Earlier this year, California became the first in the country to form a task force to study reparations for Black Americans in the state. One of the things the committee was tasked to study was discrimination in the real estate industry. One outcome so far was the passage of the Fair Appraisal Act.

During the fourth meeting of the California Task Force to Study and Develop Reparation Proposals, the committee heard testimony about home appraisal bias.

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A home appraisal is a visual inspection of a property. An appraiser creates a report that considers the square footage, property lot size, amenities, and the number of bedrooms and bathrooms. This information will be used to create a valuation of the property, indicating the market value as well as the equity present in a property.

One of the testimonies heard was from Bay Area residents Paul Austin and Tenisha Tate, who was given an appraisal $400,000 less than the $1.4 million they expected. An older white woman conducted the appraisal.

The couple decided to do an experiment and had another appraisal done. This time they had a white friend pose as the homeowner. The second appraisal report came back with their home valued at $500,000 more than the original assessment.

The new California law aims to stop such discriminatory discrepancies. On Sept. 28, California passed the Fair Appraisal Act to protect Black homeowners in the appraisal process.

Under the act the state will collect and track appraisal data. It will prohibit appraisal being influenced by race, color, religion, gender, gender expression, age, national origin, disability, marital status, source of income, sexual orientation, familial status, employment status, or military status of either the present or prospective owners or occupants of the subject property, or of the present owners or occupants of the properties in the vicinity of the subject property.

This bill would require, beginning January 1, 2023, that appraisers complete at least one hour of instruction in cultural competency on a regular basis.

Read more about the new law here.