By Casey Murray | OBSERVER Staff Writer
When Christian Jackson was 22 and fresh out of college, he knew he wanted to be involved in real estate and started flipping houses. But when the market crashed around 2007, he realized he might need to shift focus.
“I do remember, down in Florida, meeting my first appraiser, and I met him at one of my properties. He walked through the house for 15 minutes. I gave him a $400 check, and I said, ‘I’m in the wrong business,’” Jackson said.
That was Jackson’s first exposure to appraisers. Often hired by banks, appraisers evaluate a home and assign it a dollar value based on what they believe people will pay for it. But it wasn’t until the crash that he got the push he needed. Flipping homes was no longer profitable.
“I knew I wanted a career in real estate, but I didn’t want the risks that came with flipping houses as a career choice,” he said. “I remember looking through a continuing education program at the local community college, and I saw appraisal classes.”
Jackson, who now lives in the Washington D.C. area, has been an appraiser for 16 years and owns his own firm, Jackson Appraisal Group. He’s one of only a small minority of Black appraisers.
The lack of diversity among appraisers is a problem that many are now trying to fix, partly in hopes of addressing the appraisal bias faced by Black families, with one such initiative taking place in Sacramento earlier this month.
About 89% of all property appraisers in the U.S. are white, according to the Urban Institute, and only 2% are Black. Also, appraisers have a median age of 52, which is significantly older than the average workforce age, and roughly 70% are men.
The lack of diversity among appraisers has started making the news. Stories about Black families who “white-washed” their homes, or took down all evidence that a Black family might live there and had a white friend or real estate agent greet the appraiser, received significantly higher values on their homes. One family in the Baltimore area had their home valued at $472,000 before white-washing their home, and $750,000 after. Another family outside of San Francisco, who have settled a lawsuit over their appraisal, had one appraiser value their home at $995,000 and another at nearly $1.5 million.
Research supports these anecdotes. Housing lender Freddie Mac found that from 2015 to 2021, Black families received an appraisal that was below the contract price, or the price the home actually sold for, 13% of the time, while this happened to white families only about 7% of the time.
This is important because appraisals can determine what kinds of loans people can get and how much collateral their home is worth, which seeps into many other aspects of financial growth. It’s considered yet another way Black families are held back from building wealth the way white families are able to, which is part of why the California legislature passed a law in 2022 that makes appraisal bias illegal.
Making a More Diverse Industry
There are a host of reasons why so few appraisers are Black, but two stand out, Jackson said.
“The biggest barrier is the fact that people don’t know about the profession at all,” Jackson said. “That was one; two is that you really had to almost know somebody to kind of get in. It was really hard to get in and have somebody train you. A lot of appraisers don’t want to, quote unquote, ‘train their competition.’”
To be an appraiser, after completing classes, a trainee then has to complete about 1,500 hours of experience under the supervision of a licensed appraiser, which appraisers may not be open to unless incentivized to do so.
A seminar was held in Sacramento earlier this month to address exactly these concerns. The event, put on by the Appraiser Diversity Initiative, is part of a national partnership by Fannie Mae, Freddie Mac, the National Urban League and the Appraisal Institute to raise awareness about the profession and encourage young people of diverse backgrounds to take part.
Angela Jemmott, chief for California’s Bureau of Real Estate Appraisers, spoke at the seminar to provide more information about licensing in the state.
Echoing Jackson, she said the invisibility of appraisers and the mentorship requirement have presented significant challenges, which is why most appraisers got into the business through family. She said the profession is changing to meet those barriers.
She said a system known as PAREA, or Practical Application of Real Estate Appraisals, is in the process of being approved in California and will open up options for those interested in becoming appraisers.
“This will be introduced in September by a vendor who has been approved to provide this work experience samples through a modulated, simulated experience,” she said. “So anyone who signs up for this system can apply and get their work experience and be approved for their license.”
So once the program is instituted, fewer people will need to find someone to train them to receive their license.
Another barrier has been the cost of completing courses to be an appraiser. Jemmott said the classes cost between $930 and $1,200, depending on the type of license. The Appraiser Diversity Initiative is trying to address that as well by offering scholarships to those who attend their sessions, like the one that took place in Sacramento, in addition to mentoring that should help people access appraisers who can train them.
“They’re actually providing 100% coverage of their education for the trainee program,” she said. “They’re also given a mentor to help them through and ensure that they’re working through the system and moving toward getting their license.”
Jeff Hogan started working as an appraiser in 1988 and now works as vice president of valuations at Veros Real Estate Solutions in Santa Ana, a role that means he evaluates how to use and improve appraisal data.
He was at the event in Sacramento and spoke at the seminar about improving diversity and inclusion in appraisal work. Hogan also pointed out that the field is relatively unknown to and the training process difficult to access for minorities. Because of this problem, his company and its sister company, Valligent, have partnered to try and facilitate training, specifically for those who have completed their coursework but can’t find someone to train them. Their program is called the Valligent Appraiser Training Program.
“We are at this tipping point where you have more and more diverse and younger appraisers that are trying to get in the profession that can’t get a sponsor, so therefore they can’t do anything with this education that they worked so hard to get,” he said. “Our program is to try to get lenders to get on board.”
That means they work with banks, which often contract with appraisers, to set aside a certain number of their houses for that trainee, and then match that trainee with a mentor who then doesn’t have to sacrifice some of their own clients to train someone else. They also reimburse both the trainee and the trainer for their efforts.
Why An Appraisal Might Be Biased, And What To Do About It
Appraisals are supposed to be based on significant amounts of data analysis and research that help determine the value of a home, but as with anything, unconscious bias or differences in taste can get in the way.
Hogan and Jackson said it’s difficult to say definitively if a bad appraisal is due to racism because many factors influence an appraiser. Jackson said that, of course, racial bias can be powerful, even if unintentional.
“Racism and bias really has infiltrated our society at every level, so there’s no reason why appraisers should be immune to that,” Jackson said.
Hogan said even if the bias isn’t based on race, the fact that many appraisers were trained by people they grew up around and think similarly to can pose a problem.
“The way that someone becomes an appraiser now, as opposed to when I came in, is you kind of have to know somebody, so it would be more like a family member,” he said. “There’s nothing wrong with that except that now you’re passing down the same, basically, views and opinions.”
He said his presentation on diversity and inclusion encouraged appraisers to challenge their perceptions and really consider if their judgment is based on inherent value or stylistic preference.
That’s part of why Jackson said diversity is so important. A person from a community can better understand what the people most likely to buy a house in that neighborhood value. Hogan said you’re less likely to carry preconceived ideas about the place you’re from.
“I’m working with homes inside of my community, and I know my community best. I think everybody deserves that,” Jackson said.
It’s obvious that some appraisals are way off, so if an appraiser assigns a value that doesn’t seem right to a home, there are some steps one can take to get a reevaluation.
Jackson said the first thing to do is take your concerns to the lender who sent the appraiser. They may agree to send a different appraiser or reevaluate the existing one. Then get a second opinion. Appraisers compile reports that explain their reasoning for each appraisal, so send this report to another real estate professional, either another appraiser or a real estate agent who has relevant experience. If they agree the value should have been higher, and if the lender refuses to budge, you have several options. If the goal is to simply get a better appraisal value, you can take it to a different lender, but if you’d like to see the appraiser or lender face some accountability measures, you can report them to the California Bureau of Real Estate Appraisers.
Of course, Jackson also wanted to point out that he sees a more important form of bias at work in Black neighborhoods: market bias.
“Market bias is when you go to neighborhoods, maybe neighboring counties, that look exactly the same, but this house is worth $300 and this house is worth $600. That for me is really where the issue lies,” he said.
He said for African Americans to be able to build wealth, the nation needs to find a way to reverse the legacy of racism and redlining that have resulted in majority-Black neighborhoods being considered less desirable.
“It’s not appraisers that cause that,” Jackson said. “Appraisers, typically by profession, are here to decipher the market. We’re not here to dictate the market.”
He wants to see the government make more of an effort to reverse the impacts of historical policies that helped create market bias, not just appraisal bias.
EDITOR’S NOTE: Casey Murray is a Report For America Corp Member and a Data Reporter for The Sacramento OBSERVER.