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2021 Fair Housing Law Roundup
Diversity, inclusion and fairness are key goals for today’s real estate industry. Biased appraisals thwart these goals. To help remediate the problem, California enacted Assembly Bill 948 on Sep. 28, 2021. Under the new law, bias in appraisals is against the appraisers’ licensing law as well as state’s Fair Employment and Housing Act. This is big news for home appraisal professionals.
Continue reading “California Targets Unfair Appraisals”
Black-owned homes are regularly low-balled in appraisals. It’s been happening for generations. Now, the Biden administration is confronting the issue.
On June 1, 2021, the president said a new task force will deal with race-associated disparities in home appraisals. Housing and Urban Development (HUD) Secretary Marcia Fudge will lead the team as it embarks on a thorough review of current appraisal methods and outcomes, and as potential remedies are considered.
The task force will consist of a large group of agencies and financial groups, encompassing the Federal Reserve, Freddie Mac and Fannie Mae, the Consumer Financial Protection Bureau, and a host of financial groups. It will seek information and guidance, too, from civil rights nonprofits as well as the appraisal industry and its state-based regulators.
Continue reading “The Biden Administration Confronts Racial Bias in Appraisals”You’ve put in your bid for the home you want. Now you await the appraiser’s report. What’s going on behind the scenes?
The typical home appraisal relies mainly on local sales comparisons, or comps. What will other buyers pay now for a house like the one you’re buying? Whatever price others will pay for similar homes is roughly the value of your new home.
What’s a similar home? The appraiser considers homes within a certain radius of the one you’re buying, with comparable bedroom and bathroom counts, the same or similar size and construction type. Comparable homes have the same school district or a similarly ranked school district, and similar amenities nearby. The appraiser studies and compares sales information and recorded documents for the homes. Homes sold in the last three months are considered the most relevant comparisons.
Even similar properties are unique homes, of course. Therefore, the appraiser will find enough variety in the data to come up with a range of reasonable valuations. Some comparable properties might have been sold for more than the market value, others at below-normal prices, and so forth. Once the outliers are understood for what they are, an appraiser needs to figure out where your desired house fits among slightly more and slightly less costly properties.
The expert’s professional discretion explains why, many times, the appraisal will come back with a valuation very close to the price you offered and the seller has accepted. As long as your agreed-upon purchase price falls within the data-supported range of value calculated by the appraiser, a buyer usually gets an appraisal that matches what the buyer and seller think the home is worth.
Continue reading “Navigating the Home Appraisal: A Buyer’s Guide”