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. But their path to this home wasn't easy: It was hindered and nearly blocked by an underappraisal.
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 underappraisals, over 1,700 were in Philadelphia.
It was a three-bedroom row home in a quiet area close to their work and family, and they purchased it for about $80,000. They made many improvements to the rowhome, laying new hardwood floors, painting the exterior and all of the rooms, replacing kitchen appliances, upgrading bathroom fixtures and refreshing the heating and electrical systems.
Corey and Janine were working from home and their son was attending school virtually at the time, so they didn't have anywhere to go during the appraisal. They were home when the appraiser came to evaluate the house, and they talked to him for a little while. His body language seemed odd to Corey. The Ricks had just seen a home down the street from theirs sold for $130,000, Corey added. Their appraisal didn't seem to make any sense.Advised by their buying and selling agents, the Ricks requested a reappraisal. But the lender, Trident Mortgage Company, refused.
"It really clued us in to, 'Okay, maybe this was a lot bigger than we initially thought,'" Janine said. The impact of the underappraisal also reached beyond the Ricks, she added: "A higher home value in a neighborhood like Darby - It's not just good for us, it's good for the community." The Ricks knew the importance of buying a home early on, and they had hoped their purchase in Darby would lay a financial foundation for their children.
These outsiders are largely white and may be unfamiliar with the texture and context of majority-minority neighborhoods, he added, leading them to undervalue homes in those areas. These small licensing firms have created a barrier to entry into the industry for people of color, adding to an existing lack of knowledge and education about the appraisal industry in community spaces like Historically Black Colleges and Universities, he explained.
"We should be doing everything we can to remove every barrier to entry to the real estate industry," Parker said.
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