House passes bill aiming to combat ‘appraisal bias’ in real estate valuations

Although the education gap, wage gap and wealth gap may be familiar terms to many, the term “real estate valuation gap” is perhaps less well-known.

Rep. Ginny Klevorn (DFL-Plymouth) and Sen. Gary Dahms (R-Redwood Falls) sponsor HF1768/SF1020*, which would aim to counteract the real estate valuation gap, also called “appraisal discrimination” or the “racial appraisal gap.”

That’s when homes in minority neighborhoods – particularly Black neighborhoods – are undervalued by real estate property appraisers, which widens the generational wealth gap between minority families and white families.

The House passed the bill 126-5 Thursday. Passed 66-0 by the Senate April 8, the bill now goes to the governor.

Under the bill, a real estate property appraiser would be required to complete a continuing education course within two years of receiving a real estate appraiser’s license that teaches how to recognize and prevent valuation bias.

The bill defines valuation bias as an appraisal methodology or technique that harms a protected class, as defined by the federal Fair Housing Act of 1968. The act prohibits discrimination concerning the sale, rental, and financing of housing based on race, religion, national origin, sex, and, as amended, handicap and family status.

Rep. Tim O'Driscoll (R-Sartell) sponsors HF737, language from which was incorporated into the bill.

He said the continuing education courses “will raise the level of awareness of appraisers so when they knock on a door that they’ve been hired to do an appraisal on, they don’t make the valuation of the property based on the person who answers the door … [but] on the market merits of where that property is located.”

With this bill, “we are bringing about very powerful change in the state,” O’Driscoll said.

Other provisions in the bill would clarify state law to ensure that continuing education courses for real estate appraisers are free from commercial bias, such as by limiting the display of logos from the company offering a course.