Four organizations have pledged to develop training programs for members to confront and combat unconscious bias as it pertains to performing appraisals.

Four appraiser trade groups are teaming up to develop training that tackles unconscious bias in real estate valuation and calls for each organization to review its own code of ethics and other governing documents to ensure awareness and compliance among members and appraisers as a whole, according to an announcement.

The four groups are the Appraisal Institute, which has more than 17,000 members in nearly 50 countries, the American Society of Appraisers (5,500 members worldwide), the American Society of Farm Managers and Rural Appraisers (about 1,400 members) and the Massachusetts Board of Real Estate Appraisers (437 members).

“With the critical issue of racial justice being examined throughout the country, our organizations are striving to expand opportunities for aspiring minority appraisers, combat unconscious bias in valuation and find solutions to promote the flow of credit in economically-disadvantaged neighborhoods,” a spokesperson for the organizations told Inman via email.

The groups have pledged to develop training programs for members to confront and combat unconscious bias as it pertains to performing appraisals, to connect members with “thought leaders on bias and discrimination,” and to make sure their respective codes of ethics “more firmly or overtly address bias and discrimination issues” regarding protected classes. (Each organization’s code of ethics is linked to above.)

“Our organizations’ individual review of these documents will center around ensuring that our memberships are clearly reminded of their ethics and compliance obligations, which also are required by national regulations such as the Uniform Standards of Professional Appraisal Practice. This includes ensuring that bias of any kind does not enter the appraisal process,” the spokesperson said.

“Regarding unconscious bias in valuation, ultimately, appraisal practitioners apply value theory to real estate, and these theories are universal in economics. At the most basic level, the three approaches to value — sales comparison, cost, and income capitalization — are taught and practiced around the globe. Professional appraisers have a huge stake in ensuring bias does not enter the appraisal process, because at the end of the day, we sell credibility. Frankly, bias is our adversary regardless of what form it takes, as appraisers’ objectivity and independence are essential to our work’s credibility.”

Currently, appraisers are required to take courses relating to appraisal standards — including ethics, bias and independence — before they are licensed and every two years in order to renew their licenses, according to the groups.

“Our organizations are carefully reviewing our individual education offerings to ensure they touch on unconscious bias issues and will work to enhance the content, as appropriate, to meet these needs,” the spokesperson said.

“While individuals from all walks of life can carry unconscious biases, professional appraisers are bound to standards and codes of ethics that strictly prohibit bias and discrimination, requiring independence and objectivity,” he added.

“Our organizations believe the best way to confront any unconscious bias that may exist at the individual level is through education, and where necessary, enforcement of our respective codes of ethics.”

The appraiser groups will address whether to require members to participate in the new training programs as part of the planning process. “At a minimum, they will be strongly recommended,” the spokesperson said.

Asked for a timeline for when the organizations will develop and begin to offer these new training programs, he said, “Our organizations will move in the most expedient manner possible to develop these training programs in the coming months, and begin offering them as soon as they are ready.”

Complaints regarding the groups’ members can be directed at the individual organization the member belongs to as well as state appraiser regulatory agencies, the groups said. They have worked together this year to also collectively address appraisal issues related to the coronavirus pandemic as well as policy issues facing the profession as a whole.

“Acknowledging that bias exists is but one small step. Together with our partners, we commit to doing the hard work of educating our members about the various ways bias can affect their work, and provide them the tools necessary to overcome bias. By doing this as a profession, and not merely as individual organizations, we hope to underscore to our members and the public just how important this issue is to all of us,” said Lorrie Beaumont, president of the American Society of Appraisers, in a statement.

Last month, a new study published in the sociological journal Social Problems showed that the race appraisal gap — the disparity in appraised values between homes in majority-white and majority-non-white neighborhoods — has doubled since 1980.

The study’s authors, University of Pittsburgh sociologist Junia Howell and University of New Mexico sociologist Elizabeth Korver-Glenn, wrote that past discriminatory practices in real estate like redlining are not solely responsible for the disparity in appraised home values. Rather, the study’s findings revealed that standard modern appraisal practices that have been enacted since the Community Reinvestment Act of 1977 was passed have continued to impact how homes are valued in neighborhoods of color in contrast to primarily white neighborhoods.

Research has shown that houses in predominantly Black neighborhoods have been appraised at lower values than houses in predominantly white neighborhoods for decades, even when those homes possess the same characteristics and have residents of the same socioeconomic status. The study’s authors pinpoint a current appraisal method called the “sales comparison approach” as a primary culprit in exacerbating the home value disparity.

The appraisal method determines a home’s appraised value by comparing the prices of other similar homes recently sold in the same neighborhood, a tactic the real estate industry has often seen as race-neutral. However, the study points out that this technique actually has the effect of grandfathering in racist home pricing that existed prior to fair housing legislation.

Asked what the appraiser organizations thought of the study, their spokesperson said, “While several recent studies have been published on matters relating to alleged bias in real estate, these studies appear to have methodological flaws, including reliance on U.S. Census, property tax, and sales price information as proxies for professional appraisals.”

“While we acknowledge the growing body of academic research in this area, and have questions regarding the underlying data, we are open to exploring how various inputs into the appraisal process can unintentionally impact our members’ conclusions. It is worth noting, however, that appraisers work to answer the questions asked of them by the broader housing finance industry,” he added.

The organizations support efforts to revitalize disadvantaged neighborhoods, he said, but emphasized that those efforts require policy or legislative decisions.

“Appraisers are not the cause of, or responsible for, value disparities in neighborhoods — that is a function of the free market and we only reflect the market; we do not make the market,” he said.

“Appraisers can help by advocating for establishment of more thoughtful and creative programs that provide secondary sources of financing (secured or unsecured) to bridge the gap between the total cost of the proposed renovation or construction and the market value of the property.”

Email Andrea V. Brambila.

Like me on Facebook | Follow me on Twitter

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×