Does Appraiser and Borrower Race Affect Valuation?

56 Pages Posted: 2 Nov 2021

See all articles by Brent W. Ambrose

Brent W. Ambrose

Pennsylvania State University

James Conklin

University of Georgia

N. Edward Coulson

University of California, Irvine - Paul Merage School of Business

Moussa Diop

University of Southern California

Luis A. Lopez

University of Illinois at Chicago

Date Written: October 27, 2021

Abstract

Following concerns about undervaluation of minority-owned homes, we examine the incidence of racial appraisal bias using a nationwide sample of refinanced mortgages from 2000 to 2007. A unique feature of our data is that they allow us to observe the race of the both the homeowner and the appraiser. We do not observe large, systematic differences in the ratio of appraised values to automated valuation model (AVM) estimates between Black- and White-owned homes. Moreover, the appraiser's race and its interaction with the owner's race are not related to valuations. Our findings suggest that racial appraisal bias is either uncommon in the mortgage refinance market or has a relatively minor effect on valuations, on average.

Keywords: discrimination, bias, appraisal, valuation, AVM, mortgage

JEL Classification: D14, D18, D63, G2, R21,

Suggested Citation

Ambrose, Brent W. and Conklin, James and Coulson, N. Edward and Diop, Moussa and Lopez, Luis A., Does Appraiser and Borrower Race Affect Valuation? (October 27, 2021). Available at SSRN: https://ssrn.com/abstract=3951587 or http://dx.doi.org/10.2139/ssrn.3951587

Brent W. Ambrose

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States
814-867-0066 (Phone)
814-865-6284 (Fax)

James Conklin (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

N. Edward Coulson

University of California, Irvine - Paul Merage School of Business ( email )

Paul Merage School of Business
Irvine, CA California 92697-3125
United States

Moussa Diop

University of Southern California ( email )

Sol Price School of Public Policy
RGL 315
Los Angeles, CA 90089
United States
(213)821-0467 (Phone)

Luis A. Lopez

University of Illinois at Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States

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