– “poor neighborhood”
– “good neighborhood”
– “crime-ridden area”
– “desirable neighborhood or location”
– “undesirable neighborhood or location”
Why is this list important? Fannie Mae wants appraisers to stay objective about the criteria they use to describe and value properties. Appraisers need to not let their personal opinions, beliefs or subjective judgements about certain neighborhoods influence the content or outcome of an appraisal. Fannie Mae basically reiterates the Fair Housing Act in saying it is a prohibited practice to base the “opinion of market value (either partially or completely) on the race, color, religion, sex, handicap, familial status, or national origin, of either the prospective owners or occupants of the property being appraised or the present owners or occupants of the properties in the vicinity of that property” (B4-1 Pg 536 in Seller’s Guide).
Not about being politically correct: Sometimes when this conversation comes we might hear, “Dude, stop being politically correct,” or “Don’t get all woke on me,” or “It’s not your place to tell me what to say.” But this has nothing to do with being PC and everything to do with being professional, showing respect, and recognizing that words have meaning. The truth is there are always new things to learn and sometimes old dogs need to learn new tricks (myself included).
SUBJECTIVE LANGUAGE ISN’T USEFUL:
Pride of ownership: What does “pride of ownership” mean? Couldn’t pride mean something different depending on who you are talking to? Saying a neighborhood has pride or not doesn’t help anyone understand an area. So if someone says, “The neighborhood lacks pride and it’s a bad area,” that’s probably more of a declaration of personal bias rather than useful language to objectively describe an area.
Luxurious community: On the other hand when we say a location is luxurious, what does that mean? The word is so subjective because one person’s luxury is another person’s dump. That’s why I might suggest saying something like, “The neighborhood fetches some of the highest-prices in the zip code with homes typically above 5,000 sq ft., etc…” A focus on the facts is much more useful than a subjective word, right?
Family-friendly: It almost sounds okay to say, “This is a family-friendly neighborhood” because our society is so used to language like that. But what about saying, “This is NOT a family-friendly neighborhood”? I think sometimes when we insert a negative it’s a clue there is room for better language that doesn’t leave certain groups out. Let’s be real. Families live in all sorts of neighborhoods, so being a so-called good or bad area for families is highly subjective. Ultimately if you say an area isn’t fit for families, you’re probably talking about your own family or belief system more than anything.
What to do instead: It’s important to take inventory of the words we use and how our lingo might be perceived. I suggest weeding out subjective language that might in any way show bias or discriminate. So take a list like the one above and monitor your language. Being familiar with the Fair Housing Act and figuring out fact-based ways to talk about value and neighborhoods is the goal as it focuses on respect and not being swayed by personal opinions or beliefs. When describing neighborhoods I would suggest sticking to facts such as architectural styles, types of units, proximity to conveniences, economic factors, condition of homes, and anything that would help sum up an area without imposing subjective words that show personal bias. Keep in mind I’m saying this as a non-lawyer, so this isn’t legal advice. Also, I’m not saying solely using the right words is the end-all solution for eliminating bias either.
I talked with a reporter last week about these words and he asked if I use these off-limits words in my appraisal reports. Heck no. I don’t know if he believed me or not, but words matter and I take that very seriously as an appraiser.
Anyway, that’s what’s on my mind. I hope it was helpful.
Questions: What do you think of the list above? Anything to add? Are there other phrases you’ve heard by the real estate community that you’d recommend weeding out? I’d love to hear your take.
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While I am sure whomever at FNMA had their better angels at heart when they came up with this rule, this is the type of situation that calls to my mind the aphorism that “The road to hell is paved with good intentions.”
The more that centralized institutions police the people’s language and ability to state the obvious facts of everyone’s lived and felt experience, the more public trust in those institutions and the services they regulate erode.
Thanks Nick. The thing is though it’s not a fact to state an area has “pride” or not, so we are not dealing with facts but opinion. I hear you on being told what to do, but this seems more like a prod to stick to the facts and be objective more than anything. Thoughts?
I am thinking of Potter Stewart’s observation in Jacobellis v. Ohio regarding obscenity: I know it when I see it. So when I hear a neighborhood is good or poor, I don’t personally think we need five pages of lines describing aspects and qualities of a good neighborhood to understand that notion.
I am not saying that you are incorrect that the expression “pride” is subjective…it is certainly by nature subjective based on what the appraiser thinks pride means, or what he or she thinks pride means to the client or society at large.
My point is merely that if you over-regulate language too far (maybe this effort you speak of stops short – I don’t know), the appraisal document will start to enter the realm of the absurd. People then stop trusting the documents, and find ways to work around the process rather than with it.
Thanks Nick. I get where you are coming from and I firmly believe there is such a thing as too much. In my mind I don’t think these words go too far. This is basic stuff that doesn’t require much thinking for appraisers and the real estate community. If the result ends up not being credible or if it is confusing, then we’d really have to examine our practices. But if anything this sort of language seems to encourage use of objectivity, which is exactly what we need from appraisers (and I would argue other real estate professionals too). The value needs to be objective and the language we use to describe it needs to be also. This keeps readers of reports from confusion and wondering if there is bias. In my experience this really doesn’t add much extra commentary or end up with five pages of absurdity, but I suppose if someone really wanted to take things to the extreme that could be done. For now though I think there are subtle ways we can describe neighborhoods in objective terms – and that is valuable. I really only see the positives here, though taken to far this could really get absurd.
Thanks for your two cents. I really appreciate it.
Hi Ryan, well I got into a knock down dragged out mess three years ago when I put in the median household income and why with interest rates at 5% were creating an affordability issue. Had a lender tell me that was racial and it violated Fair Lending. Being the shy quiet beat up ol cowboy I am…… I asked them to show me where in Fannie Mae and the Fair Housing Act that those words about affordability and interest rates were listed. I then heard from the boss and the bosses boss. My question remained the same. No answer, no response from anyone who called me. Although the last comment was they were sending me to the state. So I waited by my phone to have a talk with the state. Funny State never called and I found out by looking in Realist that the lender closed the loan who was having such a fit. My guess is that no one at that firm and probably most firms have no clue what is actually in Fair Lending and what words can and cannot be used. I understand the reasoning but I believe that it has gotten so far out of line that we are loosing site of the trees while standing in the forest.
Thanks Brad. And this is where language can get crazy. I don’t support insanity of not being able to have conversations about affordability in neighborhoods, for instance. That’s nuts. Granted, words matter and I do think we need to choose them wisely when having this conversation.
Oh you know me I always choose my words wisely. Wish you could see me smiling right now. And you could be I don’t have a mask on while sitting at my desk. Don’t get me started…
On a different note, you be safe up there young man. Don’t want you back in the hospital. Once in 40 years is enough, you hear me>>>>>
Thanks Brad. This was a sobering past week for me because one year ago I was literally in the hospital for six nights. That was a scary time (for my wife especially) and I want to do everything in my power to not go back. I’m eating well and taking good care of myself. Here’s to health and a deep sense of peace (now that’s not easy when work is chaotic like it is right now). 🙂
You forgot “Walking distance to St. Charles Borromeo”, “Two seperate Kitchens” !!
Not sure exactly what you mean. Care to expand?
Who you callin an old dog?
Haha. You my friend. 🙂 (not really)
Why are most of those “words” , especially the positive words, seen everyday, over and over, in the MLS listings?
Not sure. I can’t really speak to what real estate agents do, but I’m emphatic that appraisers need to avoid words like this. I suspect it would be wise for the real estate community as a whole to really look at the words being used though and adapt. Language is a powerful and complex thing and there is nothing wrong with stepping back to analyze our practices and habits to see if there is room for growth.
Hi Ryan
A timely subject, a few phrases I will need to re-evaluate like;
Estate quality
Executive home
High-end home
Superior/inferior Curb appeal.
Definitive statements like “mold” are also problematic, remember we’re not experts in all things, I use “obvious discoloration”.
Thanks Joseph. I appreciate the list. Superior and inferior really hit home too because those terms can be wishy-washy. Totally agree on the “M” word.
So how come all of the online real estate sites like Zillow, Trulia, Redfin and Realtor.com have wild ranges for estimates of what a home is worth?
Hi JK. I’m not them, so I don’t really know. I do know there is no such thing a property only being worth one exact amount. There is always a range of value that is reasonable. If I sold something on Facebook Marketplace, for instance, buyers might be willing to pay $100-120 for that thing. Something similar happens in real estate where the value of a home realistically looks well-supported anywhere from $290,000 to $300,000. So there really is such a thing as a reasonable range, which means there should be a difference between algorithms on websites and even human appraisers. But let’s remember the algorithms haven’t seen the properties and obviously when there is a vast disparity, someone isn’t right.
This is a great point, we all have our own biases. We all need to be conscious when it comes to using our words. Very well said Ryan.
Thank you so much Hengameh. Yeah, there’s nothing wrong with looking in the mirror, recognizing bias, and then doing something about it. We all come with baggage. Or maybe it’s just me… 🙂
We have to be careful talking about school ratings, too. School test scores are directly correlated with the income levels (which are in turn directly correlated with the ethnic makeup) of a neighborhood, so description of school rankings or ratings is sometimes code for racial profiles of neighborhoods.
Good point Steve. Thank you. Of course school ratings can be pretty subjective depending on what goes into them. If it’s test scores, that’s one thing. But what if it’s based on ratings on a website from parents and community members? Lots to think about. Schools are important though and in my neighborhood description at times I will mention schools by name. If it’s a reason why buyers are specifically moving to the area, it’s worth mentioning. So I might say a property is within Bella Vista territory if that’s something that is driving buyers (it is something on the mind of many buyers).
Let’s keep in mind of course most of the time there is a connection with school ratings and property value. Generally speaking, the more highly-rated a school is, the higher value is likely to be. So in a sense strong schools are a predictor of value. But that’s not always the case. For instance, Sierra Oaks has some of the highest prices in the entire region, but the neighborhood technically feeds into a low-rated school on greatschools.org (Encina).
I basically stopped doing lender work in the early 1990’s when the List of Bad Words came out from an undisclosed government agency.
My friend, Barry Alperin, MAI, ASA coined the phrase in about 1992-93 or “Regulatory Paranoia”.
I failed my 5th year Experience Review with the AI over the issue of language in my reports.
My response was I use my full vocabulary to describe factors that are impacting local property value, be they good or bad.
After I was blackballed, I made sure I picked reports from good areas, not bad ones where I had written about gangs, drugs, prostition, rape, pillage and plunder.
The fact that I mostly do not do work for loan arrangers; allows me to continue using the vocabulary accumulated from years of study. haha
Thanks Steve. That’s wild. I did disclose a triple murder in a report years ago as there was something that happened right up the street. In my mind it was objective and it could be something that was on the mind of buyers – temporarily at least.
I am very curious as to the frequency of the improper words appearing in appraisals. Maybe your readers that do a lot of review work can quantify it for us, we being numbers people…. I personally feel that the numbers are going to be very low, and that this finger pointing is unsupported, if it is a problem then we need to rise above the use of these terms, but if it is BS it should be identified as such.
Richard, I review quite a few lending appraisals every week. I cant exactly quantify the number of words deemed offensive by the powers that be, but let me tell you that the overall quality of lending reports is poor. The majority of lending work is done through AMCs that are not utilizing the most competent and qualified appraisers. Its a shame because there are a lot of great appraisers out there, but many choose not to participate in the lending world.
Thanks Mark.
Thanks Richard. Any reviewers can speak up.
I think the media narrative right now assumes that these rules in place mean the words are incredibly frequent. I’ve heard people allude to that without any support. The two media pieces I saw recently both sort of took the idea of the Fannie Mae rules being present as a way to talk about appraisers being racists. I really don’t know the answer technically about frequency of words as such, but I think media can easily use this to create a false narrative.
This is something good underwriting should readily correct and it seems prudent for colleagues to confront any words that might show bias too because our value proposition to the world is our objectivity and analysis. If anything hampers my objectivity, it’s time to confront that. This is why I don’t wear swag from real estate brands when it’s given to me. I don’t want to show partiality to one brand. I know that’s a different thing, but it’s important to uphold neutrality in many ways. This is also why I said NO when someone wanted me to get a real estate license and hang my name with their brand. Nope. Most importantly when talking about the market, I am neutral and my goal is to not be swayed by sensational headlines. I want to unpack trends and tell the story – even if people challenge the narrative for whatever reason. I simply want to highlight the story the stats are telling rather than the narrative we often see imposed on the market.
I realize these examples are far from the conversation at hand, but they are all lumped into one category in my mind. As an appraiser there are constant threats to my neutrality and I need to confront big and small issues alike.
Anyway, I’m starting to ramble.
Really interesting conversation Ryan. Thank you for having the courage to get involved and the ability to find common ground. Words do matter and if we are not careful about what we say, things can become normal that shouldn’t be.
Thank you Gary. I appreciate it. This has always been an important conversation and today it feels even more relevant. In my mind speaking objectively is about both defense and offense for appraisers. I want to do the best I can on my end and avoid accusations where possible. In this regard speaking objectively is a defensive posture. But it’s really offense too as I’m doing my best to try to be objective because it’s a DNA issue as an appraiser. I need to be neutral in all I do and that needs to happen in my value, process, and the words I use to communicate. I know I’ll get some flack for this post, but it has nothing to do with being PC and being told what to do.
I can understand that an appraisal needs to appear as objective as possible; especially since they are so subjective. The examples you sited would certainly be out of place on an appraisal report.
As Realtors, we are sales people with our seller’s interest at the forefront of our duties. If the park across the street could be viewed as “wonderful for families”, the backyard is “great for entertaining”, or the home is near “fabulous schools”, we’re going to say so in the MLS. If I hired a Realtor and they were reluctant to use descriptive/subjective language, I’d find another Realtor. I suppose someone could make the argument that I was steering the purchase of the home to buyers with children. I wonder if an investor thought they had submitted the best offer, but the seller sold to a family, if the investor might have any chance of success if they were to sue for discrimination. I think sellers have the right to select any offer they like, regardless of their motivation, and thankfully Realtors are allowed to use flowery language to market a home.
Thanks Chris. I’m a huge fan of adjectives and we should use them. I think maybe you’re not getting my intent here. What I’m trying to communicate is there are some words that communicate far more than just a park being wonderful (totally fine), outstanding schools (totally fine), and the neighborhood being fabulous (totally fine). Words do have meaning and we have to be real about that. So if I say a neighborhood is poor, rich, desirable, undesirable, etc… that’s where subjective language can start to matter and make a difference. As I wrote, “I suggest weeding out subjective language that might in any way show bias or discriminate.” Calling a park amazing does not fit that bill and saying a neighborhood is incredible doesn’t either. I’m not talking about eliminating all adjectives. That would be insane. There is absolutely nothing against flowery language and hopefully people won’t walk away with that point after reading what I wrote.
There is no mistaking it is illegal to discriminate based on the Fair Housing Act, so that’s where words in the real estate community need to be chosen wisely. There will simply be some words or phrases we don’t use because they show bias or discriminate. This is true for appraisers and agents alike. As someone said on my LinkedIn post, there are legal consequences for words. I think that’s a really good way to put it. It’s true. A lawyer chimed in on my Twitter feed affirming the importance of choosing words. That’s the big point.
You are a class act Ryan. My respect for you continues to grow with each of your blog posts. Doing the right thing in the right way is what we should all be striving for…not fighting against.
Thanks for the kind words Teresa. I really appreciate it. That’s exactly what this is about. The right way.
So what about the new drop-down boxes?
My choices are:Adverse, Neutral & Beneficial
Then my choices on the next boxes are;
Other, Residential, industrial, commercial, Busy Road, Golf Course, adjacent to park and so on.
So who decided these are “appropriate”?
Thanks Michael. I don’t have a problem recognizing there is a price difference between various features or locations. After all, buyers are willing to pay more, so we need language to recognize that. It would be silly to not be able to recognize there is a difference in value for so many different items. In my mind that’s different than saying a neighborhood is not desirable or poor or rich and whatnot. I have no idea who came up with the lingo, but in an appraisal report the appraiser is supposed to back up any adjustments with support, so the focus is still on being objective.
This is a complicated topic because words are tricky as acknowledged here In already.
Maybe what is needed is some simple samples or examples of the proper way to word the needed phrases you listed, the objective way.
Thanks Larry. Yeah, it is tricky. I think a few more practical examples would likely be useful. If anyone has something to say, please pitch in. I did mention in the post, “When describing neighborhoods I would suggest sticking to facts such as architectural styles, types of units, proximity to conveniences, school ratings, economic factors, condition of homes, and anything that would help sum up an area without imposing subjective words that show personal bias.”
Thanks so much!! As I read the thread, I think what everyone is saying, is we could use a little more advice on examples of some of the words and phrases you would choose for “neighborhood condition” in your suggestion of describing “condition of homes” (all types) and “economic factors” (all types) – without detracting from our precision in describing the property. Or, is it the suggestion to eliminate the description category? Not a trick question, just need clarity.
You say
“When describing neighborhoods I would suggest sticking to facts such as architectural styles, types of units, proximity to conveniences, school ratings, economic factors, condition of homes, and anything that would help sum up an area without imposing subjective words that show personal bias“
Hi Denise. I am definitely not suggesting eliminating this category. I would be emphatically against that because I think we can do a great job with effort. I am simply suggesting to use objective language because that is what is ideal. It takes work on our part and it serves the client well. Moreover, from an appraisal standpoint, objective language helps show a lack of bias, which is the goal. I think the gist is to refrain from subjective things such as “This is a good neighborhood,” or “This is a desirable or undesirable area.” Someone this week asked me to talk about market trends for properties in “nice” areas and then properties in “better” school districts. I don’t think it was a Fair Housing sting operation, but I do think people tend use such subjective language as a norm, and that’s just not my role. So I said I could talk about dynamics at higher prices if that’s the type of stats the person wanted. I wasn’t about to take the bait to talk about “good” areas or “better” schools (whatever that means).
Ultimately, hopefully I communicated well enough above to say subjective words tell us nothing really since “good” and “bad” can mean so many different things depending on who you ask (or who is reading the report). Instead, let’s stick to some of the things I suggested. I think that’s a decent list of ideas as a starter, and there could be more that other offers too.
I might be able to focus on talking about craftsman, ranch, or Victorian homes, mostly single-family units being present along with a few apartment buildings, local amenities such as parks, proximity to schools and job centers, commuting distance to job centers, why people are moving to the neighborhood if I know (move up, move down, investment, Airbnb units, lots of first-time buyers targeting the neighborhood, etc…(and this has to be done very carefully with objectivity I think)), any changes in the neighborhood (especially if I know about something big being planned in terms of economic development), the year homes were built, owner or tenant occupancy rates if I’m lucky enough to have stats like that, the size of lots if they vary, pockets of value if there are vast differences in the neighborhood, etc… I don’t know that the wheel is needing reinventing here. It’s just when we describe a neighborhood, let’s stick to the facts rather than showing personal bias. Maybe one of these days I will do another post to talk through some more examples. That would likely be helpful.