‘Our America: Lowballed’ Shines a Light on Home Appraisal Discrimination

After putting $400,000 worth of additions and improvements into their Marin City, California, home, Paul Austin and Tenisha Tate-Austin got their home appraised and expected to see a considerable increase in the house’s value.

When the appraiser came back with a figure of just $989,000 — only $100,000 more than the appraisal was prior to the renovations — the Austins, who are Black, suspected racial bias had something to do with it, Julian Glover, the race and culture reporter for ABC 7/KGO-TV in the Bay Area, reported in February 2021.

The Austins appealed to their bank for a new appraisal, and when the day finally came, they emptied their house of family photos and African-themed art — and had a white friend bring in photos of her own family and pretend to be Tate-Austin.

The new appraisal, after their home had been “whitewashed,” came back at $1.48 million — a difference of nearly $500,000.

The Austins’ story, later picked up by national outlets, including The Washington Post, drew attention to a racial inequity that wasn’t being discussed or addressed widely before. As a result, other homeowners with similar experiences came forward.

Glover explores discrimination and racial disparity in home appraisals in-depth in a new documentary news special, “Our America: Lowballed,” debuting Friday, December 2, on Hulu and ABC-owned television stations’ streaming apps.

Glover, the executive producer of the documentary special, recently spoke to The Express News Group about what the investigation and data analysis uncovered, and the solutions that are underway.

“Our America: Lowballed” features the Austins and Black and Latino families across the country who believe they have been lowballed, potentially costing them anywhere from $100,000 to $500,000 in equity in their homes, Glover said.

And in analyzing more than 50 million home loans, especially refinancing applications, the report found that homes in predominantly Black neighborhoods are more than five times more likely to be under-appraised than homes in white communities.

“So that is directly affecting how people are able to or not able to refinance their properties, especially during 2020-21, when the interest rates were historically low, right as the Fed cut interest rates and it was a great time to be able to save money on that mortgage every month,” Glover said.

For homeowners who may be house rich but aren’t high-income earners, refinancing could have been a way for them to have more expendable income, by lowering their monthly home mortgage payment, he pointed out. “Or maybe they wanted to take out money to spruce up the property to make it look better, or help pay for their kids’ college, or maybe start a business. You know, these are all of the things that you can do when you have appreciated a nice amount of equity in your home.”

But when that equity is not accurately reflected in an appraisal, homeowners who wish to refinance or get a home equity loan are disadvantaged.

A low appraisal can also kill the sale of a home, Glover noted. He explained that if a high bidder and the seller agree on $500,000, but the appraiser lowballs the home value at $450,000, the buyer needs to come up with an additional $50,000, without financing, to make up the difference.

“If they’re not in the position to be able to come up with the additional equity then they won’t be able to purchase that property,” he said.

Glover added that people of color often are overburdened with more student loan debt than their white counterparts and other factors that can affect their credit scores, which influences the interest rates they can get for a mortgage.

And then there is intergenerational wealth, or lack thereof, that Black families have when compared to white families, he said, noting that a lot of that wealth is tied to housing. Though the Fair Housing Act of 1968 made racist housing practices and discrimination on the basis of race, ethnicity, color and other protected classes illegal, “there was nothing done to make the families whole who missed out on the opportunity to own a home.”

The racial homeownership gap stands at 74 percent of white Americans and 44 percent of Black Americans.

“The No. 1 way that we generate wealth in this country is through homeownership,” Glover noted. “So that’s why we see that 30-point gap between white and Black homeownership in this country, even several decades after explicitly racist housing practices and policies were made illegal.”

He explained he had originally discovered the Austins’ story when he was looking at the racial homeownership gap in the Bay Area, where the gap is more pronounced than the national average.

“After we told that story of the Austins … so many more families came forward from all across the country, and especially in the Bay Area, to tell their stories,” Glover said.

In June 2021, President Joe Biden — while speaking in Oklahoma for the centennial of the Tulsa race massacre — announced that his administration had launched an effort to combat racial discrimination in housing, including appraisal bias and redlining, the practice of lenders refusing to serve communities of color.

This led to the creation of the Interagency Task Force on Property Appraisal and Valuation Equity, or PAVE, co-led by the U.S. Department of Housing and Urban Development Secretary Marcia L. Fudge and White House Domestic Policy Advisor Susan Rice.

In March this year, when PAVE unveiled its plan to root out bias in home appraisals, the Austins were invited to the White House so they could share their story.

“We also take the story to the halls of Congress,” Glover said.

There is only so much that the executive branch can do, as some changes need to be made by Congress, he explained, crediting U.S. Representative Maxine Waters with proposing legislation to fix the appraisal industry.

And on the state level, he said, in his state of California, new laws mandate anti-bias training for appraisers “so that they are aware of bias that they might be bringing into their job as they go about appraising properties.”

The appraisal industry itself and the banks they work with are also working toward solutions, namely by diversifying the industry.

Glover said one of the experts that viewers of “Our America: Lowballed” will hear from says it plainly: “This is likely … the whitest profession in the country, at more than 96 percent white and 70 percent male.”

He said a lot of it has to do with how appraisers get into the profession. That is, it’s a profession often handed down from father to son for generations.

“You practically have to know an appraiser to be able to get into the industry because you need 1,000 hours of supervisory training,” Glover said.

He questioned why appraisers would take anyone under their wing who they see as future competition — unless it’s their son, brother or cousin.

Glover is familiar with Long Island’s own bombshell report about housing discrimination, “Long Island Divided,” the culmination of a three-year Newsday investigation, published in 2019, that used undercover paired testing, in which a white tester and a person of color with similar credit scores and financial situations would separately visit the same real estate office and take note of any difference in how they were treated. The investigation uncovered evidence of unequal treatment 19 percent of the time against Asian testers, 39 percent of the time against Hispanic testers, and 49 percent of the time against Black testers.

Among the incidents of discrimination the investigation found was an agent who steered white testers away from neighborhoods with minority populations and an agent who refused to show houses to a Black tester before the tester had mortgage preapproval, while not holding a white tester to the same requirement.

“These more covert practices are still happening within the real estate industry that are directly affecting, again, the No. 1 way that we build wealth in this country,” Glover said.

He pointed out that what the Austins did to uncover discrimination was to essentially perform their own test, the way Newsday had.

Their results of the Austins’ independent investigation was shocking and grabbed headlines, kicking “this avalanche of change into motion,” Glover said.