After sending out nearly a hundred résumés to potential mentors who could provide her with the training hours required to become a certified appraiser, Jillian White remembers one response very clearly.

A senior appraiser asked White, who is based in New York City, to come to his office right away to interview after telling her how impressed he was with her credentials. But his excitement quickly faded as soon as he saw a Black woman, White said, adding that she was not even allowed past the office’s threshold by the appraiser who turned her away, saying she was overqualified.

“It’s been tricky. I feel caught in the middle when I hear about appraisals coming in low for Black homeowners,” said White, who is now the head of collateral for the digital mortgage lender Better. “There are a multitude of different factors that play into this, including a deeper history of how we attach value to property in the first place, but there are also very few outside voices in the appraisal industry that can help re-examine opinions on property value.”

The appraisal industry, which has kept a very guarded gate for entrants, is largely based on an apprenticeship model that requires anywhere from 1,000 to 3,000 hours of work under a supervising appraiser to become certified.

The onus of finding a mentor is on the student, which has generally led the industry to become intergenerational and homogeneous, causing a bottleneck preventing diverse talent from breaking in, White said. There isn’t much incentive for a supervisor to take on an apprentice, especially when that person is a stranger, she said.

“As appraisers, we know there is a level of artistry and discernment when it comes to appraising,” she said. “There is some discretion given to an appraiser, so the industry being open to reconsidering how we think about this is important if we want to address some of the bias.”

Junia Howell, assistant director at Boston University’s Center for Antiracist Research, who co-wrote the study in the Social Problems journal, said the appraisal industry is one of the last remaining fields that relies on an apprenticeship model.

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