Andre Perry thinks homes owned by black people are under valued by $48,000 by appraisers. He compared similar sized homes in predominantly white and black areas using computer made valuation models. He determined that real estate appraisers are intentionally reducing the value of the homes owned by black people by $48,000. The valuations were made by computer software and not appraisers. They were based on location, size, bed/bath count, age...
(Turns out Andre Perry has a book coming out about blacks and value. He's hitting up all the shows and meetings gearing up for his book release.)
In the meeting only one person agreed with Mr. Perry. That person was POC Congresswoman Rashida Tlaib (MI-13). She is a new politician elected in 2019. She needs some education. Why was she put on this Committee when she knows nothing about the subject matter? They should know the basics of an issue before they are put on a Committee.
She said, "Homes look identical but homes in white areas are worth more? Doesn't make sense. You are working in a broken system. You should be able to change the value based on other things. It's not right that someone with no money can't buy a home. I want to take you home to my district (to Mr. Perry because what he said agrees with her thinking)."
How is Rashida Tlaib on this committee when she knows nothing about property value, buying homes and owning a home? A similar size home in Detroit, Michigan is worth less than a similar size home in California because people would prefer to live in California. That does make sense.
645 W 9th St #110-140
Los Angeles, CA 90015
June 20, 2019
Amy Liu, Mark Muro, Alan Berube
Metropolitan Policy Program
Via email: MetroMediaRelations@brookings.edu
Members of the U.S. House Committee on Financial Services
Via email: FSCDems@mail.house.gov
RE: "Know Your Price: The Devaluation of Residential Property in Black Neighborhoods," authors Andre Perry and David Rubenstein
June 20, 2019 Andre Perry sat before the U.S. House Committee on Financial Services. He presented the above paper to the Committee linked here https://financialservices.house.gov/uploadedfiles/hhrg-116-ba04-wstate-perrya-20190620.pdf.
Andre Perry stated in his paper, "We sought to understand how much money majority-black communities are losing in the housing market stemming from racial bias, finding that owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses."
Andre Perry does not understand the basics of home valuation or even value. He inferred in the meeting that real estate appraisers intentionally reduce the value of a home owned by a black family. Mr. Perry said he could see no other reason why the similar homes in different locations were valued differently. Everyone knows real estate is valued by location, location, location. When the audience was asked by a Committee member if they thought appraisers discriminate against black people in arriving at the value Mr. Perry was the only person who raised his hand in a room of real estate valuation experts.
I've been a real estate appraiser, broker, expert witness over 35 years in Los Angeles, California. I will give a brief explanation of the concept of value and how appraisers arrive at the value of a home. There is no adjustment for skin color.
The value of a home is what a willing buyer is willing to pay to a willing seller in an open market. Most of a home's value is location. A 1,500 sf 50 year old home in Detroit will be valued differently than a 1,500 sf 50 year old home in Beverly Hills. Facts are facts. Numbers are numbers. The value is what it is.
All real estate appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP). To appraise an average home the appraiser searches for other similar homes which have sold recently, are currently listed or under contract in the same area. The mathematical formula is to search +/- 15% difference in gross living area, within the last six months and within a half a mile radius of the subject property. The appraiser then selects the comparables which are most similar to the subject property in terms of age, amenities, modifications... We widen or tighten the search parameters as needed to find proper comps. We must bracket for size, bed/bath count and age. We then generally use the three most similar sold comps, one comp under contract and one current listing.
After we have our comps we make adjustments for the differences among the comps and the subject property. One might be slightly larger, have an extra bedroom, bath, garage, be fully remodeled or a fixer. We adjust for all factors which are different. In a perfect world we will find comps exactly like the subject and never have to adjust.
We don't and can't search for the color of skin of the owner of the comp properties. We don't even know the color of skin of the owner of the subject property unless we see them at the property. We generally meet the agent or the home is vacant and we meet no one. If a person or a portrait of a person is in our photos, we must Photoshop the people out of the photos.
Homes in areas that are predominantly black, Latino are generally though not always valued less than homes in primarily white neighborhoods. There are a few areas in Los Angeles where it's reversed. The correlation is between what the buyers can afford to buy and the price at which the homes are selling. No one is steering certain races to certain areas. People buy homes which they like and can afford.
Racism most certainly exists. Blacks, Latinos make less than whites. Women make less than men. That said real estate appraisers do not value homes owned by black people less than homes owned by whites. We value homes based on size, age, amenities and location.
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Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.
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