An appraisal is an objective assessment of a home’s market value provided by a licensed individual hired by the buyer. The value is based on a review of the home’s characteristics, surrounding neighborhood amenities, and recent nearby sales.

An appraisal conveys value in 2 ways.

• The appraised value is one of the critical factors that determines the loan amount and can impact how much a buyer will pay for the home.

• The appraisal value and, ultimately, the sales price can impact future appraisals of surrounding homes.

An appraisal that underestimates a home’s value can reduce how much a seller can earn from their home. That seller will be short-changed the full wealth they have built throughout the time of their ownership.

Buyers are impacted because they cannot access the full loan amount for which they might qualify. The same buyer will one day be a seller who could also experience a lower sales price because of appraisal undervaluation.

Painful stories of personal racial bias by individual appraisals have galvanized action to address inequity. These stories humanize a much more pervasive and systemic problem faced by communities of color - one that goes beyond personal prejudice.

Because of our standard appraisal approach, most homeowners in such communities face undervaluation due to biased data used in their appraisals.

Well-researched reports on systemic racial bias in appraisals can be found on our Research page.