Diversity, Equity & Inclusion in Real Estate
I didn’t think about prejudices in places like real estate. Until I encountered it, I never really thought about it. But it happened to my husband and me, and it seems there are similar stories based on an August 18th NY Times article, “Home Appraised With a Black Owner: $472,000. With a White Owner: $750,000.”
Story 1 – West Babylon, NY
My husband, Larry, and I decided to build a house in Virginia, but we first had to sell the house in West Babylon, NY. He had one of only three two-family homes in the neighborhood – the houses were built as two adjoining homes. On one side was a fully-renovated 4-bedroom, 4-bathroom, kitchen, living room, den and full basement with two-car garage. On the other side, there was a beautiful 2-bedroom, 1-bathroom, living room, and kitchen, with it’s own front and backyard for a tenant (or mother-in-law).
The appraiser – a white man – did not enter our home; he drove by and waved as he saw us leaving the house. We received a $350,000 appraisal the next day. We were shocked and horrified. What kind of a mistake is this? Larry called the appraisal company, telling them he was a lawyer trying to understand how they came to this valuation. He asked for the comps. They used a comp from an older, one-family home in a different town. The company owner apologized profusely for the “mistake” and would send another more seasoned appraiser within 36 hours.
Our agent told us that we should leave the house, take down all the pictures that showed our color, and he would show the appraiser around. The new appraisal was $650,000 – still a little lower than expected, but was within the range of that type of home. We had a great ending when we sold the house well above the asking price.
Why was this a shock to us? Didn’t we know about the lack of equity in the real estate market? Yes, we did – but we didn’t think it would happen to us – that it happened only to “other people!” Everyone has unconscious biases. In this case, the appraiser felt our house should be valued less because we identified as black people.
Story 2 – Mineral, VA
We were excited to build our home in this small lake town since we had the land for some time. Our realtor recommended a few builders but stressed one that was more popular than the rest. That builder was not on our list based on online and in-person reviews, but we listened to the realtor and went with the recommended builder.
We could see the surprise on the employees faces when we arrived for our appointment – they clearly did not expect black people. We were assigned to a young, white, junior manager and we were told that she would be our only point of contact. She was in charge of helping us with a floor plan, giving the associated improvements, helping us to pick out fixtures. We thought that was very strange as other companies had experts in each step of the process.
This builder also gave us bank recommendations. During the bank discussion, an older, more senior (white) manager came out to listen to us and then walked back into his office. We selected the bank right across the street and walked over to start a loan approval process that they approved immediately!
When we returned with the loan approval news, we were told that a mistake was made and we were mandated to utilize a different bank than the one across the street. We let them know that we had the right to select the bank that we wanted and they cannot mandate our financials. Still, they insisted that they couldn’t work with us if we didn’t use the mandated bank. After checking out this bank, they had negative bank ratings, higher rates, and negative online reviews (mostly from diverse people). One reviewer said, “run, don’t walk, away from this bank and builder! If you continue to use them, then you are a fool and you were warned!” The bank we previously selected had a AAA rating with glowing online reviews from a mixed group of people. We promptly decided to call their bluff, walk away from the builder, and utilize our selected banker in future dealings.
We asked our new banker for a recommended builder and they gave us several referrals based on how well they built the homes, the satisfaction of their clients and better pricing than we were offered with Builder #1. We also found out that “steering” was rampant with African-American and Spanish people.
We are not stupid people. We know redlining, appraisal discrimination, and other seamy real estate practices happen. However, until it happens to you, you cannot possibly know the feeling of being judged by your skin color, and having someone utilize that for their good. Like the couple in the NY Times, we made it clear that my husband was a lawyer and they crossed the line. We spoke up!
Since then, we have heard numerous stories from diverse realtors of how they are pressured daily to increase the selling price when diverse people are purchasing the home, and to devalue specific items when diverse people are on the sell side.
We are happy that we followed our own advice and got a new builder. Our house is beautiful, and the builder came in under the estimated cost of the house, and on schedule.
Real Estate is only one area where we can see the negative impact of Diversity, Equity and Inclusion. Discrimination adversely affects everyone negatively. We must stay vigilant to ensure understanding and to create change.