A five-year, $5 million grant by Wells Fargo will create the Diverse Appraiser Initiative with a goal of certifying up to 260 new appraisers through Urban League Entrepreneurship Centers in Charlotte, N.C., Atlanta and Houston starting in 2023.
Home appraisal as an industry lacks racial and ethnic diversity. According to a Bureau of Labor Statistics survey, 97 percent of appraisers are white, which often leads to valuation bias against Black and Hispanic homeowners, according to a press release.
In a 2018 Brookings Institution analysis, race plays a significant role in the devaluation of homes in Black neighborhoods. Homes of similar quality in neighborhoods with similar amenities are worth 23 percent less ($48,000 per home on average, which amounted to cumulative losses of $156 billion) in majority Black communities compared with those with few or no Black homeowners.
According to the Urban Institute, increasing the pool of diversity can support more equitable outcomes.
“Racial discrimination in the home appraisal industry is a significant barrier to economic equity,” National Urban League President and CEO Marc Morial said in a statement. “We’re proud to partner with Wells Fargo on this innovative project to open the doors of opportunity and bring a much-needed new approach to diversity, equity, and inclusion that we hope will serve as inspiration to others in the field and beyond.”
In addition to supporting the certification of trainees, the initiative includes entrepreneurship and small business development with a goal of creating as many as 130 new businesses.
“We are delighted to continue working with the National Urban League to create more opportunities for underserved communities,” Kristy Fercho, Wells Fargo’s head of Diverse Segments, Representation, and Inclusion as well as leader of the bank’s home lending business, said. “We’re excited to mobilize the combined resources at Wells Fargo and the National Urban League to help address core barriers in appraiser certification and increase the number of diverse-owned appraisal businesses. This relationship will help to diversify the industry and improve customer confidence in home valuations.”
The Urban League will give entrepreneurial training and support on business basics, including formation, financial management and access to capital, to trainees who undergo or have completed certification. The entrepreneurship centers will customize the programs for individual trainees based on their experience, skill level, and interest, the release stated.
The partnership is part of ongoing initiatives by Wells Fargo and the Urban League to promote racial equity in home appraisals. In 2021, the Urban League partnered with Fannie Mae to seek applicants for their Appraiser Diversity Initiative Sponsorship Program, which focused on attracting new entrants to the appraisal field.
A year later, Wells Fargo identified 25 people from underrepresented communities to participate in the Appraisal Associate Program with the goal of hiring and training them to become licensed residential appraisers. The bank also recruited trainees for the program in 2016 and 2018. Ninety-two percent of the trainees are from diverse backgrounds.