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Listing agents must be meticulous about a home’s details and how it is presented to prospective buyers. Top-producing agents often have their own checklist of tried and true tasks and recommendations they give to the homeseller to help them prepare their home to receive the best offer.
But what happens when your homeowner seemingly does everything right, and the tried and true checklist fails?
- Curb appeal – Check
- Staged to a neutral palette and decluttered – Check
- Priced competitively according to the most recent home sales/comps – Check
So why is this homeowner being lowballed in such a competitive housing market?
Uncovering the truth about lowball appraisals may surprise you; even in 2024, homesellers still face this issue.
Getting lowballed despite a competitive market
One elephant in the room regarding being lowballed while selling a home comes from unfair housing practices.
Yes, we have fair housing laws now, with the most monumental beginning in 1968, spurred by the Rev. Dr. Martin Luther King’s tragic assassination. However, laws are not “Disney magic.” In other words, laws did not instantly mean all violations would stop.
The belief that laws stop violations is the biggest myth I consistently have to dispel with those in the industry and everyday community members.
To explain this common misconception, I like to reference how “Dateline” and true crime podcasts show that although kidnapping, murder and other crimes have been illegal, they still happen.
Laws simply mean that if someone is caught and if there is enough evidence, that person may possibly face some sort of penalty. It is no different for illegal, unfair housing practices.
Thus, we would be wise to have “The Talk,” fair housing edition, to ensure homeowners sell. I know many think of the “birds and the bees” when we say “The Talk,” but there is another talk that is key for what I call being a fair housing DECODER (one who seeks to advocate, not alienate).
Why ‘The Talk’ matters
I was intrigued by and grateful for this comment left on an article I recently wrote for HousingWire. My empathy (the “E” of the DECODER acronym) kicked in, so please hear me out.
John Baldwin
How are you concluding that past discrimination by the federal government, lenders and real estate agents is the fault of current real estate appraisers? We are hired to provide an unbiased opinion of current market value for a given property in its market area. We can’t ignore sales in the same market because of past discrimination. And we don’t care who may occupy the property. We are getting sick and tired of being wrongfully accused of bias when we are just doing our job.
I want to highlight a few phrases that this commenter left that may resonate with many in our industry – myself included:
- “fault of current…”
- “We are getting sick and tired of being wrongfully accused of bias when we are just doing our job”
Let’s address these specifically, as well as his full comment.
First, let’s review current data to support how unfair housing did not disappear with a seemingly “bibbidi bobbidi boo” from the legislative pen. Sadly, it still happens.
Here’s data showing that although homes should be appraising for more over the last few years due to how quickly the market has appreciated, some sellers may be lowballed based on a protected class.
Plus, here are some first-hand accounts.
As a nerdy author, I always link to the data if you have time to review the datasets but I know sometimes the raw data is skipped due to it often being too technical. This is why I try to simultaneously share personal stories, especially by video, like the link above.
Although unfair housing is likely not the practice of every appraiser by any stretch, it is still imperative to have “The Talk” to raise awareness and community members’ savviness.
Proactive awareness-raising is preparation, and preparation is never lost time. Essentially, they are cautionary tales that we would be wise to heed without going through the “School of Hard Knocks.”
The same is true with most violations, including unfair housing. Thus, instead of personalizing the issues that have been documented — that we have had no part in — and being disheartened, I want to encourage us to be proactive change agents.
If you have not participated in unfair housing, you are not guilty or at fault for past episodes. Yet, the broader point of fair housing advocacy is that we all have a responsibility as we advance to ensure everyone has equal access and opportunity.
In short, we can affirm to clients, “This is an issue, but here’s how I want you to stay on guard.”
Essentially, we can acknowledge the problem and assure people it does not happen on our watch. Interestingly, that becomes a key tenet of business growth (that the community knows, likes, and trusts you). Thus, proactive awareness raising is a key marketing and business growth strategy and an advocacy strategy – a win-win. Booyah!
Be a fair housing DECODER
First, sellers should know how much the homes in their area are going for. As their real estate pro, you can provide the most recent home sales (the comps).
Secondly, and unfortunately, “staging” a home for an appraisal, may mean having a person of an opposite protected class being a stand-in for the actual homeowner. Of course, staging a home should only entail neutralizing the property, not the people who own it.
However, since the 1940s and 1950s, often the only way that unfair housing (and lending, including lowballed appraisals) can be determined is if testers (similar to secret shoppers) of a differing protected class step in and pretend to be the homeowner (e.g. Christian vs. Muslim, white vs. Black, person without a disability vs. person with a disability, male vs. female, single vs. single with kids, etc.).
Fair housing testers are sent out annually by local fair housing agencies to detect unfair housing (but many offices need volunteers). Laws did not stop the need to uncover discrimination, but laws provide a level of remedy if exposed. Such knowledge is only power for clients.
If you are not sure if your “spidey senses” are on point and need a consult before going straight to HUD, start with:
Thirdly, go with your intuition and document and report any instances of unfair housing. Often, unfair housing can continue unchecked because it is typically not reported. The National Fair Housing Alliance has estimated that although there are upwards of 30,000 reports of housing discrimination annually, that is likely only 1 percent of actual fair housing violations.
Lee Davenport is a licensed real estate broker, trainer and coach. Follow her on YouTube or visit her website.
