During an 18-month investigation, we found Black and Latino families have had their homes appraised for up to $500K less than expected. 'Our America: Lowballed' takes an in-depth look into cases of possible appraisal discrimination based on racial bias:
Across the tristate metro area, homes in majority-minority neighborhoods were about twice as likely to be underappraised as those in majority-white neighborhoods.Janine and Corey Ricks have decorated their Christmas tree, hung stockings in their fireplace and set a calendar countdown to Santa's arrival on their mantel. They're looking forward to hosting family for the holidays in their new house in New Castle, Delaware, where they live with their two children.
The Ricks are one of many local families who have been "lowballed" in recent years: From 2018 to 2020, at least 18,922 homes sold in Pennsylvania were appraised below market value, according to a 6abc analysis of Federal Housing Finance Agency data. Of those under-appraisals, over 1,700 were in Philadelphia.
It was a three-bedroom rowhouse in a quiet area close to their work and family, and they purchased it for about $80,000. Corey and Janine did their own research before putting their house on the market. They looked at similar properties -- three-bedroom, one-bathroom rowhomes -- within a one-mile radius of theirs. Then they spoke with a realtor, who did her own due diligence. Together they came up with an asking price of $124,900. They quickly found a buyer who agreed the price was fair and was eager to purchase their home.
Still, the Ricks didn't expect anything out of the ordinary from their appraisal. So when it came in at just over $80,000, they were stunned. "We were just very dejected by everything," Janine said, "just a couple days ago being so optimistic about really starting a new point in our life, and then seeing everything slip through our fingers."While the thought of racial discrimination had crept into their minds, Janine and Corey initially weren't sure that was actually what had happened to them.
The Ricks still own their home in Darby and now finance it through renters. Their original buyer was unable to purchase a home as she had planned, Janine said. With one lowballed appraisal, two families lost an opportunity to build wealth. Appraisals at least two percent below the home's contract price are considered severe, according to the Federal National Mortgage Association. The 6abc analysis found even wider racial disparities among under-appraisals that large: In the Philadelphia-Camden-Wilmington metro area, homes sold in predominantly Black neighborhoods were nearly five times as likely as those sold in mostly white neighborhoods to be lowballed by at least two percent.
Across Pennsylvania, an estimated 94% of appraisers are white, compared to just 74% of the population, according to a 6abc analysis of Census Bureau survey data. In the Philadelphia-Camden-Wilmington metro area, Black people make up 19% of the population, but only an estimated six percent of appraisers. Batts is one of very few Black appraisers in Philadelphia.
"We really wanted to get to the heart of what does Philadelphia look like in this area of appraisals," Parker said, as well as identify ways for the city, state and federal governments to close the gaps.
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