Black couple says home value was underestimated by half a million dollars because of their race
A Black couple in Northern California says an appraiser undervalued their home by nearly half a million dollars because of their race. They took the unusual action of asking a White friend to show the home for a second appraisal, which was significantly higher. Anna Werner has the story.
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By RICHARD HALSTEAD | email@example.com | Marin Independent Journal
PUBLISHED: December 6, 2021 at 6:17 p.m. | UPDATED: December 8, 2021 at 7:28 a.m.
Fair Housing Advocates of Northern California and a Marin City couple have sued a San Rafael appraiser in federal court for alleged race discrimination.
Paul Austin and his wife, Tenisha Tate-Austin, both of whom are Black, were surprised when the appraisal of their home in February 2020 came back $455,000 lower than an appraisal done in March 2019.
The Austins sought the appraisal because they wanted to take advantage of lower interest rates and obtain additional funding to complete home improvements.
Janette Miller of Miller and Perotti Real Estate Appraisers conducted the second audit and is named as a defendant in the suit along with AMC Links LLC, which hired her to do the job at the request of the Austins’ mortgage broker.
“We believe that Ms. Miller valued our house at a lower rate because of our race and because of the current and historical racial demographics of where our house is located,” Austin said. “The sales comps that the appraiser chose to use were unsuitable and were guaranteed to lower the value of our house.”
To test their suspicion of discrimination, the Austins sought another appraisal. This time they took steps to ensure that the appraiser would not know that they are Black.
They packed away their family photos and removed any art that was African or African American. They also had a White friend greet the appraiser as if she was the homeowner when the appraiser visited the house.
“The fact that there was nearly a half a million dollar bump in value after they erased themselves from their home is very strong evidence, we believe, of race discrimination,” said Julia Howard-Gibbon, a lawyer for Fair Housing Advocates of Northern California.
Neither Miller nor AMC Links responded to requests for comment Monday.
The suit makes clear that there were important differences between the way the two appraisers, both hired by AMC Links, arrived at their valuations.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, mortgage lenders and brokers are no longer allowed to employ or contract with an appraiser directly. They must instead contract with management companies such as AMC Links that hire independent appraisers.
“We also believe that the (first) appraiser took race into account when she valued the home by comparing it to sales primarily in Marin City,” Howard-Gibbon said, “rather than a larger radius around the home.”
The suit asserts that appraising a house in Marin City using comparisons of other property sales located exclusively or primarily in Marin City results in a skewed and race-based valuation of the property.
“Marin City has a long history of undervaluation based on stereotypes, redlining, discriminatory appraisal standards, and actual or perceived racial demographics,” the suit states. “Choosing to use comps located in Marin City means that the valuation is dictated by these past sale prices, which were the direct product of racial discrimination.”
When doing her sales comparisons, Miller used three properties in Marin City, two in Mill Valley and one in Sausalito. The second appraiser used two properties in Marin City and six in Sausalito.
“Pulling comps within the neighborhood of the home and near the home isn’t in and of itself problematic, if there are recent comparable sales,” Howard-Gibbon said.
The suit asserts this was not the case. It quotes Miller as writing in her appraisal that she based her valuation on five years of Marin City homes sales, where no one year had more than four sales. As a result, the suit says, Miller’s opinion is fundamentally flawed because of the small number of home sales per year.
The suit also identifies other problems with the approach that Miller took. It says Miller’s market analysis was dated, looking at no sales more recent than 2008. It faults Miller for lowering the valuation per square foot on the houses located outside of Marin City that she used for comparison purposes.
“Miller opined that she looked at several years of data and determined that houses in Marin City were worth ‘conservatively’ 25% less per square foot than those in ‘surrounding areas,'” the suit alleges.
The suit asserts that two of the three Marin City homes used in the sales comparisons were unlike the Austins’ home.
A Brookings Institution study released in 2018 reported that houses in majority Black neighborhoods in U.S. metropolitan areas were appraised for 23% less than properties in mostly White neighborhoods, despite having similar quality and amenities.
The response from appraisers at the time was that their job is to assess local market conditions, not to create the conditions.
The plaintiffs in the Marin City suit are seeking an unspecified amount in compensatory damages, statutory damages and punitive damages, in addition to attorneys’ fees and expenses.
According to the suit, the Austins have suffered “emotional distress with attendant physical injuries, and violation of their civil rights.” The plaintiffs have requested a jury trial.
The case has been assigned to U.S. District Court Judge Joseph Spero in San Francisco. The defendants have not filed responses and have no attorneys listed in the court docket.
An initial case management conference is scheduled for March 4.
A Black couple says an appraiser lowballed them. So, they ‘whitewashed’ their home and say the value shot up.
Click here to read the article in the Washington Post.
By Jonathan Edwards
December 6, 2021 at 7:22 a.m. EST
Paul Austin said he felt good as the appraiser roamed his Northern California home last year, ticking off some of the $400,000 worth of improvements he and his wife had made to the property.
The appraiser noted the new fireplace, Austin told a state reparations task force in October, mentioned a room they’d added and complimented the view from the new deck.
So Austin and his wife were shocked when the appraiser pegged the value of their Marin City home in the San Francisco Bay area at $995,000, far lower than previous appraisals.
“It was a slap in the face,” Austin told KGO-TV in February.
Austin and his wife, Tenisha Tate-Austin decided to get another opinion three weeks later, they say in a lawsuit filed Thursday in federal court in San Francisco. This time, they enlisted the help of their White friend Jan who agreed to pretend to be the homeowner for a different appraiser, the lawsuit alleges. The Austins “whitewashed” their house by removing their family photos and stripping the walls of their African-themed art. Jan helped on this front, too, by staging photos of her own family, the lawsuit states.
The new appraisal came in at $1.48 million — nearly a half-million more than the previous estimate.
The Austins, according to the lawsuit, believe the first appraiser, Janette Miller, gave them a lowball valuation because they’re Black. The couple and the nonprofit Fair Housing Advocates of Northern California are now suing Miller and her company, Miller & Perotti Real Estate Appraisals in San Rafael. They’re seeking financial damages and asking the court to order the defendants to ensure they won’t discriminate when appraising houses.
Miller and her appraisal company did not respond to messages from The Washington Post sent late Sunday night. Attorneys with Fair Housing Advocates, who are representing themselves and the Austin family, also did not immediately respond to requests for comment.
Austin told the state reparations task force in October he believes the property was devalued “because we are in a Black neighborhood, and the home belonged to a Black family.”
Other Black homeowners have reported similar experiences. The value of a woman’s Indiana home more than doubled between appraisals last year after she stripped it of all evidence that it was owned by a Black person and a White family friend stood in as the homeowner. Earlier this year, a Black family in Ohio removed family photos, artwork and their 6-year-old daughter’s superhero pictures, replacing them with belongings their White neighbors offered up. The appraised value of their house went from $465,000 to about $560,000.
A 2018 study by the Brookings Institution found that homes in Black neighborhoods in U.S. metropolitan areas were undervalued by an average of $48,000, amounting to $156 billion in losses. Differences in the quality of the houses and neighborhoods didn’t fully explain the gap, according to the study led by Andre Perry, senior fellow for Brookings Metro who studies housing discrimination.
“It’s almost when people see Black neighborhoods, they see twice as much crime than there actually is. They see worse education than there actually is,” Perry told the Indianapolis Star. “I think this is what’s happening when appraisers, lenders, real estate agents see Blackness. They devalue the asset. They devalue the property.”
As for the Austins, they bought the four-bedroom, two-bath house in 2016 for $550,000 when it had 1,248 square feet. Before purchasing, they’d struggled to compete in a hot housing market. But the previous owners, keen on helping a Black couple achieve homeownership, sold them the place off market.
Over the next two years, the Austins spent $400,000 to improve their new home, they say in their lawsuit. They installed new appliances and fixtures in the kitchen and bathrooms. They refinished the hardwood floors, replaced windows and painted the inside.
In May 2018, a new appraisal concluded the house was worth $864,000, according to the lawsuit.
The Austins kept renovating. They added a new foundation and retaining wall, creating more living space on the basement level. They put in a deck and a gas fireplace. They carved out a separate unit, with its own kitchen and bathroom, that could be used as a home office or a rental.
Through all the renovations, the Austins nearly doubled the house’s square footage.
“It was work, but it was exciting,” Austin said in the KGO interview.
In March 2019, the Austins, when applying to refinance their mortgage again, got another appraisal, which pegged the house’s value at $1.45 million, the lawsuit states. Rates kept dropping, so they decided to refinance again in early 2020, which led to the Miller appraisal.
Austin told the panel on state reparations that Miller’s alleged lowball valuation upset him. His grandparents migrated from the South to the Marin City area in the 1940s to work in the shipyards in nearby Sausalito. They tried to move out, Austin said, but segregationist practices trapped them.
Now, some 80 years later, Austin said he feels he’s dealing with vestiges of that racism. He hopes his lawsuit puts a stop to it.
“I do want to see a change,” he told the panel, “because I don’t want to see my children have to deal with this.”
Click here to read the article on the Housing Wire website.
December 6, 2021, 5:22 pm By Matthew Blake
A San Rafael, California real estate appraiser is being sued for allegedly undervaluing a home by almost 50% because the homeowners are Black.
Sausalito, California homeowners Tenisha Tate-Austin and Paul Austin, along with Fair Housing Advocates of Northern California, filed a lawsuit in federal court Thursday alleging race discrimination against Janette C. Miller of Miller & Perotti Real Estate Appraisal and AMC Links LLC, an appraisal management company headquartered in Lehi, Utah.
Messages left with Miller and AMC Links on Monday were not returned.
The lawsuit is the latest instance of Black homeowners stating that an appraiser has, because of conscious or subconscious racism, thought less of their home’s value, and that no one intervened to overrule the appraiser’s prejudice. By many appraisers own admission, their profession is old and white, and faced with a growing number of race discrimination complaints, though the extent of these complaints is unclear.
According to the lawsuit, Tate-Austin, and her husband Austin bought a house in Marin County for $550,000 in 2016. Over the next four years, the couple completely remodeled the home, and later added an accessory dwelling unit. They refinanced their mortgage in 2018 and 2019, and sought to do so again in 2020.
It was in this third iteration of mortgage refinancing where the alleged appraisal bias occurred.
Miller who, according to her LinkedIn, has operated Miller & Perotti appraisal services since 1992, valued the home at $992,000.
The Austins claim Miller was lowballing them because of their race. In response, the Austins brought in a new appraiser, who the complaint does not identify, and “white-washed” their house prior to the appraisal.
“They packed away their family photos, which depicted the house’s occupants as an African American family,” the complaint reads. “They also removed and stored any art that was African or African American themed and stored it where it would not be visible.”
Moreover, the Austin’s had a white friend pose as the property’s owner. This friend, “placed some of her own family photos, depicting her white family” around the house “prior to the inspection.”
The new appraiser valued the home at $1.482 million – 49% more than Miller’s valuation.
Besides the evidence drawn from the second appraisal, the Austins claim that Miller was biased because of the sales comparisons she used in valuing the home. Miller’s comparisons included homes in nearby Marin City, the complaint states, that were not like the Austins’ home but may have been selected because Marin City has a higher Black population relative to the rest of Marin County.
The complaint does not delve into why AMC Links is also being sued besides a sentence stating that the firm failed to review Miller’s valuation to ensure that it met the Appraisal Foundation’s published standards and was not influenced by race.
Appraisal management companies such as AMC Links typically play matchmaker between mortgage lender and appraiser. Federal regulators have envisioned appraisal management companies as a firewall between appraiser and lender.
Fair Housing of Northern California also names itself as a plaintiff, contending that their investigation into the Austin appraisal, “diverted resources, including staff time and financial resources, from other investigations and activities.”
In July, Fair Housing of Northern California filed a complaint with the U.S. Department of Housing and Urban Development on behalf of Cora Robinson, who alleged racial bias against Class Valuation, an appraisal management company, and Thomas Kearney, an individual appraiser.
In addition to officially filed complaints, the Washington Post, New York Times and other widely read publications have anecdotally reported on racial bias in appraisals. However, it is unclear how rampant bias complaints are.
For one, the Department of Housing and Urban Development has repeatedly declined to disclose to HousingWire the number of appraiser bias complaints it has received. In a November interview, Melody Taylor, executive director of HUD’s Property Appraisal and Valuation Equity task force, stated that, “Due to confidentiality filings, HUD does not disclose the complaints we receive.”
HUD has also told HousingWire it does not disclose investigations that are still pending.
In addition to HUD and a few private lawsuits, the Consumer Finance Protection Bureau also receives complaints about appraisers. That federal agency has received 14 such complaints since 2019, though CFPB does not categorize such alleged misconduct as specifically regarding race discrimination.
A Black couple ‘erased themselves’ from their home to see if the appraised value would go up. It did — by nearly $500,000
Dec. 3, 2021 Updated: Dec. 5, 2021 6:29 p.m.
Paul Austin thought things were going well when the appraiser came to his Marin City home last January.
The appraiser complimented the views of the San Francisco Bay, and he was sure to point out all the improvements, Austin recalled at an Oct. 13 meeting of a state reparations task force. So he and his wife Tenisha Tate-Austin were shocked when the appraisal valued their home at $995,000 — nearly half-a-million dollars less than another appraisal 10 months earlier.
The couple, who are Black, got a second opinion last February. This time, they asked a white friend named Jan to sit at the kitchen island and pretend to be the homeowner. They also “whitewashed” their home by hiding art and family photos. That appraiser said their house was worth $1,482,500.
The $487,500 discrepancy between the two 2020 appraisals pushed the couple to file a fair housing lawsuit in federal district court this week against appraiser Janette Miller, her firm Miller and Perotti Real Estate Appraisers Inc., and national appraisal company AMC Links LLC. It’s the latest escalation in a series of similar cases of alleged racial bias in the home appraisal process as California property owners move to reap financial gains from record home prices.
“We did our homework,” Austin told the Reparations Task Force in a panel on the racial wealth gap in October. “We believe the white lady wanted to devalue our property because we are in a Black neighborhood, and the home belonged to a Black family.”
Miller’s firm and AMC Links did not respond to requests for comment.
Researchers at the Brookings Institution have found that owner-occupied homes in majority-Black U.S. neighborhoods are undervalued by an average $48,000 per home, representing some $156 billion in cumulative losses — a dynamic that has prompted calls for policy reform to automate more of the home valuation process and otherwise minimize bias. Some in the appraisal industry, meanwhile, contend that the process is inherently subjective and driven by extreme pressure to increase home values, opening appraisers to unfair personal liability when homeowners disagree with the results.
In the case of Austin and Tate-Austin, the large appraisal discrepancy illustrates how even Bay Area residents able to purchase a home in one of the nation’s most expensive real estate markets can be shut out of some of the massive wealth generated by increasing property values.
The Austin family bought the home in late 2016 for $550,000, according to the lawsuit, and Austin said they spent around $400,000 expanding the footprint, renovating the interior and adding features like an outdoor deck and an in-law unit with bay views. With the higher second appraisal designed to take race out of the equation, the home is now worth nearly triple what they paid five years ago.
“There are definitely things about this complaint that are uniquely strong,” said the couple’s attorney, Julia Howard-Gibbon of Fair Housing Advocates of Northern California. “They erased themselves from the home, essentially.”
Though similar cases with extreme differences in appraisal values have also surfaced in Oakland, Stockton and other California cities with large Black populations, the new lawsuit revolves around the North Bay’s unique racial dynamics.
Austin knows firsthand that Marin City, an unincorporated area wedged between affluent Sausalito and Mill Valley, grew out of the pre-World War II migration of tens of thousands of Black workers seeking employment around the Sausalito shipyard. His own grandparents lived and worked there.
Though they saved money to move to other areas of Marin County, Austin said in his October testimony, they were unable to buy property elsewhere because of exclusionary practices like discriminatory bank lending and racial covenants.
The fact that his family encountered what seemed like a new version of the same old problem more than a half-century later, he said at the October meeting, made him feel ill.
“My stomach hurt, my head hurt, just because of what we went through,” Austin said. “I don’t wish that on anybody.”
Attorneys for the couple argue in the new lawsuit that “Marin City has a long history of undervaluation based on stereotypes, redlining, discriminatory appraisal standards, and actual or perceived racial demographics.”
By focusing the first appraisal only on the small number of homes sold in the immediate Marin City area, Howard-Gibbon said the appraiser “built an invisible barrier” around the home by comparing it only to other sale prices in a long-marginalized area — a result she called “recycled discrimination.”
The plaintiffs are seeking a jury trial, financial damages and a court order directing the appraisers to take action to ensure the issues in the complaint are not repeated.
Austin said at the October meeting that he is also focused on ongoing issues like recent desegregation orders issued for Marin County schools. He still can’t help but notice that neighbors’ homes on smaller lots have already crept up to values around $1.6 or $1.7 million.
“Yes, I do want to see a change,” Austin said. “I don’t want to see my children have to deal with this.”
Lauren Hepler is a San Francisco Chronicle staff writer. Email: firstname.lastname@example.org Twitter: @LAHepler