Over the past year, beginning with this NY Times piece: Black Homeowners Face Discrimination in Appraisals that initiated a rising progression of news stories covering discrimination in the appraisal of houses. And most recently, this CNN piece: When a Black homeowner concealed her race, her home’s appraisal value doubled.
So I looked at U.S. labor force data from the U.S. Bureau of Labor Statistics [BLS], which ranked the top 400 occupations by sex, race, and Hispanic or Latino ethnicity. I’ve been an appraiser for 35 years and it’s been very clear that there is nominal diversity in my profession. For users of the industry’s services who have constantly complained about “appraisal shortages” (translated: a shortage of appraisers willing to work for 50% to 75% below the market rate) – here is your opportunity for action to expand our ranks.
The appraisal industry is aging out because it is hard to bring in youth. It is one of the only professions that require new entrants to have a mentor for their first two years and often without making a living, financially. One of the key reasons for this is because most financial institutions won’t accept a “trainee” until they are licensed or certified with two years of experience. A “trainee” is a derogatory term applied to an appraiser that is not licensed yet. While the GSEs like Fannie and Freddie are fine with “trainees” signing reports prior to their two-year experience threshold, most banks are not. Existing appraisers are all for the difficult entry because supply and demand are in their favor. Few other professions have this two-year mentorship period before an entrant can make a living.
Accountants don’t require a two year mentorship program before they can make a living. Free market conditions should let those with more experience make more money, but not zero.
As a result, entry into the appraiser profession via a mentor system essentially requires appraisers to have relatives that will hire and train them. Given the beginnings of the housing industry as explained next, you can see the problem with this approach.
The housing industry we know today was built on a foundation of racism by the federal government
…and racial covenants. No wonder why there is essentially no diversity in the appraisal profession.
These BLS numbers for 400 occupations show an incredible lack of diversity within the appraisal profession. In fact, U.S. appraisers were ranked dead last for diversity in the list of 400 occupations tracked by BLS with white appraisers comprising 96.5% of the industry. Here are some appraiser ratios from BLS.
And here are the 20 least diverse occupations. The appraisal industry is even less diverse than farmers & ranchers.
While The Appraisal Foundation [TAF] was created and enabled by Congress to maintain appraisal standards (ASB) and minimum qualifications (AQB) for entry into the appraisal profession, it was also created to protect the public trust. The Appraisal Foundation’s attempt to address diversity has largely been in the form of “checking a box” to be able to say they are working on it. Yet the only actions they have taken were the result of recent public pressure by people like myself and others to call them out. The most glaring tone-deaf situations at TAF demonstrate how inappropriate it would be to allow TAF to lead any diversity efforts in the profession:
- An African-American had never held a board seat on the Appraiser Qualifications Board (AQB) until 2021. In other words, for more than thirty years, the organization has existed in a racial bubble.
- There have only been three women who have served on the AQB in the past 30 years.
- The head of the just-formed “diversity commission” is white and male.
Since TAF has not been able to see the problem for more than three decades until outsiders pointed it out and they have continued to make decisions that demonstrate their disconnect, TAF leadership is essentially the starting point to resolve the lack of industry diversity problem. Top-down is how this gets fixed if the stakeholders in the industry actually want it fixed. We have no leadership on this issue within the industry and solving this problem has to be top-down or it won’t ever be resolved.
And the news is getting worse for the appraisal industry as more and more stories like this are published yet TAF remains rudderless on diversity.
It’s time for Congress to step in.
Tags: The Appraisal Foundation, Appraisal Management Companies, AMC, TAF, trainee, diversity, BLS, U.S. Bureau of Labor Statistics, discrimination, race
Thank you for doing the research and providing actual numbers. I see this firsthand. I am willing to mentor but with the tight deadlines, and them working other jobs, it’s very difficult to for me to assist them with the 2 year goal. Then I see them getting frustrated and stopping because of the hoops.
There needs to be a change in the entry into the business. They are giving out more and more waivers; I’m seeing more and more requests for the 30 minute desktops…I hope the appraisal profession wakes up. If there are not enough appraisers, the banking industry will just find another way. We would be wise to change what we can change, while we have the ability to change before we are unable to change anything at all to make a difference. The writing is on the wall. The head-in-the-sand approach is not working..at all.
Thanks, Cassandra – modern-day appraisal economics no longer mix with the mentorship structure!
Love your posts, but this one seems discombobulated to me. You seem to be mixing the barriers to entry with unproven racial discrimination in appraisals, and support it with a BLS breakdown of appraisers by race? I’m having trouble with your reasoning. Your theory appears to be that because most appraisers are white, appraisals are racist against black people. I guess museums and airplanes are racist too.
Appreciate your reading my work and commenting here. No discombobulation here. It looks like you’ve read more into the point I’m making which is part of the problem. The entire point of this post was to illustrate that our industry is completely defenseless against these weekly news reports of bias because of our leadership. At no point have I commented about “unproven discrimination.” The optics for us are terrible right now – GSE used AVMs for 70% of their refinance appraisals in 2020. As an industry, our lack of diversity is giving others good reason to stop including us in the appraisal process. So I urge you to rethink what you’ve said here and get active to force leadership change.
The problem is not a black or white issue…..all folks are welcome to join our profession regardless of their skin color, religion, sexual orientation, political views or ethnic group affiliations. The problem is most entry level participants that I’ve dealt with will not stay the course and put forth the effort to become a good seasoned appraiser….they want something for nothing handed to them on a platter. I don’t play those games….if its worth having…its worth doing it right. We are the blame for allowing this to happen…..the emerging Woke society is our biggest threat. We need to get back to what made America great.
Fascinating disconnect. Your position – young people are lazy and unwilling to put in the time as you did. Of course nothing has changed and AMCs don’t take 50% to 70% of the appraisal fee. Learn to think and speak for yourself and stop parroting what you watch on TV – good grief, your underwear is showing.