Potential for Property Devaluation in African American Communities
Chicago, IL (BlackNews.com) — The role of a Real Estate Appraiser is to provide an objective, impartial and unbiased opinion of the value of real property.
An appraisal, however, lacks credibility when the Appraiser has no competency in terms of familiarity with the market in which the property is located. A good understanding of appraisal methodology and numerology is not a substitute for an Appraiserâ€™s working knowledge of the dynamics of a specific neighborhood. Todayâ€™s urban neighborhoods can encompass as little as a few blocks and most homeowners are more knowledgeable of their neighborhoodâ€™s boundaries than are some Appraisers.
It is not uncommon for two certified Appraisers to arrive at widely varying conclusions of value for the same property as of the same date.
Two major factors in the discrepancies between their opinions of value are often the level of their familiarity with the neighborhood and their subjective interpretation of its quality in terms of its schools, churches, homes, businesses, transportation access and other significant factors.
A common result of an Appraiserâ€™s lack of familiarity with a propertyâ€™s neighborhood is a devaluation of the property. Because suburban markets often set the standards for what constitutes a good neighborhood, there is a real possibility that an Appraiser will misinterpret the quality of a culturally diverse urban African American neighborhood.
It can take as few as three homes in a neighborhood that have been appraised and purchased at low prices to create a market that devalues other properties in the area. Other Appraisers working in the same neighborhood use the sales of the lower valued homes as comparables, which justifies a continuation of lower property values in that area. Banks often interpret this as evidence of a declining neighborhood and become reluctant to approve loans in the area.
Real Estate Appraisers in general are an aging population, according to the Appraisal Institute, the nationâ€™s largest professional association of Real Estate Appraisers. More than half of the Appraisers in the U.S. are 51-65 years of age and there is general agreement within the industry that there is an imminent overall Appraiser shortage. One can be certain that although the number of African Americans among this aging population is very small, the number of those who are close to obtaining the necessary education and experience to replace them is even smaller. This is due primarily to the difficulty in obtaining the required experience, which can only be provided by working as a trainee under a State Certified Appraiser. A shortage of Black Real Estate Appraisers has the potential to perpetuate property devaluation in African American communities throughout the United States.
Although many State Certified Appraisers have been reluctant in the past to take on trainees, African American trainees in particular have found it difficult to locate a mentor, however, it appears that opportunities may be improving.
Some of the reasons for these indications of improvement are that there are Appraisers who have no desire to accept appraisal assignments in African American neighborhoods, while others refuse assignments because they lack familiarity with these culturally diverse urban communities. The benefit of taking on African American trainees is that their supervisory Appraisers will be able to expand their officesâ€™ earning potential ($300-$500 per single family appraisal) by accepting a broader base of appraisal orders through partnership with a broader base of appraisers.
Mentoring opportunities for African American trainees would significantly increase as well if the governing body for Appraisers (The Appraisal Subcommittee (ASC), lenders and appraisal management companies (who generate most of the appraisal orders due to the Doddâ€“Frank Wall Street Reform and Consumer Protection Act, which was signed into federal law by President Obama on July 21, 2010) would work together to implement and enforce stronger regulations. These new regulations could insure that Appraisers adhere to a principle of geographical competency and have a verifiable working knowledge of the neighborhoods in which they appraise.
Currently, Appraisers can provide appraisal management companies with a list of areas that they cover without adequate oversight and verification. This practice is conducive to a focus on the quantity of appraisal assignments instead of their quality and has the potential to negatively impact property values in all communities across the United States.
In her new book, How to Become a Real Estate Appraiser, (www.sharoncarsonbooks.com), veteran Residential Real Estate Appraiser with over 30 years of experience Sharon P. Carson provides unique and valuable insight into the Real Estate Appraisal profession.
The book is a practical guide to becoming a Real Estate Appraiser and provides a look into the profession and its entrance requirements as of the date of publication. It is the authorâ€™s opinion that this is an often-ignored profession that offers enhanced entrance opportunities due to what many in the industry consider an imminent Appraiser shortage.
The book is available as an eBook or paperback on Carsonâ€™s website: www.sharoncarsonbooks.com.
About Sharon P. Carson
Sharon Carson has been active in the Real Estate business since 1974, and is a State Certified Real Estate Appraiser who has been practicing in Illinois since 1979. Sharon has performed residential real estate appraisals for government agencies and some of the largest lenders in the United States.
Sharon is one of very few in her field to earn the highly coveted RM (Residential Member) Designation through the American Institute of Real Estate Appraisers (now known as the Appraisal Institute).
Photo Caption: Bookcover for How to Become a Real Estate Appraiser and author, Sharon P. Carson