The real estate market in America has a history of being unkind to Black Americans. From redlining to predatory lending, displacement to gentrification, the community’s 40 acres, and a mule have remained elusive for many. And now an investigation by the National Community Reinvestment Coalition (NCRC) highlights another discriminatory tactic being practiced within the market—home appraisals.

“The discrimination we found in the appraisal system undermines Black wealth-building and almost certainly violates the law,” says NCRC President and CEO Jesse Van Tol. “It is unacceptable for appraisers to undercut the value of homes and conduct themselves less professionally when dealing with Black homeowners.”

Over the last two years, numerous families have come forth to tell their stories of appraisal bias. Many of them involve an appraiser valuing a home at far less than its worth when believed to be owned by a Black family. Once the home is re-appraised under the guise of being owned by a white family, its value significantly increases.

“The evidence of systemic bias in the appraisal business has been mounting for some time,” says Van Tol. But what NCRC’s new testing showed was that interracial couples in Baltimore receive far better treatment and valuations if the appraiser believes the homeowner and their family are white.

NCRC recruited multiple interracial couples who own homes in the Baltimore area to serve as testers for their experiment. For each of the seven tests, the organization hired two appraisers—one to appraise the home when the Black homeowner was present and the other to come in when the white homeowner was home.  They also modified the home’s decor to reflect the race of the homeowner the appraiser was meeting. So when the white homeowner met with the appraiser, all traces that a Black person lived in the home were removed. The reverse was done when the Black homeowner met with an appraiser.

Appraisers assigned higher average monetary values to homes when they believed them to be white-owned. On average, white testers received valuations $7,000 higher than their Black partners who showed the same home. The discriminatory discrepancies were as high as 9 percent and 13 percent in two cases. And while valuations are a primary issue, the issue goes beyond that. 

In some instances, appraisers also subjected Black mystery shoppers to unprofessional conduct—including drawn-out processes, worse communication, and in one situation, completely ghosting the Black homeowner. White homeowners were not subjected to this treatment. The organization believes that the Black testers' experiences underscore the devastating effects on a family’s long-term wealth-building efforts. The treatment by some appraisers could also lead to sellers missing out on better interest rates, and can even derail a sale entirely. 

NCRC says that the investigation draws on the organization’s decades-long experience crafting and executing probes for bias and discrimination using mystery shoppers. “Mystery shopper bias testing not only generates quantitative indicators common in research on discrimination—but also reveals and documents how discrimination happens as a human experience,” the organization says.