Gayle Fleming is a retired real estate agent who worked in the industry for more than three decades. The opinions in this commentary are her own. Read more opinion at CNN.
(CNN)A couple of years back, I read an article about two married people who'd decided to refinance their home. The Jacksonville, Florida couple, Abena and Alex Horton, had two appraisals: For the first one, they kept on display in their home their family photos, Black-themed books, greeting cards and other Afro-centric artifacts (Abena is Black, and her husband is White).
But when that appraisal came in suspiciously low, the Hortons had a second one done -- this time removing any items that might lead the appraiser to suspect the home was inhabited by an African American. Sure enough, the second appraisal came in at $465,000 -- $115,000 more than before the home had been "white-washed."
I read that story with interest, but also with a certain rueful recognition. As a Black person, I pay close attention to issues pertaining to race. And, as a real estate agent with more than 30 years of experience (technically a former agent, since I retired last year), I am only too aware of the multitude of ways that the industry is riddled with built-in biases and pitfalls for homeowners of color.
I've worked for most of my career in a suburb of a rapidly gentrifying Washington DC, where most of the buyers and sellers of single family homes have been upper-income White families. But when the sellers have been people of color, the advice I've had for them has been simple: Before selling your home, "de-ethnicize" it.
If you are a Black home owner, you need to clear your shelves of family reunion photos and remove the Afrocentric art from walls. And I once told an Indian couple that the statues of Ganesh would have to come down from the mantle, at least until after the sale of their home had closed.
I nodded again with familiar recognition recently as I read about another case -- an even more egregious one -- involving a Black couple in Maryland. They filed a lawsuit after their home appraised $300,000 higher after a White couple stood in for them.
And then there was the Black woman in Indianapolis last year, who found that the appraised value of her home doubled when a White friend stood in for her. The list goes on and on.
Now in all fairness, even if the sellers are White, realtors sometimes tell them to remove family photos and other personal effects: A home seller wants people to be able to imagine themselves in the house. You don't want to remind them of the family that lives there now.
But what we are seeing with Black families and other of color is the historic, entrenched racism that permeates the industry. The history of this kind of discrimination is long and deep. And it has conspired to keep Black people swimming upstream when it comes to wealth accumulation, since home ownership is the main way most people achieve that goal.
It's always a little awkward to tell a family to scrub all evidence of their cultural or racial background when they put their house up for sale. But sadly, negative associations appear to attach to the home in the minds of some prospective buyers if it belongs to a family of color -- so much so, that it can lead to a substantial downgrading in the value of the property.
I've tried to be as open as possible with my clients: I let them know that people have their stereotypes and their prejudices -- and let them. That should not stop my clients from getting as much money as they can, regardless of the prospective buyer's conscious or unconscious biases.
Sadly, discrepancies in the appraisal process is just one of myriad ways that the real estate industry has been historically very unfriendly to Black and brown people. It is well known that benefits in the GI Bill that made home ownership possible, giving many White Americans a foothold on financial stability and later generational wealth to pass on to their heirs, were denied to Black veterans, since banks wouldn't offer loans for homes in Black communities. And, of course, Black prospective homeowners couldn't purchases houses in White suburbs because of discrimination.
Homes in Black neighborhoods historically also appraise for less. A 2018 study by Brookings Institution determined that homes in Black neighborhoods appraised for 23% less than homes in comparable White neighborhoods. Another study last year conducted by Redfin found that homes in Black neighborhoods are appraised on average $46,000 less compared to homes in similar White neighborhoods. As the researchers at Brookings put it: "Our findings are generally consistent with the widespread presence of anti-Black bias."
And if they are able to purchase a home, Black homeowners often have a harder time refinancing to get more favorable interest rates. According to a report commissioned by the National Association of Real Estate Brokers (NAREB) in 2021, the surge in home refinances led to "an estimated $5.8 billion in cost savings on future mortgage payments. Of that amount only $198 million was captured by Black homeowners."
So against the backdrop of real estate's lamentable history vis-à-vis Black people, low-ball appraisals are more of the same, deeply troubling pattern. But appraisers are not supposed to wear their biases on their sleeves. In fact, they are prohibited by law from doing so.
And while it is true that the value of a home can be somewhat subjective (depending on how a home has been maintained or upgraded, for example), the parameters for assessing home values are fairly clear: Appraisers are supposed to look at what recent comparable homes have sold for in the neighborhood or a nearby comparable neighborhood, taking into consideration the condition of the home being refinanced.
On that basis, there simply isn't room to explain the widely divergent home appraisals when looking at Black-owned homes versus White-owned ones. What is devaluing these homes is the simple fact that Black and brown bodies have inhabited them. It's not that far removed, when you think about it, from the notion that Blacks and Whites shouldn't swim in the same waters at the swimming pool, or can't drink from the same water fountain. It is the very definition of racism.
What continues to surprise me is that many White people, even real estate professionals, appear to be taken aback when they learn about this differential treatment that African Americans are subjected to in their dealings with the industry. But in my experience, Black home sellers are rarely surprised. We have all gotten the memo about needing to white-wash our homes.
Abena Horton certainly did, telling the New York Times after the shocking low appraisal of her Florida home: "In the Black community it is well known that you take your pictures down when you're selling the house. But I didn't think I had to worry about that for an appraisal."
So what can be done to stem the problem of racism in appraisals? The industry can start by hiring more appraiser of colors, and making sure that all of them have the training they need to be able to identify and root out discriminatory practices.
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According to The Appraisal Institute, the nation's largest professional association of real estate appraisers, more than 85% of appraisers are White. There needs to be more diversity in an industry -- any industry -- that has so much power to hurt or help people of color.
Remote appraisals could also help in many cases: That would take the potential for human bias completely out of the picture, in addition to helping resolve the problem of a shortage of appraisers, which has only gotten worse because of the Covid-19 pandemic. The White House has also said it is aware of the way appraisals that are too low are hurting people of color, and has formed a task force to examine it.
And if none of those solutions does the trick, then there's another time-tested one that just might -- legal action. In at least a few of the highly publicized cases, the families in question have initiated lawsuits against the appraisers. If enough lawsuits are filed against what appears to be an industry unable to solve its problem with bias, I suspect that appraisal companies will take note and clean up their act.
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Opinion: The thing Black families have to do -- and White families don't -- before selling a home - CNN
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