Black homeowners' properties are frequently undervalued for thousands less than similar white-owned homes.
Experts say bias in the appraisal process is the reason for the gap, but change may be coming.
Pennsylvania is poised to adopt a new immersive training technology to create a more equitable home-selling experience.
This story is part of "Advancing Cities," a series highlighting urban centers across the US that are committed to improving life for their residents. 

When Philadelphia real-estate broker Deborah Spence is helping a Black homeseller prepare their home for appraisal, she walks them through a process she calls "whitewashing."

"You take all the pictures off the wall, all the art off the wall, nothing on the counter space," she told Insider. "You pretty much clear out the house to make it appear that it's neutral." 

She sometimes even recommends having a white friend sit in the home when the appraiser is due to visit — and making sure the real owner is out of the house.

Real-estate broker Deborah Spence.




Laura Eaton

The point is to eliminate any evidence of the homeowner's race. Otherwise, in Spence's experience, the home is less likely to be appraised at full value.

Spence's whitewashing approach is not uncommon, and for good reason: In Philadelphia, homes in mostly Black neighborhoods are appraised, on average, at about $26,000 less than similar homes in mostly white areas, Redfin found. (Nationwide, that gap is about $48,000, Brookings found.) 

A low appraisal value matters for a few reasons. For one, if you're selling your home, and it's appraised under its value, you may have to accept less money for the property, which reduces your overall wealth and affects your ability to buy another home. 

Also, for homeowners who want to tap into their equity with a cash-out refinance and use the money for other purposes — renovations, for example, or sending kids to college — a low appraisal means there's less cash to draw from.

Plus, this chronic undervaluing contributes to the racial wealth gap in the US, a difference of over $130,000 between the accumulated wealth of a Black family and that of a white one, according to a 2016 study by the Federal Reserve Bank of Minneapolis on income and wealth inequality in America. 

The appraiser profession is 95% white in Philadelphia

Spence believes a lack of diversity in the appraiser profession is a primary reason for appraisal bias, she said. In her roughly 10 years selling homes in Philadelphia and the surrounding counties, she said she had never once seen an African American appraiser. She told Insider: "It's as if they do not exist."

That's not surprising, considering 95% of appraisers in Philadelphia — a majority nonwhite city — are white, a report by the Philadelphia Home Appraisal Bias Task Force found. Nationally, more than 90% of appraisers are white, according to Data USA.

The Appraiser Qualifications Board, the national body that sets professional standards for appraiser education and licensing, is aware of the profession's diversity problem. The board's chair, Brad Swinney, told Insider he thought the main issue was the training framework.

At present, prospective appraisers are required to have 1,000 hours or more of experience (plus other requirements) to sit for a credential exam in residential-real-estate appraisal. Those hours must be completed under the supervision of a licensed appraiser and may be paid or unpaid.

The model, Swinney said, has a negative effect on the appraiser pipeline because it creates "an economic disincentive for an appraiser to take on a trainee."

"They take them on; they lose money getting them trained up," Swinney said, adding: "There's a point at which they start to become viable" and get their credential soon after.

"In the meantime, you've introduced them to all your clients, taught them how they like the work done, and they're basically set up to take some of your clients," he said. Because of that, he added, appraisers tend to take on family members and friends as trainees since they're more likely to stay with the business — hence the lack of diversity.

A new high-tech training program aims to widen the pipeline

To counter that, the Appraiser Qualifications Board has approved a model for a computer program, called Practical Applications of Real Estate Appraisal, to satisfy the experience requirements of the credentials for a residential-real-estate appraiser.

PAREA programs can involve a variety of training methods, including computer-based learning, video gaming, video tutorials, and virtual reality. "It's like a flight simulator for appraisers," Swinney said. Early demonstrations of PAREA show the user in virtual reality (using handsets and a VR headset) measuring a digitally rendered home and entering the measurements on a virtual tablet.

The hope is that getting rid of the supervisory requirement will open up the field to those who are otherwise qualified but can't land a supervisor, Swinney said. The Appraiser Qualifications Board has also added a requirement for prospective appraisers to gain education in fair-housing law, with an eye to ending appraisal bias. This field of study will become mandatory in 2026, Swinney said.

Right now, Pennsylvania is among the 42 states that have signaled PAREA is an acceptable model for training appraisers. It wouldn't replace Pennsylvania's current licensing system but would offer an alternative to the traditional supervisor-trainee model. The state's Board of Certified Real Estate Appraisers voted in September to begin a rulemaking process to allow PAREA to become available to prospective appraisers. The Pennsylvania Department of State said that process could take about a year to complete.

Philadelphia's mayoral favorite plans to prioritize equitable home appraisal

Cherelle Parker, the Democratic nominee for Philadelphia's next mayor and the favorite to win, said she's committed to bringing an end to appraisal bias in Philly. As a City Council member, she formed the Home Appraisal Bias Task Force, which produced a report with recommendations for and data on appraisal bias in the city. Parker said the task force would continue its work under her leadership. 

"As mayor, I will be working to ensure that local, state, and federal solutions are implemented — not just for bias in appraisals but also for other fair-housing issues," she told Insider. "Buying a home is the largest investment many Philadelphians will ever make, and we must provide more opportunities for Philadelphians to own their own homes and realize the true value and return on that investment."

Spence, the real-estate broker, said she's more than ready for change to come, whether it's through legislation, PAREA, or something else.

"We absolutely, 100%, need change in the appraisal system," Spence said. "We can't wait. When it comes to African Americans and the gap, it's always, 'Oh, you have to wait your turn. Change doesn't happen overnight.' But we've been waiting a long time. We've been waiting centuries for change and equality, and I think now is the time for us to get equality."