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[Asha] Home appraisers, caught on camera.
One dream home, six different visits.
So many people who have no idea that their homes may have been
appraised much lower than it actually is.
[Asha] It's your biggest investment.
Could your race cost you thousands?
If you haven't lived that life, you're going to be out of touch.
We need to be discussing these issues.
[Asha] Our Face Racism series hits home.
[Asha] Your marketplace starts now.
We're in Oakville, Ontario.
Our team is preparing for a site check by a home appraiser.
This house has 4 + 1 bedrooms, three and a half bathrooms
and it's about 4,000 square feet with a finished basement.
It even has a pool in the back.
But what we really want to know...
Will the value of this home change with the race
of the owner?
We make a few small additions to the décor.
Our hidden cameras are rolling.
Close to a million home appraisals happen in Canada
every year.
They are critical for a mortgage or refinancing.
And in some cases, people just want to know what their house
is worth.
That's what we're about to do.
Hire home appraisers and compare their quotes.
We book six appraisals for the same rented house for our test.
And randomly assign two appraisers to each type of
homeowner, Black, South Asian, and white.
We ask members of our CBC team to join me.
We have a bunch of stuff here.
These are kind of the items that we're going to be changing
with each different family.
These are your children.
Look how cute she is.
So, we've got pictures of kids, we've got a poster going up in
one of the children's bedrooms. -Got it.
And then we have some dolls here.
We're just trying to give a sense of who lives here.
[Asha] Due to the pandemic, we agree to outside visits only and
then send them pictures of what the home looks like inside.
But first let's meet Karen.
Back in 2005, she changed mortgage companies and her home
had to be appraised.
You can feel the look, like is this-- are you really
living here?
Like, what gives you the right to live in this house?
That's the feeling that I got from that appraiser.
[Asha] And she makes a prediction to her husband.
I said to him, I bet you our appraisal comes back really low.
[Asha] Sure enough, the appraiser's estimate is much
lower than similar homes in her neighbourhood.
I said to the broker, this doesn't make sense that this
would be this much, and I want another appraisal.
I said to her, I think it's because we're Black.
It's like, you know, driving while Black, well, owning
a house while Black.
[Asha] So, she demands another appraisal.
And that second appraisal comes back $100,000 higher,
then you know something's wrong.
Something is just not right.
[Asha] You heard correctly.
A $100,000 difference between her first appraisal and her
second one.
Are we still doing that offer in London?
[Asha] Is Karen an isolated case?
Realtor Chukwu Uzoruo doesn't think so.
One of the groups I'm part of, ACRES, it's an Afro-Canadian
real estate society.
I remember I reached out to some of the members to ask them about
their experience when it comes to the appraisals, and some of
them were saying yeah, you know, definitely it has happened
to me before.
[Asha] It happened to Chukwu too in 2018 when he was refinancing
his home.
I got the news from my wife, she was telling me the lady came
inside, she just-- just rushed right in, came back
outside, stepped outside and then she left.
[Asha] The appraisal Chukwu gets?
Less than he expected even with extensive renovations.
So, he follows up with the company.
I was looking at the-- the tone of the supervisor.
I'm Canadian, I'm Canadian born, but I grew up in the Caribbean,
so I have a Caribbean accent, and not to mention my name
is Nigerian.
So, the reaction I got from this guy wasn't that--
hey, you know what?
This is a professional who's a broker who knows what he's
talking about, it was just like there was some fool who's just
trying to get a higher amount for no reason.
[Asha] Chukwu has another appraisal that's $50,000 higher.
Back on hidden camera, it's time for our test.
First day and Stephanie meets our first appraiser.
You found it okay?
Excellent.
[Asha] He chats with her for quite a while.
There are built-in speakers--
--if that's a thing.
Inside and then going to outside, so it plays
when you're at the pool.
Right.
[Asha] And then takes a look around.
[Stephanie] Okay. Thanks for that.
Take care. Bye.
[Asha] More of the same from our second appraiser.
You'll see the little sidewalk that goes to the back.
The concrete. Yeah.
That's the-- yeah, that's from before.
[Asha] He surveys the exterior, and takes his $500 fee...
I'll grab you some cash.
[Asha] He's on his way.
We send them photos of the interior to make their
final assessment.
Now it's time for the results.
Our first appraisal comes in at
$1,925,000.
The second appraisal, a little lower
at $1,900,000 flat.
A $25,000 difference.
Interesting.
Will we see the same variation with our South Asian
homeowner, Serenity?
[producer] That's how it's gonna look.
[Asha] Day two and her appraisals are in full swing.
If you just kind of go around where the garage is,
there's a door, you'll be able to unlock it.
[Asha] Compared to Stephanie's appraisals,
the first guy takes just four minutes to finish the job.
Seems like each person has their own way of doing things.
Yeah, definitely.
[Asha] The second appraiser gets straight to work.
Doesn't even ring the doorbell.
Good. How are you?
Okay.
Okay, perfect. Thank you.
[Asha] Time for Serenity's results.
Her first appraisal checks in at
$1,915,000, the second,
$1,850,000, a difference of $65,000.
Hmm, that's a bigger variation than the white homeowner.
Could this be a sign of racial bias?
Discrimination in appraisals is making headlines stateside,
with many African Americans calling it out.
[woman] So, it appraised for $1.482, which was 50% more than
what it appraised for a couple weeks prior.
Almost $1.5. $500,000 more.
[woman 2] By just having my husband in the house by himself
and taking down all evidence that he has a Black family.
[Asha] The issue caught even attention of then-candidate
and now President Joe Biden.
Same exact home.
Your home will start off being valued 29% less than my home.
[Asha] Professor Junia Howell studies discrimination in the
American appraisal industry.
While it might look and manifest slightly differently in
different areas depending on what racial groups live there
again and again, we see that white spaces are evaluated as
worth more, as more desirable, as more marketable.
There are so many parallels between Canada's appraisal
industry and the United States.
It's really hard for me to believe that there isn't a lot
of racial bias in appraisals in Canada.
[Asha] Now, I step into the role of our third homeowner.
I alter my appearance and throw on a pair of glasses with a
hidden camera.
They're actually quite nice glasses.
I get familiar with my new home.
How will my appraisals compare with the others?
[Asha] Hi, how's it going?
We're about to find out.
[Asha] Share your home appraisal story.
Marketplace@CBC.ca.
[Asha] This is Your Marketplace.
We're testing racial bias
in home appraisals.
So far, the appraisers meet our white homeowner Stephanie and
our South Asian homeowner Serenity.
Now they're meeting me, our Black homeowner.
[Asha] Oh, okay. Hi.
[Asha] He inspects the exterior of the home but when he gets to
the backyard.
[Asha] That's right.
[Asha] His tone is different then the others..
...then this happens.
[Asha] Yep.
[Asha] Yes.
=He asks me twice if I'm the homeowner.
That didn't happen to anyone else.
[Asha] We'll send them.
[Asha] Bye.
We send the interior photos and the quote?
1.7 million dollars.
The lowest appraisal in our test.
Now for our final appraisal.
[Asha] You should go this side.
And I'll open it up.
[Asha] He takes a look around and we chat about the house.
[Asha] The pool is also something that is upgraded.
We actually put that in back in 2017.
And the light fixtures.
Just a couple of years ago we put these light fixtures in.
[Asha] And he's off.
[Asha] Nice to meet you.
But get this my second appraisal comes in at
a high of $2,050,000.
Which is $350,000 more than the first one
for the same house.
On the same day.
That's the largest difference in our test!
And it's similar to what Karen experienced when she demanded a
second appraisal and got a much higher amount.
Thing is that some people take the first quote at face value.
They don't know that they can ask for a second appraisal.
I think about that, what other opportunities for other people
have been lost.
[Asha] Bottom line, if you suspect your home appraisal is
too low, it might be worth fighting for another opinion.
We share our results with our expert Junia Howell.
The first appraisal came in at 1.7, the second appraisal came
in at just over two million.
That enormous variation, right there in and of itself
is a problem.
$350,000, that is enormous.
[Asha] And even though one of the estimates for the Black
homeowner is the highest in our test the average is still the
lowest of all three homeowners.
This matters so much that I think as a society, again, for
all of us we need more standardization here because the
variability allows for more bias than is
really desirable or acceptable.
[Asha] All of the appraisers in our test fall under the
Appraisal Institute of Canada.
So, we take our results to its CEO, Keith Lancastle.
I think to suggest that biases don't exist, would not be--
would not be candid-- would not be honest.
[Asha] We start with our white homeowner.
A $25,000 variance.
Your thoughts?
Entirely-- entirely reasonable.
[Asha] And then our South Asian homeowner.
You're looking at $65,000 difference there.
[Keith] On nearly 2 million.
It's certainly not-- it's not a significant difference.
[Asha] Some people might argue that's still a lot of money.
Then we tell him about what happened to me, our
Black homeowner.
That's $350,000 of a difference between the first appraisal and
the second one, mind blowing.
You would really need to look at the-- at the appraisal reports
side by side and look at the assumptions that the individuals
relied upon in arriving at their-- their opinion of value.
[Asha] I just don't know how that could be rationalized or
how you could even compare them and say that this is a
legitimate reason why there's this big of a difference?
We did look at some of the individual reports and there are
some differences that could, I'm not saying they did, that could
have influenced a difference in value, even
one that significant.
But I would say as well though that some appraisers will be
more conservative in the values that they arrive at day in, day
out, than others that might be more aggressive.
But what do you say to some in the BIPOC community and
the Black community who will look at our test results
and say that is definitely racial bias.
We acknowledge that there are biases in our society,
and we have to work to be better.
From the outside looking in, it is-- it is troubling that
one would be so much lower than all of the others.
But I don't know that it's a fair statement to suggest that
you can directly draw a line between that and
the race of the homeowner.
[Asha] Keith adds the institute has received only one
complaint about racial bias in more than a decade.
While we debate the results, someone else is listening in.
It's been more than two years since Chukwu Uzoruo's appraisal
came back about $50,000 lower than expected.
He's finally getting his chance to face the industry.
I'm wondering if you'd be willing to speak
with him and hear his concerns?
Absolutely.
We have Black homeowners who are actually taking away any
sort of influence, that there are actually Black people living
in the house before the appraisers are even coming in.
Because they all know in the back of their mind that bias
does have an effect, and maybe one of the reasons why
you're not hearing so many of the complaints that are coming
in, is because we don't know who to complain to.
That is, is a very discouraging thing to hear.
That's why we struck our council on diversity, to help make sure
that collectively the real estate sector is able to work
better, and not-- and not be influenced by biases like this.
I'm really hoping that you reach out to other groups or community
groups who can actually tell you or give you guys some guidance.
If you haven't lived that life, if you haven't experienced it,
you're going to be out of touch and nothing's going to change.
Take the problem of bias seriously, it
really does impact us.
We need to be discussing these issues, we can't just
pretend they're not happening.
We certainly encourage people to submit complaints if they have
concerns with an appraisal.
If our members do make a mistake
that causes a financial impact, there is an insurance program in
place to help make sure that those people are made whole.
[Asha] Were you happy with his responses?
I understand his position but at the same time it
makes me upset to be really honest.
There's so many people who have no idea that their homes may
have been appraised much lower than it actually is.
And I'm thinking about the potential.
The what-ifs.
That could've been your retirement savings.
That could've been your vacation home.
[Asha] You gonna follow up with AIC and Keith?
Keith is going to be my new best friend.
[Asha] Have a complaint about your home appraisal?
The AIC wants to hear from you.
Check out their website or email them info@aicanada.ca.