Real estate appraisers will be required to complete a fair housing and appraisal bias education course under the bill signed Monday by acting Gov. Tahesha Way. (Courtesy of the state of New Jersey)
Discrimination in housing appraisals has been a long-standing obstacle in the racial wealth gap, multiple studies have shown.
New Jersey took a step Monday to limit those discriminatory practices, with acting Gov. Tahesha Way signing legislation that updates the Real Estate Appraisal Act to explicitly ban appraisers from discriminating against property sellers and buyers.
Under the new law, appraisers are barred from considering personal characteristics — race, religion, sex, gender identity, sexual orientation, age, marital status, disability, familial status, or immigration status — of the current or future owners when determining the value of a property.
“When buying or owning a home in New Jersey, we must strive to provide our residents with fair and equal treatment,” Way said. “For far too long, systems were in place that would perpetuate racial bias. With this bill, we will ensure that personal biases don’t influence appraisers.”
This comes nine months after the state Attorney General’s Office launched an initiative that set penalties for appraisers found to devalue a home because of characteristics protected under the Law Against Discrimination.
Now, property owners will have more ways to find remedies if they believe they’ve faced discrimination, officials said. The law will be enforced by the Appraisal Qualifications Board within the state’s consumer affairs division.
Real estate appraisers will also be required to complete a fair housing and appraisal bias education course offered by the board.
Advocates celebrated the new law as one that will help Black and brown families achieve the full benefits of homeownership and generational wealth.
“Holding appraisers accountable for discrimination is one of the ways we must address New Jersey’s racial wealth gap,” Adam Gordon, executive director at the Fair Share Housing Center, said in a statement. “For most homeowners, their house is their most valuable asset. Appraisal bias has been robbing Black and Latino families of hard-won equity for decades.”
Multiple studies have found that homes are undervalued in majority-Black communities. A 2022 study from the Brookings Institution said homes in Black neighborhoods are valued 21% to 23% lower than in non-Black neighborhoods. Bias in the appraisal process accounts for some of this discrepancy, along with systemic bias against Black neighborhoods from buyers in the housing market, the study states.
The legislation passed the Senate 26-10 in May, and it passed the Assembly 65-10 in June. Sen. Declan O’Scanlon (R-Monmouth) voted against the bill, calling the measure “ludicrous, because appraisers have no skin in the game.”
O’Scanlon said the real estate market — not appraisers — determines how much a home is worth. He said the new law could drive appraisers to overvalue homes, which is “not good for the market, not good for the mortgage industry, not good for the banks.” He also argued the law could lead appraisers to stay away from some neighborhoods out of fear that they could be deemed racist.
“The whole proposition is misguided and ridiculous,” O’Scanlon said. “The only potential here is negative.”
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