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The topic of racial bias in home appraisals continues to gain momentum. A steady stream of local and national news stories has uncovered Black homeowners getting higher appraised values after removing evidence of their “Blackness” such as family photos and artwork.
Not only does this illegal practice keep more minorities from becoming homeowners, but it actually robs existing minority homeowners of their hard-earned wealth. Homes of similar quality in neighborhoods with similar amenities are worth an average of $48,000 less in majority Black neighborhoods, according to research from Dr. Andre Perry of the Brookings Institute.
Illinois REALTORS®, which is dedicated to eradicating discrimination in every facet of real estate transactions, created the Discriminatory Appraisals Task Force in December 2020 with the aim of ending the practice all together. The 22-member task force is comprised of Illinois REALTORS® members, lenders and appraisers from across the state and is chaired by REALTOR® Lutalo McGee of Chicago.
To achieve its lofty goal, the task force is focusing on three key areas: education and outreach, research and policy. Some of their work so far includes:
- Research and data collection in partnership with Illinois universities and academics on mortgage, valuation and sale data to identify patterns and trends of discrimination.
- Creation of education and guidance materials for Illinois REALTORS® members to assist them and their clients if they encounter discrimination in a transaction.
- Development of public policy and regulatory proposals at the state and national level that are intended to decrease and ultimately eliminate discrimination in the appraisal process.
- Contribution to federal oversight bodies research into potential changes to appraisal regulation, including submission of policy proposals to the Federal Housing Finance Agency (FHFA).
The task force’s objective of education and outreach, is intended to ensure that REALTORS® are prepared ahead of time for the appraisal, know how to properly review the appraisal report and know what to do if there is suspected bias or negligence. The appraisal resources guidance materials produced by the task force give both REALTORS® and consumers the tools they need to confront these issues head-on.
Among the resources already compiled are videos, articles and continuing education options, Illinois REALTORS’® Appraisals FAQs and the Sample Appraiser’s Package. The FAQs cover everything from the basics to how to handle complex situations such as a reconsideration of value. The Sample Appraiser’s Package is a comprehensive checklist of the type of information about the subject property that can be provided to the appraiser before they begin their work.
To download these tools and follow the topic, go to www.IllinoisRealtors.org/appraisals.
While the task force will continue to educate members and consumers on their rights during the appraisal process, it is also working on public policy solutions that are being presented to both state and federal lawmakers. Illinois REALTORS® has been in ongoing communication with the Illinois Department of Financial and Professional Regulation, which regulates both real estate brokers and appraisers, as well as with both of the state’s U.S. Senators, on changes to regulations governing appraisals.
The Discriminatory Appraisals Task Force is expected to continue working on this important issue through the end of 2021 and into 2022.
