Two Black California business partners say they were lowballed by $155,000 in a home appraisal because of their race
Braunz Courtney and his longtime friend and business partner Jamar Mears, a licensed real estate agent, told ABC7 they were shocked when the East Oakland home was valued at $575,000 in December. A separate appraisal conducted just one month later placed the value of the Northern California home at $730,000.
“Something’s not adding up here,” Courtney said.
Home appraisers are required by the Fair Housing Act of 1968 not to discriminate on the basis of race, religion, national origin, or gender.
Fair housing advocates say bias complaints are underreported and that homeowners often don’t know they are facing discrimination.
“When buyers of color face discrimination in the marketplace, it can discourage them from the whole process,” Lisa Rice, president and chief executive of the National Fair Housing Alliance, told The Philadelphia Inquirer.
Courtney purchased the three-bedroom home in 2015 for $305,000, then added major upgrades, including a second bathroom, updated floors and new appliances.
In 2019 Courtney had the home appraised to take out money for more renovations, including a separate dwelling unit, and at that time it was valued at $631,000.
After the 500-square-foot unit was added in the backyard, the home was then appraised even lower.
“After putting over $150,000 into the home you’re telling me a year later, it’s $25,000 less?” Mears said. Mears discovered that the appraisal showed the additional unit Courtney added had been valued at just $10,000.
Courtney and Mears argued that the appraiser was using comps that were not comparable to the home in square footage and updates made. “He’s supposed to be an appraiser and have some type of formal training and this is what (he) says is a comp,” asked a puzzled Courtney. Mears added, “He was just like, let me give you the bottom of the barrel as a comp versus something that’s truly comparable: the size, the AUD, the updating.” So the two approached the mortgage broker to reconcile the issues, but the appraiser stuck with the valuation and the lender took the appraiser’s side as well.
Three months into the refinance process, the mortgage broker suggested the pair go with a different lender and agreed to pay for another appraisal.
The new appraisal placed the value of the home much higher. “It came back at $730,000. Over $100,000 more than what it originally appraised for,” said Courtney.
During the appraisal process a property’s condition, size and location is assessed. Similar recently sold properties are also used for comparison.
A major difference between the two appraisals was the comparable homes listed to determine the value. The value of comparable homes surveyed in the December appraisal averaged $591,000, compared against a $703,000 average in the final appraisal.
Courtney and Mears believe the first appraiser valued the East Oakland home at a lower price because it is in a primarily Black and Latino area.
“For me, there was definitely some discrimination going on,” Mears said.
Earlier this year, Paul Austin and his wife Tenisha Tate Austin, a Black couple from Marin City, also in Northern California, said they believe race definitely played a role in the significantly different appraisal values of their home after its value increased by 50 percent when a white friend of the family pretended the home was their own.
“It was a slap in the face,” said Paul Austin.
The couple is currently in talks with the Fair Housing Advocates of Northern California to file a lawsuit.
“You’ve got to recognize that bias exists, especially unconscious bias,” Rodman Schley, president of the Appraisal Institute, told The Philadelphia Inquirer earlier this year. “Anyone who says that it doesn’t exist is simply wrong.”