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A Black couple in the San Francisco Bay Area has settled out of court with an appraiser they accused of undervaluing their home due to their race — with settlement terms that include a jaw-dropping order for the appraiser to watch a documentary the couple was featured in about their experience.
Paul Austin and his wife Tenisha Tate-Austin sued appraiser Janette Miller and Miller and Perotti Real Estate Appraisals in San Rafael, California in 2021. They also sued AMC Links LLC, an appraisal management company in Utah, according to a report in the San Jose Mercury News.
The Austins received an appraisal of $998,000 from Miller for their four-bedroom home in Sausalito, near San Francisco in 2020. Concerned their home was worth more, they arranged for a second appraisal — but with a white friend posing as the owner of the home. The second appraisal with the white owner upped the home’s value to $1.48 million.
The Austins decided to sue Miller claiming that her appraisal was “the direct product of racial discrimination.”
The case has now been settled out of court for an unspecified sum — but with one unique caveat: the defendants must watch a documentary the Austins were featured in about their experience and the issue of appraisal bias at large, titled Our America: Lowballed.
“Having to experience everything that came with receiving the lowballed appraisal was overwhelming,” Paul Austin, 47, said in a statement. “Being able to tell our story and knowing we had legal recourse helped.”
“The ongoing undervaluation of homes in Black neighborhoods perpetuates the wealth gap between Black and white families,” Tenisha Austin said in a statement. “We hope by bringing attention to our case and this lawsuit settlement, we can help change the way the appraisal industry operates, and we can start to see a different trend.”
The Austins purchased the four-bedroom home for $550,000 in 2016 and felt that they had finally obtained a “slice of the American dream” according to a report from ABC 7. They then poured over $400,000 into improving the home, adding an entirely new level, a new deck and new appliances.
The town of Sausalito is known for having one of the country’s most expensive zip codes, with the average listing price for a property in the upscale area at $2 million, according to Realtor.com.
The Austins had their home appraised years ago, before renovating it, and had it priced at $890,000. When they hired Miller to appraise it again in 2020 after renovating it, they were expecting a price tag in the millions and were stunned by the $998,000 figure she returned.
“It was a slap in the face,” Paul Austin told ABC 7.
“There are implications to our ability to create generational wealth or passing things on if our houses appraise for 50% less than its value,” Tenisha Austin said.
When they were approved for another appraisal with Miller and Perotti Real Estate Appraisers — but this time decided to recruit their white friend to stand in as the owner.
“We had a conversation with one of our white friends, and she said ‘No problem. I’ll be Tenisha. I’ll bring over some pictures of my family,’ ” Tenisha Austin told the station. “She made our home look like it belonged to her.”
When the home with the white owner was reappraised at $1.48 million, the Austins decided to sue, with the advocacy group Fair Housing Advocates of Northern California acting as a co-plaintiff.
Miller’s attorneys have denied any bias in court filings.
“There is nothing inherently racist about choosing comparable properties that are located in the same city as the Subject Property,” they wrote in a rejoinder to the lawsuit. “Without any direct (or indirect) evidence of actual racial discrimination, Miller’s choice of comparable properties cannot support Plaintiff’s claim of discrimination.”
A growing body of research has begin in recent years to back Black homeowners claims of bias from real estate appraisals. A study released in 2022 by the Federal Home Financing Authority found that homes in predominantly white neighborhoods were valued at double the value of homes in neighborhoods that were predominantly occupied by people of color.
A seperate study released by mortgage giant Freddie Mac in 2021 confirmed the existence of an “appraisal gap” for homeowners in predominantly Black and Latino neighborhoods, wherein appraisals were more likely to come in below the contract price than in majority white census tracts.
The Biden Administration announced in March 2022 a series of reforms intended to combat appraisal bias, including a five-point plan that seeks to make the appraisal industry more accountable, arm consumers with assistance and awareness, prevent algorithmic bias, cultivate a more diverse appraisal industry, and leverage federal data to benefit research and policymaking around appraising.