Avoiding Bias. How do other investors do it?
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Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
4y@Allen L.
Just because you expected the appraisal to be higher, has nothing to do with the skin color of your tenants. Maybe you just thought your house was worth more than It is.
106 Replies
- 4yDaniel SmythPro MemberRental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
@Ron Brady
I have worked through biases and unfair people my whole life. Nothing is fair in this world.
If things were actually FAIR in real estate, you would charge just that amount of rent that allows you to buy and maintain the property. Forget that cash flow and getting a lower interest rate without also reducing the rent.
You get the appraisal you pay for. You can ask for a high or low appraisal. You get what you get.
It's petty and just too much time for me to worry about if someone is using my skin color to take advantage of me.
I refuse to care about skin color and pitty those who look to use that skin color as an advantage.
It's business. Do your own numbers and measure against the numbers you are given.
A poor appraisal can be reported, but you need real numbers and proof of negligence to do more that get your money back or have another agent in that company get another.
Don't fall into the trap. You do good, and make the pies with the ingredients you get from reliable merchants.
- Rental Property Investor · Burlington County, NJ · Member since 2019 · 540 posts · 771 votes4y
@David Song thanks for weighing in
@Michelle E. Thank you! My wife and I had lots of nods and "been there" chuckles as we read your response. We appreciate your sharing and wish you the best of success in your investing.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Originally posted by @Ron Brady:
In our lives pre-real estate, we spent quite a bit of time confronting those we suspect of bias.
Wait a second - you mean you actually go looking for bias and racists...? That's sure a good way to find more than your share and would most likely make you a little hyper-vigilant about the whole topic. Hmmmm.
Anyway, like someone said - if they are gonna use your skin color to judge you, then screw 'em! Don't give them a dime of your money.....
- Rental Property Investor · Burlington County, NJ · Member since 2019 · 540 posts · 771 votes4y
@Daniel Smyth Thanks for sharing your perspective. We appreciate it.
- Rental Property Investor · Burlington County, NJ · Member since 2019 · 540 posts · 771 votes4y
"Wait a second - you mean you actually go looking for bias and racists..."
If this was a question to us, our answer is: no, we have not gone looking for it. And yet bias and racism seem to have found us at various points in our lives and work, notwithstanding our best efforts to avoid it. When faced with it, and we can, we've called it out. But, as we shared in that earlier response, it has been our experience that those who are biased or racist often protest that they are not when called on it. Like bias, humans have, as we're sure you've experienced, an immense ability to lie to themselves about these things. Akin, perhaps, to all the folks in prison who claim "they didn't do it".
Glad this topic has you so engaged!
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
You're just an engaging kind of guy, Ron! Sorry you seem to find more than your share of BS out there, but just disengage and move on brother......if you spend time thinking about them or getting involved it just means they've won.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Originally posted by @Jim K.:
Good post, Jim.....I agree - manipulate to favor yourself, win and make money....then laugh all the way to the bank, right?
I don't agree that the world is broken though.....it has always worked just like this and it works fine. Ya just gotta be smart enough to game the game if ya knows what I mean.... :-)
- Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes4y
Originally posted by @Bruce Woodruff:
Originally posted by @Jim K.:
Good post, Jim.....I agree - manipulate to favor yourself, win and make money....then laugh all the way to the bank, right?
I don't agree that the world is broken though.....it has always worked just like this and it works fine. Ya just gotta be smart enough to game the game if ya knows what I mean.... :-)
Bruce, I like your posts, I like your outlook, I like the hat, but you consistently refuse to acknowledge that black folks have gotten shafted in America, and you consistently try to tell me that it all evens out in the end, and you consistently imply that if black people just changed their perspective, why, they would see there is no racism at work in this country continuing to shaft black folks nowadays.
My experience is that this is just not true.
- 4yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Jim K.:
Originally posted by @Bruce Woodruff:
Originally posted by @Jim K.:
Good post, Jim.....I agree - manipulate to favor yourself, win and make money....then laugh all the way to the bank, right?
I don't agree that the world is broken though.....it has always worked just like this and it works fine. Ya just gotta be smart enough to game the game if ya knows what I mean.... :-)
Bruce, I like your posts, I like your outlook, I like the hat, but you consistently refuse to acknowledge that black folks have gotten shafted in America, and you consistently try to tell me that it all evens out in the end, and you consistently imply that if black people just changed their perspective, why, they would see there is no racism at work in this country continuing to shaft black folks nowadays.
My experience is that this is just not true.
this same case was on ABC news on my Tesla entertainment system .. they repeated it virtually every time you checked in on the news.. I called BS on it when i heard it.
who in this business that has done more than a few deals has had a bad appraisal.. Only to get a second appraisal from some other outfit to come in with better numbers. I think its a huge leap to make that it was because of pictures of the family on the wall.. I simply dont believe it personally. Why would an appraiser who is licensed bonded insured who is making probably 500 to 700 dollars for that one appraisal job risk his license his career litigation just to ding these folks.. U would need to see the comps both these appraisers used. since the GFC the appraisal industry is regulated pretty heavy. To me this stuff just fosters whats going on in America it makes things worse for everyone.
I had to quit flipping homes in Texas because they were prejudice against out of state flippers every single one of my appraisals came in 15 to 25k less than I had sold the house for .. it was nuts.. these were fha first time home buyers and you know those appraisals are now stuck for 6 months so we just sucked it up sold it and left the state.
Personally again I think its really sad that the OP thinks he has to hide. And I dont believe he needs to as it relates to the real estate industry.. I mean take the turn key markets of the mid west mid south and deep south.. the cities Memphis Jackson Birmingham are 70% 80% 75% black who do you think your tenants are .. ???
Reality is you will get a bad appraisal in this business when your buying those types of assets were there is value add and a lot of transactions for rehabber houses that are in need of a bunch of repair.. Every turn key house sold fits that description.
There is no question about redlining and discrimination of the ethnic and races in the past we all know this its no mystery.
when i read this I went through rehash of the first 30 homes we built and sold last year in Oregon. And it runs right along state population lines.. we have one black/white couple One lesbian couple One non English speaking Hispanic couple one white/Chinese couple with their Chinese parents living with them One Russian Orthodox folks dress like Amish and 3 police officers that decamped from Portland.. and one lives next to the mixed race couple and is good friends with the husband that the black partner And I am proud to say each and every family is outstanding their homes immaculate and we have the highest priced development in town by about 10 to 15% over our competition.
In my mind we keep rehashing this stuff with click bait media stories and we are not getting anywhere we are going backwards .
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Originally posted by @Jim K.:
You're misreading and mis-quoting me, my friend. Very disappointing. Allow me to clarify.....Here's what I see and have seen in my life:
1) black folks have gotten shafted in America - No Sh*t sherlock...
2) it all evens out in the end - It can be made even, depending on the effort put forth by the individual.
3) if they changed their perspective they would see there is no racism at work - Never have I said that, what I have said is there is always racism, both here and everywhere else in the world. You can wallow in it and cry 'poor me' constantly, or you can ignore, work around and rise above it.
These are just my opinions, disagree if you like.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes4y
The article fails to get into the technical side of the appraisal; an appraisal is math based on chosen comps. Choosing different comps creates the largest swing. I would love to review both appraisals; I deal with this all the time - as an agent and as an investor.
Our single family rental properties are very similar, same age, size, same finishes, same kitchen, same flooring - we have a standard. Yet, the appraisals come in with at least a 10% range. And usually it is the comps, fully renovated vs original.
Some of the upgrade items listed in the article should not even make much of a difference - but what does the Washington Post know about appraisals?
Bias in general and specifically racial bias are real, if you open your eyes you can see it every day. I like to believe that most of the time it is not intentional. Fair housing law is pretty strict - why would an appraiser who makes $600 on that job risk a violation and intentionally appraise the house half a million lower than it should be. To achieve what? To stick it to a black couple he will never see again in his live?
This needs to be looked into, for sure. But the article, the picture of the angry looking couple also look like click bait - and I am not sure if the approach is productive. While the issue of racial bias needs (intended as well as unintended) needs to be in public focus, this approach seems to be more devisive than productive.
I actually suspect that incompetence is to blame, on one of the appraisals, possibly even on both. I get that the couple is angry with the world they live in for all they have seen over the years, but if the case does not go through they will be even more angry.
- Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes4y
I will say two things here:
[1] Focusing on this will NOT put money in your pocket. (Line up your Rockets to fill your Pockets)
[2] Re #1 = Tony Robbins on "The Wall". https://www.youtube.com/watch?v=3jq2rtLC5Iw
Good Luck!
- 4yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
It's sad to see this is still happening.
NETWORTH BUILDERS5236 Reviews - Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes4y
Life is inherently biased and dangerous. We want to do business with people we know, people we went to school with, people in our fraternity, people at our religious organization, people that speak our language, people that look like us, smile like us, have an accent like us...and on and on and on and on. Why do some people drive Chevys and some Fords....price/quality/style/prestige? Do Porsche owenrs like other Porsche owners and frown on Subaru owners? I am always surprised when people want to sue drug companies because the effect was not what they expected. Ever read the label......how can same drug cause high or low blood pressure? or so many other opposite effects. You have risks taking it, but also have risks not taking it....like death. I like it when my doc says, you don't have an issue taking medicine do you? Why I ask....well some people think it is not natural he says. He guarantees all ingredients are naturally occurring? He says high cholesterol is natural and if you don't solve that issue thru diet or drugs, then you die the natural death of clogged arteries.
I'm sure shituations happen, but wow....our appraisers around here are so busy, I hope they are not taking time to stop and look at the pictures in the house. Who has time for that? Every appraiser I've ever talked to says they do not evaluate furniture, or cleanliness, or things not associated with the structure itself. I still advise every client that we are selling the house twice...1st to the buyer, and then and maybe even more importantly the appraiser.....I want to take my chances that ease of showing, ease of access, ease of doing the appraisal, providing the comps I want them to use, and doing everything I can to make their job easy in a difficult world. Lights on, blinds open, vacant home, pets removed, beds made, dishes put up and all the other things we want done to sell the house.
I have no idea if the appraisal was biased or not, but get 3 appraisers to measure the house and they all come up with different sizes.....pictures or no pictures.
- Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes4y
@Bruce Woodruff
"You can wallow in it and cry 'poor me' constantly, or you can ignore, work around and rise above it."
"Rise above hatred and repression through hard work," hmm, where have I heard that before?
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Originally posted by @Jim K.:
"Rise above hatred and repression through hard work," hmm, where have I heard that before?So Jim, just to be clear, you're saying that's me or my intent? You're linking me to that?
PS - The phrase they used was - "hard work makes you free"
- Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes4y
Originally posted by @Bruce Woodruff:
Originally posted by @Jim K.:
"Rise above hatred and repression through hard work," hmm, where have I heard that before?So Jim, just to be clear, you're saying that's me or my intent? You're linking me to that?
PS - The phrase they used was - "hard work makes you free"
Just to be clear, stop it with the old crypto-KKK false-equivalency trick. That IS EXACTLY WHAT YOU ARE SAYING. You can parse the words all you want, it's the same sentiment. If you work hard, you can rise above, you can find your freedom in an unfree world. It was a self-satisfied lie to sell a crooked game then and it is a lie to sell a crooked game now. And also just to be clear, if things were just a little different in this country, I have no doubt we good clearheaded white folks would be trying to exterminate the blacks here and make soap out of them. Should I run down the long list of black jokes I've heard about killing all tbe blacks from good old boys all over the USA?
I doubt you've ever read any of the foundational Third Reich white supremacist texts, but a good share of them were written right here in the USA. If you do have an interest and you want to get a sense of the ideas behind the monumental wrongs done to black people here in the 20th century that came out of that way of thinking, start with "The Passage of the Great Race," written by Madison Grant and first published right in New York City. Hitler once called it his Bible.
Redlining, blockbustering, sterilization, disease trials, local voter disenfranchisement, practical school resegregation, appraisal inequality, JUST RISE ABOVE and it will be all OK. Don't you throw up in your mouth with the hypocrisy just a little bit once in a while? What's next? Are we going to argue that all the thousands of statues of traitors erected in the South are just a nod to their history and having nothing at all to do with keeping black people down?
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
No I don't. You go tilt at your windmills Jim, I'll stay rooted in the real world.
At least you downgraded me from a Nazi to regular ole KKK. Nice. Are you worse than those you claim to despise?
- Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes4y
Originally posted by @Bruce Woodruff:
No I don't. You go tilt at your windmills Jim, I'll stay rooted in the real world.
At least you downgraded me from a Nazi to regular ole KKK. Nice. Are you worse than those you claim to despise?
And there you are again with the most trusted trick in the bag. Somebody points out that you're clearly articulating a Nazi or KKK sentiment, you claim that they're saying you dress up in an SS uniform or a pointy hood in your spare time. A part is the whole, false equivalency, who me?
I'll bet you don't even know you're doing it at this point. You heard some slimeball come up with it once, you've used it ever since, that's all you know. - Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes4y
Originally posted by @Jim K.:
Originally posted by @Bruce Woodruff:
No I don't. You go tilt at your windmills Jim, I'll stay rooted in the real world.
At least you downgraded me from a Nazi to regular ole KKK. Nice. Are you worse than those you claim to despise?
And there you are again with the most trusted trick in the bag. Somebody points out that you're clearly articulating a Nazi or KKK sentiment, you claim that they're saying you dress up in an SS uniform or a pointy hood in your spare time. A part is the whole, false equivalency, who me?
I'll bet you don't even know you're doing it at this point. You heard some slimeball come up with it once, you've used it ever since, that's all you know.With the exception of the obvious crazies, most of it in today's world is subtle and ingrained. I agree, he probably doesn't even know.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Originally posted by @Tony Kim:
With the exception of the obvious crazies, most of it in today's world is subtle and ingrained. I agree, he probably doesn't even know.You're assuming a lot there Tony. About someone you've never even met....
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes4y
I'll be curious to follow this and I wish we could review the appraisals themselves. Based on the few facts we have from the media (which who knows how accurate the reporting is in this "post-truth" era), it does seem pretty egregious: property appraises for $995k when the black owners meet the appraiser, then $1.48M when a white guy meets them... I mean we've all seen whacky appraisals but ~$500k off would make me question things for sure. One of the articles I read mentions the first appraiser pulled comps from predominantly black neighborhoods when the property is in Marin which is 85% white. I wonder where she pulled comps from? The Canal area of San Rafael? That's the least expensive part of Marin but also mostly hispanic. I can't think of any predominantly black neighborhoods in or even near Marin unless she went really far away/ over the bridge. So something's definitely fishy. It's hard to really say what's going on without knowing the market better and comparing the appraisals. @Ron Brady thanks for bringing this up and I'm really impressed with your candor considering some of these comments. Non-minority people really can't relate to this kind of thing, we're privileged by not having to think about whether or not race is a factor when we get a low appraisal.
- Investor · Jersey City, NJ · Member since 2013 · 129 posts · 122 votes4y
@Ron Brady
I absolutely do the same thing.
The first time I had an appraiser come to my rental property, I went through a lot of effort to clean the entire exterior and help the tenants clean the interior. I also dressed nice and professional to meet the appraiser and stayed to answer questions and provided additional info including recent improvements I had made and comps for the area. The appraisal came in at 380k. Much lower than I expected. I am brown (East indian).
I got a second appraisal and this time my husband met the appraiser in his usual old overworn t-shirt & shorts. I did not attend. Appraisal came in at 480k. My husband is white (Irish/Italian).
380k vs 480k is a huge difference!! We are both certain there was bias involved here. Now my husband is always the one who meets with the appraiser.
I have also experienced bias that works in my favor too. For example, even though my tenants know that I own the over $1M property that they are renting in, they speak to me like I am a poor broke mom, struggling to make ends meet. Not sure how they get this impression since they also know I am a working professional. I believe it is just bias because I am a woman/ visible minority. But I think they are motivated to pay their rent on time for this reason, so I am definitely ok with them having this impression!
I also used to have an Airbnb where I believe bias worked in my favor. My husband and I would take turns meeting the Airbnb guests and letting them into the property and I started to notice a pattern. Whenever I met the guests, they would give a 5 star rating, and whenever he met them they would have nit picky complaints. For example, he got complaints and stars taken off for things like, “the top of the fridge was dusty” and “there were no oven mitts provided”… If you understand Airbnb, you know how critical it is to get 5 star reviews. My husband is very charming, affable and great with meeting strangers. I on the other hand, am the nerdy awkward one who is better at crunching numbers than being a charming host. And yet I was get 5 star reviews and he was getting nitpicky comments.
The only explanation I can figure is that when people see a white male Airbnb host, they see a professional investor with a business that is making them rich. So they are hyper critical. When people see me, they just see a poor struggling mom trying to make ends meet. So they feel sorry for me and give me great reviews. It’s ok with me. I will take it all the way to the bank :)
- Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes4y
Originally posted by @Bruce Woodruff:
Originally posted by @Tony Kim:
With the exception of the obvious crazies, most of it in today's world is subtle and ingrained. I agree, he probably doesn't even know.You're assuming a lot there Tony. About someone you've never even met....
You're right. If that's not you, then I stand corrected.
- Rental Property Investor · Burlington County, NJ · Member since 2019 · 540 posts · 771 votes4y
We appreciate your sharing your experiences and perspectives.
One thing we do love about real estate is that there are many different strategies any given investor can choose to deploy on the road to wealth. Our experience tells us that if we are mindful of bias and plan for it, we increase our chances of success and if we do not, we decrease our chances. We certainly understand that each different investor will approach this question very differently, as evidenced by the varied opinions and approaches in this discussion thread.
Best wishes for your continued investment success!
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