Class Valuation, an AMC focused on appraisal technology and innovation, was named a top spotlight innovator by Brookings Institute and ASHOKA in the Changemakers Challenge: Valuing Homes in Black Communities. Valuing Homes in Black-Majority Neighborhoods is a far-reaching effort of the Brookings Metropolitan Policy Program and Ashoka’s Economic Architecture Project to find solutions for housing devaluation, Class Valuation announced in a press release.

Additionally, Class Valuation acquired AMC AppraisalTek, an Arizona-based AMC. It is Class Valuation’s fifth acquisition since 2018.

The challenge, according to Class Valuation, which opened fall of 2021, asked industry innovators to submit their proposed innovations (either policy innovation, or market innovation) to help reshape the mortgage industry to create more equity in the housing market and improve the values of homes in neighborhoods which have been historically suppressed.

“Our goal is to eliminate subjectivity and all forms of conscious and subconscious bias, be it racial, socioeconomic, political, religious, etc., from the appraisal process,” Class Valuation’s Valuation Modernization Executive Vice President Cristy Conolly said in the release. “Injecting positive or negative bias into an opinion of value can falsely drive values both up and down. The core idea of the digital appraisal is to remove this subjectivity and rely on a standardized, scientific, repeatable process to derive data-driven values.”

The Class Valuation Digital Appraisal project leverages advanced computer vision technology to create digital twins of subject properties. The digital twin is a complete virtual rendition of the home, which allows the appraiser to inspect the entire property from anywhere, as if they were on-site. This adds a new layer of appraiser independence as they can review all relevant data and property characteristics without visiting the home or contacting the borrowers, the company stated.

Using advanced technology, Class Valuation is collecting 100 percent of the data in a fully transparent way. This reduces the possibility of the appraiser inadvertently misrepresenting the property or forming any bias through interactions with the homeowners or borrowers.

“We are honored to be recognized as a spotlight innovator for our Digital Appraisal project alongside our partners, including Guild Mortgage who we worked closely with on this project,” Scot Rose, chief innovation officer at Class Valuation, said. “A ton of work has gone into this project, and we’re confident our solution will provide more scientific, objective valuations for the mortgage process, which we believe will help improve equity in housing.”

Guild Mortgage, a growth-oriented mortgage lending company, collaborated on the submission of the Class Valuation Digital Appraisal project for this challenge.

“The collaboration with Class Valuation, leveraging Guild’s insights on bias in the appraisal process gleaned from more than 60 years in the mortgage business, along with actionable ideas for overcoming bias through hybrid appraisal models, represents an important step for the housing industry to help reduce human bias and improve the quality of appraisals overall,” Guild Mortgage Capital Markets Executive Vice President David Battany said. “In a hybrid appraisal process, where the appraiser never enters the other person’s home, the possibility of any bias being formed, either good or bad, is greatly reduced. This results in a higher quality and scientifically repeatable process, with less variations in appraisal values and a more just and fair lending environment for all.”

According to research from the Brookings Institute, the devaluation of homes in Black-majority neighborhoods is a systematic and nearly ubiquitous failure. Addressing the current devaluation and preventing future devaluation requires structural innovations in public policy and private markets coupled with growing demand for those innovations from community members, funders, investors, policy makers and strategic partners who each have a critical role to play in addressing devaluation.