Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Friday, October 8, 2021

How to Avoid Being Accused of Bias in Real Estate Appraisal - Free Webinar by George Dell, Peter Christensen ... by Mary Cummins

how to avoid being accused of bias in real estate appraisal, bias, discrimination, real estate appraisal, real estate appraiser, mary cummins, los angeles, california, brea, fha, hud
how to avoid being accused of bias in real estate appraisal by George Dell, Peter Christensen, bias, discrimination, real estate appraisal, real estate appraiser, mary cummins, los angeles, california, brea, fha, hud

I attended the free webinar by real estate appraiser/instructor George Dell and lawyer Peter Christensen. Other speakers were appraiser Craig Gilbert who spoke about the new California bill AB 948 and Dave Towne. 

It was very informative and based on common sense. The main takeaway was choose appropriate comps/data, include an explanation on why you chose the comps you chose, save a copy of your search parameters and results to your work file, and fully explain and describe your adjustments and the values in a bullet-proof report. 

I'd like to add some other suggestions. Even though the intended users of the appraisal report are savvy, educated, experienced finance professionals write your report so that an average lay person with an average education can easily understand everything. The buyer, seller, borrower, agent, their cousin, all their social media friends ... will be reading the report. If they don't like or understand anything about it, they will be attacking the appraiser on social media, to the real media and leaving negative business reviews all over the internet. They may even file a frivolous complaint just because they don't understand something. A woman said an appraiser wrote "Marin city" for the city in the report. She said it was "code for black." The property legally was in Marin City. It wasn't code for anything. Not my appraisal. That's how sensitive this issue can be. 

For instance state that per government guidelines the appraiser must first search sold, pending, active comparable properties +/- 15% difference in GLA (gross living area) from the subject, within 1/2 mile radius, within the last three to six months with similar amenities and in similar condition. If you can't find enough comps and have to widen your search, state specifically why and how you did that. State that you need at least three sold, one pending and one listed comp, if you do. Cite USPAP, FHA and government regulations that govern our appraisals. 

If the GLA, bed/bath/room count differ from the actual size, state what is included in GLA per ANSI and permits. State what is not legal GLA in the home and why. I even include links to ANSI, government guidelines ... beyond what is in our limiting conditions. Some people think they are being "ripped off" because the Appraiser didn't give credit to the unpermitted elevated toilet they added in the garage or the closet/balcony/patio/carport/shed they illegally converted into a bedroom that would never meet code or basic safety requirements.

If they added what they feel are lots of improvements or additions that don't add real value to the home, specifically tell them why. Go into the math of return on investment, over improvement, under improvement, market reaction to improvements... I had a guy tell me he spent $150,000 adding palm trees to his back yard 20 years ago. He asked me why I didn't add $150,000 to the value of his $400,000 home. I told him specifically why it didn't add any value to the home. 

Sometimes lay people just don't understand the form. One person thought pg 1, "Improvements," "Condition of property" section had to do with the condition of the entire house even though it ONLY relates to the kitchen and bathrooms. The reader can't see the drop down menu items which state "kitchen," "bath." They only see the result which could be "no improvements within the last seven years." I added an explanation right in that section so people know what it is. 

Specifically describe each of the comps relative to the items in the grid. If there is an adjustment for any item, describe what it's for and how it was calculated. Readers don't realize that we use advanced math, regression analysis and statistics to formulate our adjustments based on lots of independent data from the various MLS and public records. It is probably a good idea to ever so briefly mention the appraisal theory of matched pairs analysis so they will understand the reason for the comps and grid. A brief mention of regression analysis would help so they can understand how we figure out the exact adjustments. Add charts from your xml spreadsheets to the report if needed. Like your math teacher used to tell you "show your work." Save all of your adjustment calculations, xmls, charts to your work file.

Your summary of the market comparison approach needs to be very clear and plain. Specifically state which comps set the upper, lower levels of value and why. Which comps carry the most weight and why. If you feel the property could be worth more but there just are no recent closed sold comps to support that value, state that. Sometimes it's best for a homeowner to wait until a similar home closes for a higher value in a week such as one of the higher listed or pending comps. People don't realize that we are generally limited by the highest recent closed sale. Even if our report were to come in higher, the AMC, underwriter, lender would send it back stating that it can't be higher than the highest closed sale. That has been happening a lot lately. 

A few last pointers. Of course never discriminate against anyone even if the homeowner treats you horribly. If a homeowner is instantly very rude and attacks you when you arrive or during the inspection, just leave and cancel the appraisal. Get your research and trip fee and be done with it. It's not worth the headache. This has only happened to me a few times in 35 years. 

If things start to get iffy during the inspection but not to the point of leaving, take notes instantly. If they tell you what they think the property is worth, tell you a home a mile away sold for $1.2M, what value they need for their loan, how a recent "stupid" appraiser didn't know the area, recent appraisals came in too low, that they added $$$ worth of "improvements and upgrades"...instantly take notes of everything they are saying and doing. I do this on my iPhone note feature. I always ask if they've done improvements during the inspection. I tell them they can give, send me a list of the alleged improvements if they like. If they, the agent, whomever hand you comps, take them. You don't have to use them but it's good to see where their mind and reasoning is at so you know what you have to deal with. Once in a great while they may even give you a good comp. 

If the appraisal is for a purchase, search for comps before you accept the assignment. If you can't find any comps to support the contract price, don't take the assignment. Save everyone a big headache especially yourself. If it's a refinance, look at the current loan amount and figure out loan to value ratio. If their current loan is $1,000,000 but the home is only worth $900,000, you may have a problem which could be avoided before you accept or complete the appraisal. Better not to complete the appraisal then no one can file a complaint for biased appraising. 

Always be very polite, on time, look and act professional, be kind and answer their questions. If they request a Reconsideration of Value i.e., an appraisal appeal, be very thorough, kind and polite in your reply. Don't ever just reply with "no change." Supposedly this is the biggest reason people file a report for discrimination. Specifically state why you could not use the comps they provided going back to the government guidelines and underwriting limitations. Reply to each of their concerns in layman terms. 

If they give you good comps, use them and change your value. Very rarely you may not see a sold comp because it recorded the day of or after your inspection but you pulled comps the night before the inspection. Sometimes sold comps record days before they show up in public records. Feel free to call the agent of pending comps or even call title to see if they closed. With this crazy super quickly appreciating recent market the most recent comps are the best representation of the market. 

One very important last suggestion. Many people especially people of color, immigrants, people of different religions, sexual orientation, languages ... have been discriminated against for their entire lives. They may always be on the defensive. Their first thought might automatically just be "it must be discrimination!" Even though it's upsetting to be falsely accused of discrimination don't get upset or defensive. Respond politely and kindly to their ROV requests. Be understanding and thorough in your reply. Pretend you are talking to your sweet old grandmother who just doesn't understand all of the advanced math and statistics. Break it down into simple and plain language they understand. That could be the difference between having a calm conversation or a frivolous complaint filed against your license and business. 

If after you've responded politely and thoroughly someone still files a false or frivolous discrimination complaint against you, you need to take action. Obviously these false discrimination complaints are only coming in now when the appraised value is under contract or the unsupported expectation of the borrower, seller, buyer... No one complains if you come in at contract or above. In prior years with quickly appreciating crazy markets they just called us "deal killers" but now partly because of the current political climate they call it "discrimination." 

I hate coming in under contract because you know there will be a lot of stress and strife which is why I try to avoid those appraisals if at all possible. If they only filed the complaint with the lender or AMC, your reply to the ROV is your basic reply. No one has ever filed any complaint against me for anything even though I have had a handful of people in 35 years who weren't happy with the value. I replied via the ROV. 

I personally would reply to a discrimination complaint. What did they state that you did or said that was discriminatory? State exactly everything that happened on the phone, in email, text, voicemail, at the inspection... Always save all of this to protect yourself. If you feel they are trying to influence the value with the threat of complaint, actual complaint, instantly notify the AMC and lender of this fact. Per the Appraiser Independence Laws "it is unlawful for any person in the course of a mortgage transaction to improperly influence the development, report, result, or review of a real estate appraisal sought in connection with a mortgage loan." Each state has their own laws. California law Article 7 CIVIL CODE SECTION 1090.5 . Here are the laws for each state from the Appraisal Institute

It's also a violation of Federal law 15 U.S. Code § 1639e - Appraisal independence requirements. If the lender is notified that they tried to influence the value, they will not get a home loan, i.e. "It shall be unlawful, in extending credit or in providing any services for a consumer credit transaction secured by the principal dwelling of the consumer, to engage in any act or practice that violates appraisal independence." I would try all other means of resolving the situation before you make such a complaint as the outcome would not be good for anyone. Talk to the AMC who can talk to the lender who can talk to the client and explain the regulations in detail. 

If they file a false or frivolous complaint to a government agency such as you state licensing board or HUD, contact your E&O insurance and a lawyer. In order to prove discrimination or bias, they MUST show evidence and prove that you intentionally discriminated against them in the appraisal. They must show that you appraised their home vastly differently than any home you've appraised in the past based on discrimination. They must show you perhaps violated USPAP, pulled the wrong comps, refused to look at better data they sent to you... They would have to show more than just mistakes or say poor judgment in the selection of comps. They must show evidence of "intent to discriminate" and "discriminatory behavior." I don't know if any individual appraiser has ever been found to have discriminated against anyone in an appraisal report in a lawsuit or formal government complaint more recently. I'll keep searching. I'm sure lenders, banks, agents have definitely discriminated against people in the farther past. I know some AMCs, lenders have settled some cases without admitting any guilt such as the recent Chase case. You don't need to prove as much evidence with lenders. Chase still stands by the appraisal. They settled to avoid litigation costs and bad press. 

In summary, always do the most thorough and best appraisal possible. Pick the most similar comps and let them do your work for you. Save all of your work, notes, emails, voicemails, texts, photos, sketches, math, charts, xml files... to your work file. Explain everything in layman's terms assuming regular non finance people will be reading the report. Be polite, kind and understanding with everyone. Treat them like your grandmother. Always thoroughly reply to any ROVs. That appears to be one of the main causes of discrimination complaints. If they give you a better comp, other better data, use it and change the value if the new data or comp supports it. Most importantly, never discriminate against anyone ever for any reason. Discrimination, racism, sexism... is hateful and harms everyone and our society. 

From the class information page. 

"Save the DATE!

Join us on Friday October 8th at 12 Noon Pacific Time for a free 1.5-hour webinar on

How to Avoid Being Accused of Bias

This is NOT a hands-on class. No Continuing Education credit will be offered.

We emphasize underlying principles and logic."

"About George Dell: About George Dell and Valuemetrics.Info

George Dell, SRA, MAI, ASA, CRE, LAI, of San Diego, CA, is the creator and developer of Evidence-Based Valuation (EBV©) which optimizes computer algorithms with trained valuation judgment. 

His signature workshop, Stats, Graphs and Data Science1 initiates new appraiser products and services – by combining appraiser expertise with data science tools and critical thinking skills.  It has been presented to various appraiser groups and professional organizations. For more information, check out for upcoming classes.

Mr. Dell has been published multiple times in The Appraisal Journal, and other publications. His most recent articles include, “Common Statistical Errors and Mistakes” in 2013 Fall Edition, “Regression, Critical Thinking, and the Valuation Problem Today” in the 2017 Summer Edition, the Feature article in Appraisal Buzz, September 2019, "Red Door, Blue Door, Doggie Door Value" and many articles in Ann O'Rourke's paid newsletter, Appraisal Today.

George Dell’s free weekly blog raises often-controversial (but forward looking) issues.  He is the editor and author of The Asset Analyst Report (TAAR)©.  The EBV curriculum -- for appraisers and credit analysts -- is taught through

About Peter Christensen,

Attorney & Principal at

Peter is member of the California and Washington state bars, as well as a licensed insurance broker. After earning his BS and JD degrees at U.C. Berkeley, he began his career at Latham & Watkins LLP. He later served as general counsel to the largest provider of professional liability insurance to appraisers and valuation businesses. He’s based near Santa Barbara, California, but enjoys traveling the country to meet with professionals and firms, and he’s has made it to 48 states so far."

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.

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