Pioneering Mystery Shopper Tests On Appraisal Bias Find Detailed Evidence Of Racial Discrimination

Real estate appraisers inflicted discriminatory treatment on Black homeowners in a pioneering new “mystery shopper” investigation, the National Community Reinvestment Coalition (NCRC) announced Tuesday.

The discrimination we found in the appraisals system undermines Black wealth-building and almost certainly violates the law. It is unacceptable for appraisers to undercut the value of homes and conduct themselves less professionally when dealing with Black homeowners,” NCRC President and CEO Jesse Van Tol said. “The evidence of systemic bias in the appraisal business has been mounting for some time but NCRC’s new testing showed that interracial couples in Baltimore get far better treatment and valuations if the appraiser believes the homeowner and their family are White.”

Appraisers assigned higher average monetary values to homes when they believed them to be White-owned, NCRC’s mystery shoppers discovered. White testers received valuations $7,000 higher on average than their Black partners who showed the same home. The discriminatory discrepancies were as high as 9% and 13% in two cases.

In some instances appraisers also subjected Black mystery shoppers to serious unprofessional conduct – including drawn-out processes, worse communication and in one case simply ghosting the homeowner – from which their White partners were spared. 

The full investigative report, which is the first of its kind to be published, can be read here.

NCRC experts will host a webinar to discuss the report on Wednesday October 26, from 12pm to 1pm ET. Please register here to attend: https://www.eventbrite.com/e/ncrcs-work-on-apprasial-bias-tickets-443624251077

NCRC’s new investigation draws on the organization’s decades-long experience crafting and executing probes for bias and discrimination using mystery shoppers. Mystery shopper bias testing not only generates quantitative indicators common in research on discrimination – but also reveals and documents how discrimination happens as a human experience. The project involved interracial Black-White couples who own homes in the Baltimore area. Each home was appraised at least twice, with each partner taking turns presenting their home after altering decor and photograph displays to either “whitewash” or “blackwash” the residence.

The discrimination NCRC’s testers experienced can have devastating effects to a family’s long-term wealth-building efforts – and not just by depressing a home’s monetary value. The delays and discourteous non-communication some appraisers in NCRC’s testing displayed toward Black testers can also cause sellers to miss out on cheap interest rates, or even derail a sale entirely. 

Read the full report here.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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