2.4.3_Identifying-Avoiding-Bias_ 1080p_caption

Jul 06, 2026 12:51 · 5:19 · English · Whisper Turbo · 2 Kaikōrero
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Let's walk through a scenario.
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An appraiser is hired to complete a residential appraisal for a purchase transaction.
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Before the inspection even takes place,
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the loan officer tells the appraiser the contract price is $525 ,000 and
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says, we really need this one to work.
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If it doesn't come in at value,
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the deal may fall apart.
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Now, during the inspection,
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the buyer's agent is also pointing out sales they believe support the contract price.
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In fact,
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they hand the appraiser a list of sales selected by the seller and explain why they
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think those sales prove the property is worth the contract amount.
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As the appraiser reviews the market,
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something interesting emerges.
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Several of the sales being promoted are actually superior to the subject property.
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At the same time,
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there are two lower price competing sales nearby that appear to be more comparable,
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but nobody mentioned those.
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After leaving the property,
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the appraiser begins feeling some pressure.
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Not direct pressure to falsify anything,
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but pressure nonetheless.
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The appraiser knows everyone involved wants the transaction to close.
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When preparing the report,
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the appraiser gives significant weight to the sales that support the contract price.
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The lower price competing sales receive less discussion.
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Positive adjustments are applied to those lower sales,
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and those adjustments move the indicated values closer to the contract amount.
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The appraiser doesn't make up data,
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nothing is fabricated,
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but the analysis is clearly moving toward a desired outcome.
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The final value opinion comes in at exactly $525 ,000,
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matching the contract price.
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Later, a complaint is filed and the appraisal is reviewed.
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The reviewer notes that the lower -priced competing sales were actually more comparable.
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The adjustments applied to those sales weren't well supported,
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and the reconciliation appears to be driven more by the desired result than by
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market evidence.
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As a result,
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a regulatory concern is raised.
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Did the appraiser allow bias,
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client pressure,
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or advocacy to influence the assignment results?
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That's the question I want you to think about.
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Did this appraiser remain impartial and independent or did subtle bias influence
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the assignment?
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Now, before we answer that question,
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let's look at how USPAP defines bias.
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USPAP defines bias as a preference or inclination
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that precludes an appraiser's impartiality,
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independence,
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or objectivity.
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Merriam -Webster defines bias as an inclination of temperament
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or outlook, especially a personal and sometimes unreasoned judgment or prejudice.
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Notice that neither definition requires fraud.
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Neither definition says someone has to intentionally falsify information.
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Bias can be much more subtle than that.
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This scenario illustrates one of the most common threats to appraisal credibility,
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and that's pressure to support a transaction outcome.
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What's important here is that nobody explicitly told the appraiser to hit a number.
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Instead,
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the pressure was subtle.
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The loan officer said,
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we really need this one to work.
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The buyer's agent steered the appraiser toward certain sales.
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Those kinds of comments happen every day in appraisal practice.
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The danger is that an appraiser can slowly begin focusing on evidence that supports
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a desired outcome while paying less attention to contrary evidence.
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In the real world,
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bias often doesn't look like outright fraud.
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It can look like selectively emphasizing certain sales or minimizing contrary evidence.
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It can look like unsupported adjustments.
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Or it can appear when an appraiser begins reconciling toward a number because everyone involved
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wants the deal to close.
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So what actually went wrong here?
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The problem isn't that the final value matched the contract price.
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There's nothing wrong if that's where the evidence leads.
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The issue is how the appraiser got there.
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The lower price sales appeared to have been more comparable,
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yet they received less emphasis.
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The sales supporting the contract price received greater weight.
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The adjustments applied to the lower sales appear aggressive and lack strong support.
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When you put all of those facts together,
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the reconciliation begins to look outcome -driven rather than evidence -driven.
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The concern is the process.
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This is where USPAP comes into play.
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The ethics rule requires appraisers to perform assignments with impartiality,
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objectivity,
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and independence.
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That means we can't allow a client's objectives,
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a party's financial interest,
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or transaction pressure to influence assignment results.
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The USPAP preamble reinforces this concept by emphasizing integrity,
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impartiality,
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objectivity,
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independent judgment,
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and ethical conduct.
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Those principles are the foundation of public trust.
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Once analysis starts being shaped by a desired outcome,
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credibility begins to erode.
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This is also a good reminder that bias isn't limited to obvious misconduct.
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Bias can show up in much smaller ways.
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For example,
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giving greater weight to evidence that supports a preferred outcome,
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minimizing stronger contrary evidence,
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using unsupported adjustments that move values toward a desired result,
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reconciling toward a contract price because the transaction needs to work.
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Those are all warning signs that an appraiser may be drifting away from independent judgment.
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The appraiser may genuinely believe they're being helpful.
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But if the analysis is no longer being driven by the most credible market evidence,
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bias may still be present.
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And if a regulator,
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lender,
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or court concludes that bias influenced the analysis,
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the consequences can be significant.
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The report's credibility may be questioned.
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Disciplinary action is possible.
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There could be litigation exposure and damaged professional reputation.
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Interestingly, the biggest problem often isn't the final value conclusion.
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It's the pattern of analysis that suggests the appraiser favored an outcome.
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So what's the lesson here?
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The lesson is that appraisers need to recognize pressure before it becomes bias.
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We need to monitor our own decision -making process.
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When you're working through an assignment,
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ask yourself,
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am I giving undue weight to evidence that supports a preferred result?
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Am I minimizing stronger contrary evidence without adequate support?
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Would another competent appraiser view my reconciliation as objective and credible?
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Am I exercising independent judgment or am I trying to make the deal work?
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Those are simple questions,
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but they're powerful questions.
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And they help translate USPAP's ethics rule and the principles in the preamble
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into everyday appraisal practice.

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