Virtual Appraisals Could Reduce Racial Bias on Home Purchases

The majority of home appraisals switched to a virtual format at the start of the COVID-19 pandemic, a practice that lawmakers say could address and prevent racism against Black homeowners, The New York Times reports. Recent studies by Freddie Mac have revealed a trend of undervalued homes with Black or Latino owners, but online appraisals would eliminate biases without the need for face-to-face interactions or physical property inspections.

A move by the Interagency Task Force on Property Appraisal and Valuation Equity on March 19 allows the majority of home appraisals across the U.S. to be conducted entirely online, forcing appraisers to rely on data rather than human observation.

In a statement, Fannie Mae said, “The traditional appraisal process relies heavily on human observations that can be subject to conscious or unconscious bias, while modern appraisal methodology — such as desktop and hybrid appraisals — involves significant reliance on data and a more arms-length process between the appraiser and the borrower or homeowner.”

Read more