Black homeowner, 2 appraisals, $62,000 difference
The owner thinks her lower home appraisal was skewed by her race and her neighborhood — and a recent study says those factors play more of a role in appraisals now than in 1980.
Christina Jordan was in the process of purchasing a new condo in Chicago’s Woodlawn neighborhood when the coronavirus pandemic upended daily life, making her question if it was the right time to move.
Jordan, 37, dropped her plans but decided to refinance her Oakland condo, which is west of Oakwood Beach, after hearing it was a good time to get a lower interest rate. The process required a home appraisal, but she was surprised when it valued her home at $278,000 — $1,000 less than she paid for her three-bedroom condo six years earlier.
After posting on social media about her experience, she started to hear from Black colleagues and friends — some working in high-level positions — who faced similar obstacles in getting their home valued correctly.
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“That there are multiple people who have been going through the same experience and started coming out of the woodwork based on the posting was really jarring and frustrating,” Jordan said.
Jordan decided to get a second appraisal; this time, she didn’t disclose her race on forms. It was $62,000 higher than the first.
Experts say home appraisals add to the inequities Black homeowners face compared to their white counterparts. Despite housing reforms, inequities for homeowners in communities of color have increased since the 1980s, said Junia Howell, an assistant professor of sociology at the University of Pittsburgh, co-author of a recent study about the issue.
Among the study’s findings: from 1980 to 2015, homeowners in white neighborhoods have gained wealth at twice the rate of homeowners in Black and Latino communities. The study also found the racial makeup of a neighborhood plays more of a role in home appraisals now than it did in 1980.
Sarah Brune, the public policy and innovation strategist from Neighborhood Housing Services of Chicago, said they’ve heard stories from homeowners who think their home appraisal was influenced by the person doing the appraisal not being familiar with the area.
Richard Townsell, the executive director of the Lawndale Christian Development Corporation, has tried to brainstorm ways appraisals can change since it has become a barrier for communities of color. One idea he’s floated: value the property based on what it would cost to rebuild it if destroyed. Another idea: use comparable sales from similar properties in different neighborhoods and not just the surrounding neighborhood.
“If you are only going to look at Black and Brown communities, and you can’t look at Logan Square or TriTaylor, then we will always be behind,” Townsell said.
While redlining — a discriminatory practice once used to mark communities of color as economic risks to home lenders — was made illegal, little was done to adjust or reset the values of the homes in the communities that had been redlined, Howell said.
Jordan thinks her home appraisal from May was skewed by her race and her neighborhood. The appraisal was part of a refinance through Chase, and she told the bank about problems she had with the report. But Chase, which hires contractors to do home appraisals, found the appraisal needed no revisions, according to a voicemail from the bank left for Jordan that she shared with the Sun-Times.
She then started working through the refinance process with Wintrust Bank, and underwent a second appraisal in June. Wintrust used a different appraiser. This time, Jordan didn’t disclose her race on forms, she said.
In the neighborhood where Jordan lives, about 87% of the residents are Black, and the median value of owner-occupied units is $304,300, according to an analysis of census data from the Census Reporter.
The two appraisals of Jordan’s home show how comparable sales can vary, skewing how a home is valued. In the first appraisal, three comparable sales used to determine her home value ranged from $277,040 to $278,600. One of the comparable sales was from a condo located in her building.
The second appraisal looked at homes that had sold for much more in Jordan’s neighborhood. Three of the homes the report looked at ranged from $336,000 to $363,500.
Andre Lanier, a Chicago-based appraiser for 18 years, said the appraisal process is always an opinion, which is why some homeowners might not be happy with the outcome. Lanier did not appraise Jordan’s home.
He stresses the need for workers in his industry to have “geographic competence.” Block-by-block knowledge of Chicago is important, he said, because of how neighborhoods within neighborhoods can differ.
“What happens sometimes is that when you are not geographically competent, the [comparable sales] might look like a comparable [sale],” Lanier said. “If you don’t know the areas, if you haven’t lived in them, walked into those streets, worked with buyers, how do you really know from an objective standpoint what buyers find as appealing?”
He said in Oakland, and the greater Bronzeville area, the market has been stable and homes should be appreciating year after year.
The first appraisal compared her condo to other homes that didn’t have similar upgrades, Jordan said. The report also stated she didn’t have an oven, though it was visible in photos included in the report. In fact, her kitchen was custom designed by De Giulio Kitchen and the stove and oven cost about $8,000, she said. In late summer, another unit in her building that didn’t have finishes like her condo sold for $330,000, according to a Redfin listing.
The report also listed her property at 1,577 square feet, a detail Jordan disputes.
The second appraisal, which valued her home at $340,000 — $62,000 more than the first appraisal — reported her square footage as 1,709. She was able to cut her interest rate and reduce the years tied to the loan.
In a statement, Chase stood by the appraisal of Jordan’s home, saying a second analysis was done and “found no discrepancies.”
Myra Winding-Hermann is a friend of Jordan and lives in the same neighborhood, less than a half-mile away. She and her husband, Jonathan Hermann, purchased their condo in 2017 and decided to refinance in 2019 to try to lower their interest rate.
As part of the process, her home was appraised for $475,000 — which was a $6,000 increase from when the couple purchased the condo for $469,000, Winding-Hermann said. She, too, thinks her home wasn’t valued correctly and thinks the appraiser overlooked recent upgrades.
She heard stories of nearby homes selling for more. She didn’t realize there was an issue around home values until she started opening up to others about her own experience.
“Then you realize it’s not me, it’s a systemic problem that needs to be addressed,” Winding-Hermann said.
Howell said legislative reforms should address the inequities in home values, and she is in support of reparations to deal with the historical wealth gaps. She also says the country should rethink how individuals build wealth.
“We cannot continue allowing property to appreciate in some and not in other [communities], exasperating the wealth gaps, the racial gaps,” Howell said. “The very notion that we should be able to accumulate wealth in our property in itself becomes problematic.”
Winding-Hermann thinks her home value was skewed by her race. If she were to do the process again, she would take down her photos and consider letting her husband, who is white, be home alone for the appraisal. She doesn’t want to do that, but absent of reform, she thinks that’s what it would take to get a better appraisal.
“I hate to play the race card,” she said. “But it’s real and it’s valid.”
Elvia Malagón’s reporting on social justice and income inequality is made possible by a grant from the Chicago Community Trust.