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Home appraisals: Hidden camera investigation reveals race could affect value (Marketplace) - YouTube
Channel: CBC News
[1]
[鈾櫔鈾猐
[2]
[Asha] Home appraisers,
caught on camera.
[4]
One dream home, six
different visits.
[7]
So many people who have no idea
that their homes may have been
[11]
appraised much lower
than it actually is.
[13]
[Asha] It's your
biggest investment.
[15]
Could your race
cost you thousands?
[17]
If you haven't lived that life,
you're going to be out of touch.
[19]
We need to be
discussing these issues.
[21]
[Asha] Our Face Racism
series hits home.
[24]
[Asha] Your marketplace
starts now.
[29]
We're in Oakville, Ontario.
[32]
Our team is preparing for a
site check by a home appraiser.
[36]
This house has 4 + 1 bedrooms,
three and a half bathrooms
[41]
and it's about 4,000 square
feet with a finished basement.
[45]
It even has a pool in the back.
[50]
But what we really
want to know...
[52]
Will the value of this home
change with the race
[55]
of the owner?
[57]
We make a few small additions
to the d茅cor.
[60]
Our hidden cameras are rolling.
[64]
Close to a million home
appraisals happen in Canada
[67]
every year.
[68]
They are critical for a
mortgage or refinancing.
[71]
And in some cases, people just
want to know what their house
[74]
is worth.
[76]
That's what we're about to do.
[79]
Hire home appraisers
and compare their quotes.
[82]
We book six appraisals for the
same rented house for our test.
[87]
And randomly assign two
appraisers to each type of
[90]
homeowner, Black,
South Asian, and white.
[94]
We ask members of our
CBC team to join me.
[97]
We have a bunch of stuff here.
[98]
These are kind of the items that
we're going to be changing
[101]
with each different family.
[103]
These are your children.
[105]
Look how cute she is.
[107]
So, we've got pictures of kids,
we've got a poster going up in
[110]
one of the children's bedrooms.
-Got it.
[112]
And then we have
some dolls here.
[114]
We're just trying to give a
sense of who lives here.
[117]
[Asha] Due to the pandemic, we
agree to outside visits only and
[121]
then send them pictures of
what the home looks like inside.
[125]
But first let's meet Karen.
[128]
Back in 2005, she changed
mortgage companies and her home
[131]
had to be appraised.
[133]
You can feel the look, like
is this-- are you really
[136]
living here?
[138]
Like, what gives you the
right to live in this house?
[140]
That's the feeling that I
got from that appraiser.
[144]
[Asha] And she makes a
prediction to her husband.
[146]
I said to him, I bet you our
appraisal comes back really low.
[150]
[Asha] Sure enough, the
appraiser's estimate is much
[153]
lower than similar
homes in her neighbourhood.
[157]
I said to the broker, this
doesn't make sense that this
[159]
would be this much, and
I want another appraisal.
[163]
I said to her, I think
it's because we're Black.
[165]
It's like, you know, driving
while Black, well, owning
[167]
a house while Black.
[168]
[Asha] So, she
demands another appraisal.
[171]
And that second appraisal comes
back $100,000 higher,
[174]
then you know something's wrong.
[176]
Something is just not right.
[178]
[Asha] You heard correctly.
[179]
A $100,000 difference between
her first appraisal and her
[183]
second one.
[187]
Are we still doing that offer
in London?
[190]
[Asha] Is Karen an
isolated case?
[192]
Realtor Chukwu Uzoruo
doesn't think so.
[196]
One of the groups I'm part of,
ACRES, it's an Afro-Canadian
[198]
real estate society.
[200]
I remember I reached out to some
of the members to ask them about
[203]
their experience when it comes
to the appraisals, and some of
[206]
them were saying yeah, you know,
definitely it has happened
[208]
to me before.
[210]
[Asha] It happened to Chukwu too
in 2018 when he was refinancing
[214]
his home.
[215]
I got the news from my wife,
she was telling me the lady came
[218]
inside, she just-- just
rushed right in, came back
[222]
outside, stepped
outside and then she left.
[225]
[Asha] The appraisal
Chukwu gets?
[226]
Less than he expected even
with extensive renovations.
[231]
So, he follows up
with the company.
[233]
I was looking at the--
the tone of the supervisor.
[237]
I'm Canadian, I'm Canadian born,
but I grew up in the Caribbean,
[239]
so I have a Caribbean accent,
and not to mention my name
[241]
is Nigerian.
[243]
So, the reaction I got from
this guy wasn't that--
[244]
hey, you know what?
[245]
This is a professional who's
a broker who knows what he's
[247]
talking about, it was just like
there was some fool who's just
[250]
trying to get a higher
amount for no reason.
[253]
[Asha] Chukwu has another
appraisal that's $50,000 higher.
[259]
Back on hidden camera,
it's time for our test.
[263]
First day and Stephanie
meets our first appraiser.
[266]
You found it okay?
[269]
Excellent.
[270]
[Asha] He chats with
her for quite a while.
[272]
There are built-in speakers--
[274]
--if that's a thing.
[276]
Inside and then going to
outside, so it plays
[279]
when you're at the pool.
[283]
Right.
[284]
[Asha] And then
takes a look around.
[286]
[Stephanie] Okay.
Thanks for that.
[287]
Take care.
Bye.
[290]
[Asha] More of the same
from our second appraiser.
[296]
You'll see the little
sidewalk that goes to the back.
[300]
The concrete.
Yeah.
[304]
That's the-- yeah,
that's from before.
[306]
[Asha] He surveys the exterior,
and takes his $500 fee...
[312]
I'll grab you some cash.
[314]
[Asha] He's on his way.
[317]
We send them photos of the
interior to make their
[319]
final assessment.
[321]
Now it's time for the results.
[323]
Our first appraisal
comes in at
[325]
$1,925,000.
[327]
The second appraisal,
a little lower
[329]
at $1,900,000 flat.
[331]
A $25,000 difference.
[336]
Interesting.
[337]
Will we see the same variation
with our South Asian
[339]
homeowner, Serenity?
[340]
[producer] That's how it's gonna
look.
[342]
[Asha] Day two and her
appraisals are in full swing.
[348]
If you just kind of go around
where the garage is,
[350]
there's a door, you'll be
able to unlock it.
[352]
[Asha] Compared to
Stephanie's appraisals,
[355]
the first guy takes just four
minutes to finish the job.
[358]
Seems like each person has their
own way of doing things.
[363]
Yeah, definitely.
[365]
[Asha] The second appraiser
gets straight to work.
[368]
Doesn't even ring the doorbell.
[371]
Good.
How are you?
[373]
Okay.
[376]
Okay, perfect.
Thank you.
[377]
[Asha] Time for
Serenity's results.
[380]
Her first appraisal
checks in at
[382]
$1,915,000, the second,
[386]
$1,850,000, a
difference of $65,000.
[391]
Hmm, that's a bigger variation
than the white homeowner.
[395]
Could this be a
sign of racial bias?
[399]
Discrimination in appraisals
is making headlines stateside,
[403]
with many African
Americans calling it out.
[406]
[woman] So, it appraised for
$1.482, which was 50% more than
[412]
what it appraised for a
couple weeks prior.
[415]
Almost $1.5.
$500,000 more.
[418]
[woman 2] By just having my
husband in the house by himself
[421]
and taking down all evidence
that he has a Black family.
[426]
[Asha] The issue caught even
attention of then-candidate
[429]
and now President Joe Biden.
[431]
Same exact home.
[433]
Your home will start off being
valued 29% less than my home.
[438]
[Asha] Professor Junia Howell
studies discrimination in the
[441]
American appraisal industry.
[444]
While it might look and
manifest slightly differently in
[446]
different areas depending on
what racial groups live there
[450]
again and again, we see that
white spaces are evaluated as
[453]
worth more, as more
desirable, as more marketable.
[457]
There are so many parallels
between Canada's appraisal
[460]
industry and the United States.
[462]
It's really hard for me to
believe that there isn't a lot
[465]
of racial bias in
appraisals in Canada.
[468]
[Asha] Now, I step into the
role of our third homeowner.
[471]
I alter my appearance and throw
on a pair of glasses with a
[475]
hidden camera.
[476]
They're
actually quite nice glasses.
[479]
I get familiar with my new home.
[482]
How will my appraisals
compare with the others?
[486]
[Asha] Hi, how's it going?
[489]
We're about to find out.
[495]
[Asha] Share your
home appraisal story.
[498]
[505]
[Asha] This is Your Marketplace.
[510]
We're testing racial bias
[512]
in home appraisals.
[515]
So far, the appraisers meet our
white homeowner Stephanie and
[518]
our South Asian
homeowner Serenity.
[521]
Now they're meeting me,
our Black homeowner.
[524]
[Asha] Oh, okay.
Hi.
[529]
[Asha] He inspects the exterior
of the home but when he gets to
[532]
the backyard.
[537]
[Asha] That's right.
[539]
[Asha] That's right.
[540]
[Asha] His tone is different
then the others..
[543]
...then this happens.
[546]
[Asha] Yep.
[549]
[Asha] Yes.
[550]
=He asks me twice
if I'm the homeowner.
[553]
That didn't
happen to anyone else.
[558]
[Asha] We'll send them.
[561]
[Asha] Bye.
[563]
We send the interior
photos and the quote?
[566]
1.7 million dollars.
[569]
The lowest appraisal
in our test.
[573]
Now for our
final appraisal.
[576]
[Asha] You should go this side.
[578]
And I'll open it up.
[583]
[Asha] He takes a look around
and we chat about the house.
[590]
[Asha] The pool is also
something that is upgraded.
[594]
We actually put
that in back in 2017.
[599]
And the light fixtures.
[601]
Just a couple of years ago we
put these light fixtures in.
[611]
[Asha] And he's off.
[614]
[Asha] Nice to meet you.
[615]
But get this my second
appraisal comes in at
[618]
a high of $2,050,000.
[621]
Which is $350,000 more than
the first one
[624]
for the same house.
[626]
On the same day.
[629]
That's the largest
difference in our test!
[631]
And it's similar to what Karen
experienced when she demanded a
[633]
second appraisal and
got a much higher amount.
[638]
Thing is that some people take
the first quote at face value.
[641]
They don't know that they can
ask for a second appraisal.
[645]
I think about that, what other
opportunities for other people
[647]
have been lost.
[649]
[Asha] Bottom line, if you
suspect your home appraisal is
[651]
too low, it might be worth
fighting for another opinion.
[658]
We share our results with
our expert Junia Howell.
[661]
The first appraisal came in at
1.7, the second appraisal came
[667]
in at just over two million.
[670]
That enormous variation, right
there in and of itself
[674]
is a problem.
[676]
$350,000, that is enormous.
[679]
[Asha] And even though one of
the estimates for the Black
[681]
homeowner is the highest in our
test the average is still the
[685]
lowest of all three homeowners.
[689]
This matters so much that I
think as a society, again, for
[692]
all of us we need more
standardization here because the
[695]
variability allows for more
bias than is
[699]
really desirable or acceptable.
[702]
[Asha] All of the appraisers
in our test fall under the
[704]
Appraisal Institute of Canada.
[707]
So, we take our results to
its CEO, Keith Lancastle.
[710]
I think to suggest that biases
don't exist, would not be--
[714]
would not be candid-- would
not be honest.
[717]
[Asha] We start with
our white homeowner.
[719]
A $25,000 variance.
[722]
Your thoughts?
[724]
Entirely-- entirely reasonable.
[727]
[Asha] And then our
South Asian homeowner.
[730]
You're looking at
$65,000 difference there.
[734]
[Keith] On nearly 2 million.
[735]
It's certainly not-- it's
not a significant difference.
[739]
[Asha] Some people might argue
that's still a lot of money.
[742]
Then we tell him about what
happened to me, our
[744]
Black homeowner.
[745]
That's $350,000 of a difference
between the first appraisal and
[751]
the second one, mind blowing.
[754]
You would really need to look at
the-- at the appraisal reports
[757]
side by side and look at the
assumptions that the individuals
[761]
relied upon in arriving at
their-- their opinion of value.
[766]
[Asha] I just don't know how
that could be rationalized or
[769]
how you could even compare
them and say that this is a
[773]
legitimate reason why there's
this big of a difference?
[775]
We did look at some of the
individual reports and there are
[779]
some differences that could, I'm
not saying they did, that could
[783]
have influenced a difference
in value, even
[786]
one that significant.
[788]
But I would say as well though
that some appraisers will be
[792]
more conservative in the values
that they arrive at day in, day
[796]
out, than others that
might be more aggressive.
[799]
But what do you say to
some in the BIPOC community and
[802]
the Black community who will
look at our test results
[805]
and say that is definitely
racial bias.
[808]
We acknowledge that there are
biases in our society,
[812]
and we have to
work to be better.
[814]
From the outside looking in,
it is-- it is troubling that
[818]
one would be so much lower
than all of the others.
[821]
But I don't know that it's a
fair statement to suggest that
[824]
you can directly draw a line
between that and
[828]
the race of the homeowner.
[831]
[Asha] Keith adds the institute
has received only one
[833]
complaint about racial bias in
more than a decade.
[837]
While we debate the results,
someone else is listening in.
[842]
It's been more than two years
since Chukwu Uzoruo's appraisal
[845]
came back about
$50,000 lower than expected.
[849]
He's finally getting his
chance to face the industry.
[853]
I'm wondering if you'd be
willing to speak
[854]
with him and hear his concerns?
[857]
Absolutely.
[858]
We have Black homeowners who are
actually taking away any
[862]
sort of influence, that there
are actually Black people living
[864]
in the house before the
appraisers are even coming in.
[867]
Because they all know in the
back of their mind that bias
[869]
does have an effect, and maybe
one of the reasons why
[872]
you're not hearing so many of
the complaints that are coming
[875]
in, is because we don't know
who to complain to.
[878]
That is, is a very
discouraging thing to hear.
[881]
That's why we struck our council
on diversity, to help make sure
[884]
that collectively the real
estate sector is able to work
[887]
better, and not-- and not be
influenced by biases like this.
[892]
I'm really hoping that you reach
out to other groups or community
[894]
groups who can actually tell you
or give you guys some guidance.
[898]
If you haven't lived that life,
if you haven't experienced it,
[900]
you're going to be out of touch
and nothing's going to change.
[902]
Take the problem of bias
seriously, it
[905]
really does impact us.
[907]
We need to be discussing these
issues, we can't just
[908]
pretend they're not happening.
[912]
We certainly encourage people to
submit complaints if they have
[914]
concerns with an appraisal.
[917]
If our members do make a mistake
[919]
that causes a financial impact,
there is an insurance program in
[923]
place to help make sure that
those people are made whole.
[927]
[Asha] Were you happy
with his responses?
[929]
I understand his position
but at the same time it
[930]
makes me upset to
be really honest.
[933]
There's so many people who have
no idea that their homes may
[936]
have been appraised much
lower than it actually is.
[940]
And I'm thinking
about the potential.
[941]
The what-ifs.
[942]
That could've been
your retirement savings.
[943]
That could've been
your vacation home.
[946]
[Asha] You gonna follow
up with AIC and Keith?
[949]
Keith is going to be
my new best friend.
[953]
[Asha] Have a complaint
about your home appraisal?
[955]
The AIC wants to hear from you.
[958]
Check out their website or
email them [email protected].
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