The Appraisal Institute empowers individuals and nurtures an environment that inspires and encourages diversity, equity and inclusion.

Over the last two years, the Appraisal Institute has been amplifying and accelerating DE&I initiatives and partnerships to bring about positive change, including improving diversity within the profession through the Appraiser Diversity Initiative in collaboration with Fannie Mae, Freddie Mac and the National Urban League, and with our Minorities and Women Course Scholarship from the Appraisal Institute Education and Relief Foundation.

The profession does have a lot of work to do to achieve greater racial, ethnic and cultural diversity among appraisers. Representation is a leading force for equity and inclusion in every profession. We recognize that recruiting for greater diversity will make us stronger and more representative of the communities we work in and contribute to greater cultural awareness.

Appraisals by AI Designated Members – who are technically trained in their field and adhere to our Code of Professional Ethics – remain the gold standard in real estate valuation. Appraisal is one piece of a larger ecosystem to look at when it comes to housing issues. Ensuring unconscious bias doesn’t play a role in appraisals and seeking broader solutions to diversity, equity and inclusion in housing is a priority for the Appraisal Institute. We know homeownership is one of the most critical factors in economic equity, and we know Black and brown communities have been historically underrepresented as homeowners. Creating a more equitable housing environment in this country will take solutions advanced by real estate brokers/agents, banks, government agencies, appraisers and others.

APPRAISAL REQUIREMENTS

Per national or federal guidelines by Fannie Mae, Freddie Mac and the Federal Housing Administration/Veterans Administration, appraisers are typically required by lenders to use the sales comparison approach using uniform forms to estimate market value for property. The sales comparison approach analyzes recent sales data from similar properties in the same area.

SECURING AN APPRAISER

Typically, appraisals and appraiser contracts are initiated by a lender as a part of a potential or pending home purchase, sale or refinance. Many consumers directly seek out and hire appraisers for home valuation or pre-listing information, but federal lending requirements prohibit borrower-ordered appraisals for mortgage purposes.

NON-DISCRIMINATION REQUIREMENTS

Appraisers are prohibited from basing opinions on the sex, race, color, religion, handicap, national origin, familial status, or other protected classes of either the prospective owners or occupants of the subject property or the present owners or occupants of the properties in the vicinity of the subject property.

MORTGAGE LENDER APPRAISAL MANAGEMENT

Mortgage lenders (e.g., banks) are the ultimate arbiter of any loan needed to support a home purchase, sale or refinance. They will typically initiate an appraisal to determine the property’s value. Some lenders manage the appraisal process using third party appraisal management companies (AMCs) and others manage the process internally.

APPRAISERS WITH VARYING CREDENTIALS 

States issue several types of licenses and certifications for appraisers, and private organizations may confer professional designations that exceed these requirements. It’s important to work with the most highly qualified appraisers such as Appraisal Institute Designated Members who have completed more rigorous training and are bound by a higher Code of Professional Ethics.

CONSUMERS RIGHTS DURING APPRAISAL 

You have the option to attend the appraiser inspection of your home or prospective home. Federal law requires mortgage lenders to provide copies of all written appraisals or valuations used in a credit decision at least three business days prior to closing. Be sure to ask questions of your lender about the appraiser to ensure the person is the most highly qualified to conduct the appraisal and that the person has local market expertise. Once completed, request and review a copy of your home appraisal report.

RECONSIDERATIONS OF VALUE (ROV) 

Lenders may have a ROV process to correct factual errors and/or accept additional information or comparable sales from the borrower. Recent fair housing complaints and enforcement actions have highlighted the importance of lenders maintaining a credible dispute process that should include appraisal review and that adequately communicates the results to the borrower.

CONSUMER RIGHTS TO APPEAL

While the process can vary across the industry, if you disagree with the value opinion in an appraisal, you have several options, such as: Ask for and review your report from the lender and/or appeal the appraisal with your lender using their dispute process (reconsideration of value or second appraisal).

COMPLAINTS AND CONCERNS

If you feel discrimination played a factor in the appraisal, file a complaint with the appropriate fair housing agency (HUD Office of Fair Housing and Equal Opportunity or state fair housing agency). If your complaint involves unprofessional conduct or a potential violation of the Uniform Standards of Professional Appraisal Practice, file a complaint with the appropriate state appraisal board or professional appraisal organizations.

For Appraisal Institute professionals looking to get involved with this important effort:

• Know that questions being raised pertaining to appraisal are about much more than any individual appraiser, or our profession. 
• This is a topic that can be difficult or uncomfortable to grapple with; even so, it is still important to pursue these steps. This is about a group of people disproportionately being left behind in homeownership and wealth generation. 
• The more people who can experience economic opportunity, the better off they will be and the better off all our communities will be. Care must be taken to avoid unintended consequences from policy changes, such placing consumers in “upside down” mortgages or fueling housing bubbles. 
• Participate in the AI unconscious bias training when it’s offered. You’ll hear more from us when it’s ready.
• In the meantime, know that all of us carry unconscious bias in many ways and in many forms, even if we don’t intend to. What’s important is to recognize bias and know how to interrupt it when it happens. 
• Please keep asking questions, being curious and participating. If you don’t understand why AI is doing something it’s doing, please ask. If you have ideas for how we can be doing things better or different, let us know. If you see an opportunity to be part of a discussion about how to advance diversity, equity and inclusion in appraisal, housing or otherwise, take it.