[♪♪♪] [Asha] Home appraisers,
caught on camera. One dream home, six
different visits. So many people who have no idea
that their homes may have been appraised much lower
than it actually is. [Asha] It's your
biggest investment. Could your race
cost you thousands? If you haven't lived that life,
you're going to be out of touch. We need to be
discussing these issues. [Asha] Our Face Racism
series hits home. [Asha] Your marketplace
starts now. We're in Oakville, Ontario. Our team is preparing for a
site check by a home appraiser. This house has 4 + 1 bedrooms,
three and a half bathrooms and it's about 4,000 square
feet with a finished basement. It even has a pool in the back. But what we really
want to know... Will the value of this home
change with the race of the owner? We make a few small additions
to the décor. Our hidden cameras are rolling. Close to a million home
appraisals happen in Canada every year. They are critical for a
mortgage or refinancing. And in some cases, people just
want to know what their house is worth. That's what we're about to do. Hire home appraisers
and compare their quotes. We book six appraisals for the
same rented house for our test. And randomly assign two
appraisers to each type of homeowner, Black,
South Asian, and white. We ask members of our
CBC team to join me. We have a bunch of stuff here. These are kind of the items that
we're going to be changing with each different family. These are your children. Look how cute she is. So, we've got pictures of kids,
we've got a poster going up in one of the children's bedrooms.
-Got it. And then we have
some dolls here. We're just trying to give a
sense of who lives here. [Asha] Due to the pandemic, we
agree to outside visits only and then send them pictures of
what the home looks like inside. But first let's meet Karen. Back in 2005, she changed
mortgage companies and her home had to be appraised. You can feel the look, like
is this-- are you really living here? Like, what gives you the
right to live in this house? That's the feeling that I
got from that appraiser. [Asha] And she makes a
prediction to her husband. I said to him, I bet you our
appraisal comes back really low. [Asha] Sure enough, the
appraiser's estimate is much lower than similar
homes in her neighbourhood. I said to the broker, this
doesn't make sense that this would be this much, and
I want another appraisal. I said to her, I think
it's because we're Black. It's like, you know, driving
while Black, well, owning a house while Black. [Asha] So, she
demands another appraisal. And that second appraisal comes
back $100,000 higher, then you know something's wrong. Something is just not right. [Asha] You heard correctly. A $100,000 difference between
her first appraisal and her second one. Are we still doing that offer
in London? [Asha] Is Karen an
isolated case? Realtor Chukwu Uzoruo
doesn't think so. One of the groups I'm part of,
ACRES, it's an Afro-Canadian real estate society. I remember I reached out to some
of the members to ask them about their experience when it comes
to the appraisals, and some of them were saying yeah, you know,
definitely it has happened to me before. [Asha] It happened to Chukwu too
in 2018 when he was refinancing his home. I got the news from my wife,
she was telling me the lady came inside, she just-- just
rushed right in, came back outside, stepped
outside and then she left. [Asha] The appraisal
Chukwu gets? Less than he expected even
with extensive renovations. So, he follows up
with the company. I was looking at the--
the tone of the supervisor. I'm Canadian, I'm Canadian born,
but I grew up in the Caribbean, so I have a Caribbean accent,
and not to mention my name is Nigerian. So, the reaction I got from
this guy wasn't that-- hey, you know what? This is a professional who's
a broker who knows what he's talking about, it was just like
there was some fool who's just trying to get a higher
amount for no reason. [Asha] Chukwu has another
appraisal that's $50,000 higher. Back on hidden camera,
it's time for our test. First day and Stephanie
meets our first appraiser. You found it okay? Excellent. [Asha] He chats with
her for quite a while. There are built-in speakers-- --if that's a thing. Inside and then going to
outside, so it plays when you're at the pool. Right. [Asha] And then
takes a look around. [Stephanie] Okay.
Thanks for that. Take care.
Bye. [Asha] More of the same
from our second appraiser. You'll see the little
sidewalk that goes to the back. The concrete.
Yeah. That's the-- yeah,
that's from before. [Asha] He surveys the exterior,
and takes his $500 fee... I'll grab you some cash. [Asha] He's on his way. We send them photos of the
interior to make their final assessment. Now it's time for the results. Our first appraisal
comes in at $1,925,000. The second appraisal,
a little lower at $1,900,000 flat. A $25,000 difference. Interesting. Will we see the same variation
with our South Asian homeowner, Serenity? [producer] That's how it's gonna
look. [Asha] Day two and her
appraisals are in full swing. If you just kind of go around
where the garage is, there's a door, you'll be
able to unlock it. [Asha] Compared to
Stephanie's appraisals, the first guy takes just four
minutes to finish the job. Seems like each person has their
own way of doing things. Yeah, definitely. [Asha] The second appraiser
gets straight to work. Doesn't even ring the doorbell. Good.
How are you? Okay. Okay, perfect.
Thank you. [Asha] Time for
Serenity's results. Her first appraisal
checks in at $1,915,000, the second, $1,850,000, a
difference of $65,000. Hmm, that's a bigger variation
than the white homeowner. Could this be a
sign of racial bias? Discrimination in appraisals
is making headlines stateside, with many African
Americans calling it out. [woman] So, it appraised for
$1.482, which was 50% more than what it appraised for a
couple weeks prior. Almost $1.5.
$500,000 more. [woman 2] By just having my
husband in the house by himself and taking down all evidence
that he has a Black family. [Asha] The issue caught even
attention of then-candidate and now President Joe Biden. Same exact home. Your home will start off being
valued 29% less than my home. [Asha] Professor Junia Howell
studies discrimination in the American appraisal industry. While it might look and
manifest slightly differently in different areas depending on
what racial groups live there again and again, we see that
white spaces are evaluated as worth more, as more
desirable, as more marketable. There are so many parallels
between Canada's appraisal industry and the United States. It's really hard for me to
believe that there isn't a lot of racial bias in
appraisals in Canada. [Asha] Now, I step into the
role of our third homeowner. I alter my appearance and throw
on a pair of glasses with a hidden camera. They're
actually quite nice glasses. I get familiar with my new home. How will my appraisals
compare with the others? [Asha] Hi, how's it going? We're about to find out. [Asha] Share your
home appraisal story. Marketplace@CBC.ca. [Asha] This is Your Marketplace. We're testing racial bias in home appraisals. So far, the appraisers meet our
white homeowner Stephanie and our South Asian
homeowner Serenity. Now they're meeting me,
our Black homeowner. [Asha] Oh, okay.
Hi. [Asha] He inspects the exterior
of the home but when he gets to the backyard. [Asha] That's right. [Asha] That's right. [Asha] His tone is different
then the others.. ...then this happens. [Asha] Yep. [Asha] Yes. =He asks me twice
if I'm the homeowner. That didn't
happen to anyone else. [Asha] We'll send them. [Asha] Bye. We send the interior
photos and the quote? 1.7 million dollars. The lowest appraisal
in our test. Now for our
final appraisal. [Asha] You should go this side. And I'll open it up. [Asha] He takes a look around
and we chat about the house. [Asha] The pool is also
something that is upgraded. We actually put
that in back in 2017. And the light fixtures. Just a couple of years ago we
put these light fixtures in. [Asha] And he's off. [Asha] Nice to meet you. But get this my second
appraisal comes in at a high of $2,050,000. Which is $350,000 more than
the first one for the same house. On the same day. That's the largest
difference in our test! And it's similar to what Karen
experienced when she demanded a second appraisal and
got a much higher amount. Thing is that some people take
the first quote at face value. They don't know that they can
ask for a second appraisal. I think about that, what other
opportunities for other people have been lost. [Asha] Bottom line, if you
suspect your home appraisal is too low, it might be worth
fighting for another opinion. We share our results with
our expert Junia Howell. The first appraisal came in at
1.7, the second appraisal came in at just over two million. That enormous variation, right
there in and of itself is a problem. $350,000, that is enormous. [Asha] And even though one of
the estimates for the Black homeowner is the highest in our
test the average is still the lowest of all three homeowners. This matters so much that I
think as a society, again, for all of us we need more
standardization here because the variability allows for more
bias than is really desirable or acceptable. [Asha] All of the appraisers
in our test fall under the Appraisal Institute of Canada. So, we take our results to
its CEO, Keith Lancastle. I think to suggest that biases
don't exist, would not be-- would not be candid-- would
not be honest. [Asha] We start with
our white homeowner. A $25,000 variance. Your thoughts? Entirely-- entirely reasonable. [Asha] And then our
South Asian homeowner. You're looking at
$65,000 difference there. [Keith] On nearly 2 million. It's certainly not-- it's
not a significant difference. [Asha] Some people might argue
that's still a lot of money. Then we tell him about what
happened to me, our Black homeowner. That's $350,000 of a difference
between the first appraisal and the second one, mind blowing. You would really need to look at
the-- at the appraisal reports side by side and look at the
assumptions that the individuals relied upon in arriving at
their-- their opinion of value. [Asha] I just don't know how
that could be rationalized or how you could even compare
them and say that this is a legitimate reason why there's
this big of a difference? We did look at some of the
individual reports and there are some differences that could, I'm
not saying they did, that could have influenced a difference
in value, even one that significant. But I would say as well though
that some appraisers will be more conservative in the values
that they arrive at day in, day out, than others that
might be more aggressive. But what do you say to
some in the BIPOC community and the Black community who will
look at our test results and say that is definitely
racial bias. We acknowledge that there are
biases in our society, and we have to
work to be better. From the outside looking in,
it is-- it is troubling that one would be so much lower
than all of the others. But I don't know that it's a
fair statement to suggest that you can directly draw a line
between that and the race of the homeowner. [Asha] Keith adds the institute
has received only one complaint about racial bias in
more than a decade. While we debate the results,
someone else is listening in. It's been more than two years
since Chukwu Uzoruo's appraisal came back about
$50,000 lower than expected. He's finally getting his
chance to face the industry. I'm wondering if you'd be
willing to speak with him and hear his concerns? Absolutely. We have Black homeowners who are
actually taking away any sort of influence, that there
are actually Black people living in the house before the
appraisers are even coming in. Because they all know in the
back of their mind that bias does have an effect, and maybe
one of the reasons why you're not hearing so many of
the complaints that are coming in, is because we don't know
who to complain to. That is, is a very
discouraging thing to hear. That's why we struck our council
on diversity, to help make sure that collectively the real
estate sector is able to work better, and not-- and not be
influenced by biases like this. I'm really hoping that you reach
out to other groups or community groups who can actually tell you
or give you guys some guidance. If you haven't lived that life,
if you haven't experienced it, you're going to be out of touch
and nothing's going to change. Take the problem of bias
seriously, it really does impact us. We need to be discussing these
issues, we can't just pretend they're not happening. We certainly encourage people to
submit complaints if they have concerns with an appraisal. If our members do make a mistake that causes a financial impact,
there is an insurance program in place to help make sure that
those people are made whole. [Asha] Were you happy
with his responses? I understand his position
but at the same time it makes me upset to
be really honest. There's so many people who have
no idea that their homes may have been appraised much
lower than it actually is. And I'm thinking
about the potential. The what-ifs. That could've been
your retirement savings. That could've been
your vacation home. [Asha] You gonna follow
up with AIC and Keith? Keith is going to be
my new best friend. [Asha] Have a complaint
about your home appraisal? The AIC wants to hear from you. Check out their website or
email them info@aicanada.ca.
I did a randomized control experiment in university where I sent out resumes randomly to 200 companies. Same resume with the exception of a change in the name - from a typically caucasian name to an ethnic name.
20 call backs for the ethnic resume vs 40 for the CA caucasian sounding name.
My classmate did the same study but only with the largest Canadian organizations which were most vocal about diversity...80% higher call back for resumes with the caucasian sounding name.
I am surprised that anyone is surprised about this video.
Since when do you even meet your appraisers?
They've been doing them online for the most part, and we've bought, switched lenders and are currently refinancing three different properties since last May.
We pay them over the phone/through the broker, the reports go straight to the bank. Never met a single one of them.
I'm astounded that they do more than an internet search for comparables tbh.
The black homeowner had the HIGHEST appraised value. Doesn’t that nullify the entire thesis? It seems like the variability between the two values point was added by producers at the end to try to artificially create a racism angle.
Really shitty on CBC.
Nope. CBC sent out two appraisers, three customers, one house.... and that’s supposed to be a good representation of the general practice of approval industry? I don’t think so.
It's obvious that racial bias exists, but this is a really lazy attempt at proving it.
I usually like CBC Marketplace but this investigation was horrible.
Home appraisals inherently have a lot of variation, particularly for luxury homes. To see variation across six appraisals and then ask, “Is this racism?” isn’t helpful to anyone. It’s useful to know that appraisals have a lot of variation so if you aren’t happy with your first, it could be a good idea to get a second opinion but that’s all I got out of the episode. To point to racism as a significant contributing factor without evidence is lazy, and even dishonest, journalism.
They didn’t go into the factors the appraisers listed in their reports to get to the highest and lowest valuations. I don’t know if they could get access to them but that guy from their industry association apparently viewed the reports. They didn’t even really discuss the research studies by that one academic they had on the show.
Racial bias exists and is important to discuss but it shouldn’t be the boogeyman for all issues. The guy at the end who was complaining about an appraisal coming in $50k lower than he expected is a perfect example. A $50k difference isn’t that bad in real estate and if this is the most egregious case CBC could find, it makes it seem like racial bias isn’t a big problem.
Finding racial bias in appraisals would require a larger study with hundreds or thousands of observations of real estate transactions, appraisals, and homeowner race.
Is this even for real lol, what is this world coming too.
I have no doubt there are racist appraisers but the only thing this video proves is that appraisals can vary wildly.
CBC is taxpayer-funded trash. Never miss an opportunity to race-bait.