But when that estimate turned out to be suspiciously low, the Hortons had a second one made—this time removing any items that led the appraiser to suspect the home was occupied by an African American man. In fact, the second valuation came in at $465,000 — $115,000 more than when the house was “whitewashed.”
I read this story with interest, but also with a certain regretful realization. As a Black person, I am very sensitive to racial issues. And as a real estate agent with more than 30 years of experience (technically a former agent since I retired last year), I’m all too aware of how diverse the industry is, with its built-in biases and pitfalls that make homeowners of color.
I’ve worked most of my career in a suburb of rapidly gentrifying Washington DC, where most single-family home buyers and sellers were higher-income white families. But when the sellers were people of color, the advice I had for them was simple: Before you sell your home, “de-ethnicize” it.
If you’re a black homeowner, you need to clear out your shelves of family reunion photos and remove the Afrocentric art from the walls. And I once told an Indian couple that the statues of Ganesh had to come off the mantle, at least until the sale of their house was completed.
I nodded again with familiar approval the other day when I read about another case – an even more egregious one – involving a black couple in Maryland. They filed a lawsuit after their home was appraised by $300,000 after a white couple stood up for them.
And then there was the black woman in Indianapolis last year who found her home’s appraised value doubled when a white friend stood up for her. The list goes on and on.
Well, in fairness, even when the sellers are white, realtors sometimes ask them to remove family photos and other personal items: A home seller wants people to be able to introduce themselves in the house. They don’t want to remind her of the family that lives there now.
But what we’re seeing in black families and other people of color is the historically ingrained racism that permeates the industry. The history of this type of discrimination is long and deep. And it’s conspired to make blacks swim against the tide in wealth-accumulation, since home-owning is the primary way most people achieve that goal.
It’s always a little awkward to tell a family to erase all evidence of their cultural or racial background when listing their home for sale. But unfortunately, negative associations with the home seem to linger in the minds of some potential buyers when it belongs to a color family – so much so that it can result in a significant depreciation 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 I let them. That shouldn’t stop my clients from getting as much money as possible, regardless of the potential buyer’s conscious or unconscious bias.
Unfortunately, inconsistencies in the valuation process are just one of the myriad ways in which the real estate industry has historically been very unkind to blacks and browns. It is well known that the benefits of the GI Act, which made homeownership possible and gave many white Americans a foothold in financial stability and later generational wealth to pass on to their heirs, were denied to black veterans because banks did not offer loans
to buy homes in black communities. And, of course, black prospective homeowners couldn’t buy houses in white suburbs because of discrimination.
Houses in black neighborhoods have also historically been valued for less. A 2018 Brookings Institution study found that homes in black neighborhoods are valued 23% less than homes in comparable white neighborhoods. Another study conducted by Redfin last year found that homes in black neighborhoods are valued an average of $46,000 less than homes in similar white neighborhoods. As the Brookings researchers put it, “Our findings are generally consistent with the widespread presence of anti-Black prejudice.”
And when they are able to buy a home, black homeowners often have a harder time refinancing to get cheaper interest rates. According to a report commissioned by the National Association of Real Estate Brokers (NAREB) in 2021, the surge in home refinancing resulted in “an estimated $5.8 billion in cost savings on future mortgage payments. Of that amount, only $198 million was raised from black homeowners.”
So, given real estate’s deplorable history with black people, low-ball valuations are more like the same deeply troubling pattern. But reviewers shouldn’t wear their prejudices on the tip of their tongues. In fact, they are forbidden by law from doing so.
And while a home’s value can be somewhat subjective (e.g., depending on how a home has been maintained or upgraded), the parameters for assessing home value are fairly clear: appraisers should look at what compares to recent homes, sold in the neighborhood or a similar neighborhood nearby, taking into account the condition of the home to be refinanced.
Based on this, there is simply no room to explain the wildly disparate home valuations when looking at black and white homes. What devalues these homes is the simple fact that black and brown bodies have inhabited them. It’s not that far off when you think about the fact that blacks and whites shouldn’t swim in the same pool of water or drink from the same water fountain. It’s the very definition of racism.
What never ceases to amaze me is that many white people, even real estate professionals, seem surprised to learn of the differential treatment African Americans face in dealing with the industry. But in my experience, black home sellers are rarely surprised. We all got the memo that we need to whitewash our houses.
Abena Horton certainly did, telling the New York Times after her Florida home’s shockingly low valuation: “It’s known in the black community that if you sell the house, you take down your pictures. But I didn’t think I was going to do that, so I had to take care of it at an appraisal.”
So what can be done to reduce the problem of racism in appraisals? The industry can start hiring more color assessors and ensuring everyone has the training needed to identify and eliminate discriminatory practices.
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 reviews could also help in many cases: This would completely eliminate the potential for human bias and help solve the problem of the shortage of experts, which has been exacerbated by the Covid 19 pandemic. The White House has also said it is aware of how underratings hurt people of color and has formed a task force to investigate.
And if none of these solutions suffice, then there is another proven solution that might help – legal action. In at least some of the much-noticed cases, the affected families have filed lawsuits against the experts. If enough lawsuits are filed against an industry that doesn’t appear to be able to solve its problem with bias, I think rating companies will take notice and adjust their modus operandi.