Property ownership is historically one of the most reliable paths to building generational wealth. It affords people so many ways to monetize both today, and tomorrow, through actions like renting, renovating and flipping, and simply waiting for a place to appreciate and eventually selling. That last piece is key to significant wealth building: property appreciation.
Every day, Americans purchase homes that make up an important part of their retirement portfolio, or even part of a trust that they plan to leave to their children. But that all comes to a screeching halt if, when the time comes to sell, the property under-appraises. For many Black families, that is the unjust and heartbreaking reality. Due to pervasive racism in the real estate industry, Black families receive shockingly low appraisals on their homes, the long-term implications of which can be devastating. One couple in Northern California faced this type of discrimination and took swift and clever action, according to ABC7 News.
The Couple And The Home
Paul and Tenisha Austin purchased a four-bedroom home in the highly desirable, waterfront neighborhood of Sausalito in 2016, for $550,000. Just a 25-minute drive outside of San Francisco, Sausalito has seen a boom in its real estate market as a peaceful suburb for SF commuters to escape to.
In fact, within just a few years of purchasing the property, the Austins had it re-appraised and it was valued at $890,000 – already seeing a major appreciation since the purchase date.
At that point, the Austins poured $400,000 into the property, adding a whole new level, a new deck and shiny new appliances. Then, in 2020, after all of those renovations, they had a company called Miller and Perotti Real Estate Appraisers come in and re-appraise their home.
The Austins were shocked when the value came in at just $998,000. So let’s recap: waterfront property, San Francisco suburb, appraised at $890,000 BEFORE $400,000 worth of upgrades were done (including expanding the home). What happened? The Austins had their suspicions.
A “New” Owner And A New Number
The Austins suspected racial discrimination was behind their lowball appraisal. They requested a re-appraisal, but this time, had their white friend pose as the owner – putting up photos of her white family throughout the home and really playing the part. Then the new appraisal came in.
With a white owner in place, the home appraised for $1.48 million.
The Austins teamed up with the Fair Housing Advocates of Northern California and sued Miller and Perotti Real Estate Appraisers for racial discrimination. The case settled out of court with the appraisal company paying the Austins an undisclosed figure.
As part of the settlement, the Austins requested that the woman who appraised their property be required to watch Our America: Lowballed, a documentary about Black and Latino families who have to fight for fair appraisals of their homes after facing racially-driven lowball figures.
This injustice has been an important part of the ongoing exposure of racial discrimination in the housing market. These underappraisals strengthen the already massive wealth gap between Black and white families. The Austins were sharp and fought back – but no family should have to do what they did.
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