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Appraiser Countersues Black Plaintiffs Who Alleged Discrimination
by Isaac Peck, Publisher
There are now a number of lawsuits facing appraisers where the primary allegation is racial discrimination.
Tate-Austin v. Janette Miller, filed in California in Dec. 2021, was one of the first (and perhaps the most publicized). But since late 2021, a number of similar lawsuits have popped up—from North Carolina to Maryland.
Connolly & Mott v. Shane Lanham et al. is one highly publicized lawsuit covered at length by mainstream media–CBS News, The New York Times, NBC, CNN, ABC News, and more.
Filed in August 2022 in the U.S. District Court of Maryland, Connolly and Mott allege that Lanham discriminated against them and violated professional appraisal standards because of his allegedly “racist beliefs” (among other things).
Mr. Lanham is now countersuing Connolly and Mott for labeling him a racist, making false and defamatory accusations, and causing severe harm to his business, his reputation, and his well-being. Alongside his counterclaim, Lanham has also filed a Motion to Dismiss Connolly and Mott’s initial claim, arguing that they have failed to show any facts that support he discriminated against them.
Here’s the story.
Background
Nathan Connolly and Shani Mott are both professors at John Hopkins University. Mott is an Instructor of Africana Studies and Connolly is a History Professor whose work focuses on racism, capitalism and politics—and he is also the author of a book titled A World More Concrete: Real Estate and the Remaking of Jim Crow South Florida.
Connolly and Mott purchased a home in Baltimore, Maryland in the Homeland neighborhood for $450,000 in 2017. In mid-2021, they contacted loanDepot seeking to refinance their home at a 2.25 percent interest rate—on the condition that the property appraised at $550,000. Which their loan officer believed was a conservative estimate.
Appraiser Shane Lanham was hired by loanDepot and subsequently appraised their home for $472,000, resulting in the denial of their loan application. Seven months later, Connolly and Mott approached a different lender, who sent a different appraiser, who appraised their home with a value of $750,000 after they “whitewashed” the home and had a white friend stand in for them.
This differential between the appraisals, and the fact that Lanham came in under $75,000 compared to their loanDepot’s loan officer’s conservative estimate, form the basis of Connolly and Mott’s claim against Lanham. Their lawsuit describes Lanham as “indifferent,” “aloof,” never smiling or making eye contact and, more importantly, a racist because of how he selected his comps and completed the appraisal of their home.
Counterclaim
In response to Connolly and Mott’s lawsuit, Lanham filed a counterclaim against them on January 24, 2023. Lanham’s suit proffers that “Falsely labeling someone a ‘racist’ and falsely accusing someone of racism are among the most damaging, hurtful, and destructive attacks in today’s society.”
Lanham points to the widespread media coverage of the lawsuit and posits that Connolly and Mott’s statements have been “seen by millions of people” and that falsely accusing him of being a racist had a “devastating impact” on his reputation, business, livelihood, and well-being. Lanham explains that he was just trying to do his job with the best data he had at the time, but given the damage that’s been done to him, he now has no choice but to countersue Connolly and Mott.
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Lanham’s counterclaim goes on to make a series of arguments that deal with the technical aspects of his appraisal. These arguments include:
1. Subject Property on a Major Roadway: At the heart of the dispute over Mr. Lanham’s appraisal appears to be the fact that Connolly and Mott’s home faces Northern Parkway, a major roadway in Baltimore City that, in most portions, is “at least six lanes wide and used by motorists for crosstown travel,” according to Lanham. Mr. Lanham’s suit argues being directly on such a busy street is a “significant factor affecting the value of the property” due to (A) air pollution and poor air quality, (B) near-constant noise generated by vehicular traffic, and (C) the danger such proximity poses to children who might play in the front yard of the home.
In their initial complaint, Connolly and Mott lambasted Lanham for his “unjustifiably large negative adjustments” to the comparables he selected and, while acknowledging that some adjustment may have been necessary for the subject property’s proximity to Northern Parkway, write that “a negative adjustment of ten percent is excessive and is inconsistent with proper appraisal practices.”
Additionally, Connolly and Mott praise the second appraiser for not choosing any comps located on Northern Parkway, writing that it demonstrates the “illegitimacy of using Northern Parkway as a boundary” and note that the second appraiser only adjusted a negative two percent for being on a busy street—which they argue is “consistent with industry standards.”
2. Sale of House Next Door: On the date Lanham completed his appraisal in June 2021, the house directly next door to the Subject Property was listed for sale for $500,000. It had been on the market for over 30 days at the time and only 10 days after Lanham completed his appraisal, the list price was lowered to $475,000. Another month passed before this property was under contract and finally closed at $465,000 in August 2021.
Lanham’s suit points out that the house’s sale price directly next to the Subject Property was $7,000 below his appraised value. While the Subject Property “had more above grade living area square footage,” Lanham argues that the kitchen of the house directly next door had (A) a kitchen with improvements that made it more desirable than the kitchen of the Subject Property, and (B) an improved sunroom that was not present at the Subject Property.
“Some value adjustments to [the house next door] would be necessary to compare it to [the Subject Property], but the location of [the house next door], on the same busy road as [the Subject Property], makes [the house next door] a good comparable property and the fact that [it] sold for $465,000 shortly after the effective date of Mr. Lanham’s appraisal supports and validates the amount of Mr. Lanham’s appraisal,” reads Lanham’s counterclaim.
3. Analysis of Comparables: A fair portion of Lanham’s counterclaim against Connolly and Mott centers on discussing the comparables used in his appraisal report and defending the adjustments he made. Lanham’s suit includes detailed descriptions, as well as pictures of the kitchen, bathrooms, basement, sunroom, and other areas of both the Subject Property as well as the comparables, in an effort to explain the differences in the properties and justify the value adjustments that were made for size, condition, living area, proximity to major roadways, and so on.
4. Credibility of the Second Appraisal: Lanham and his legal team have repeatedly requested a copy of the second appraisal which valued Connolly and Mott’s home for $750,000, but so far the original plaintiffs have not provided a copy. The second appraisal occurred in January 2022, seven months after Lanham’s appraisal, and while Lanham has not seen it, his counterclaim attempts to raise questions about its credibility.
First is the discussion of the home that is immediately next door to the Subject Property, which closed in August 2022 (5 months prior to the second appraisal) for $465,000. Lanham questions why the second appraiser did not consider this home sale as a comparable or give it any weight given that it is immediately next door to the Subject Property.
Second is the discussion of a home that was listed for sale shortly after the second appraisal that was 0.2 miles away from the Subject Property and located on the same busy street—Northern Parkway. This property was listed for sale for $605,000 shortly after the second appraisal was completed. The property stayed on the market for over three months “because it was overpriced,” argues Lanham. Over the three months it was on the market, the home’s list price was lowered to $550,000 and then again to $510,000, before it finally went under contract.
Lanham uses both of these examples to question how the second appraiser could possibly justify a value of $750,000 when it is clear that similar, comparable properties right next to the Subject Property on Northern Parkway were selling in the $400,000 to $500,000 range, both before and after the second appraisal’s effective date.
5. Not a Fair Comparison: Part of Connolly and Mott’s initial claim is that they “whitewashed” their home prior to the second appraiser visiting the property, which their suit explains as “removing the many indicia that a Black family lived there, such as family photos and their children’s drawings of Black people, and replacing them with items borrowed from white friends.”
However, Lanham posits that to compare his appraisal with the second appraisal, which was performed seven months later and relied on “home sales that had not even occurred” at the time of his appraisal is unfair. Such an “ill-conceived experiment involving different appraisers, a seven-month gap, and intervening changes in market conditions would not withstand even basic scrutiny in the serious academic environment in which they [Connolly and Mott] work,” argues Lanham.
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False Accusations and Defamation
One of Lanham’s charges against Connolly and Mott is that they were well aware of the lower-priced comparable property sales that were occurring right next to their home—especially the sale for $465,000 immediately next door to their home (right after Lanham’s appraisal) and the other property whose list price was lowered from $605,000 to $550,000 to $510,000 after their second appraisal. Lanham alleges this on the basis that they are “educated consumers and knowledgeable about recent sales transactions in the Homeland neighborhood.”
Consequently, Lanham argues that Connolly and Mott knowingly engaged in a media campaign to spread false and defamatory statements about him and failed to disclose material facts that would have cast doubt on their accusations. Lanham argues they did so with actual malice—that is, with “knowledge of their falsity or reckless disregard for the truth or falsity of those statements.”
The harms caused to Lanham as a result of Connolly and Mott’s alleged defamation and false accusations include:
- Subjecting Lanham to public scorn, hatred, contempt, or ridicule and discouraging others in the community from having a good opinion of him.
- Injuring Lanham in his profession, employment, and business, including loss of income, reduced business, and being told directly by clients that he has not received work because of the accusations made against him.
- Subjecting Lanham to harassment, including causing him to be the recipient of malicious and threatening voicemail messages and the target of social media postings.
- Causing Lanham mental anguish, emotional distress and personal humiliation, including depression symptoms, anxiety, headaches, difficulty sleeping, irritability, upset stomach, and trouble with social and family relationships.
As a result of being injured by Connolly and Mott’s allegedly false and defamatory statements, Lanham is seeking:
- compensatory damages in excess of Two Hundred Fifty Thousand Dollars ($250,000);
- punitive damages in excess of Two Hundred Fifty Thousand Dollars ($250,000);
- together with interest and costs, and such other relief as may be appropriate under the circumstances.
Lanham’s counterclaim is the first instance Working RE has seen where an appraiser being very publicly called a racist and sued for discrimination has fought back with a lawsuit of his or her own.
It will be interesting to see how this case develops in the months ahead, or if other appraisers that have been publicly vilified as “racists” will also file similar counterclaims.
Motion to Dismiss
Alongside Lanham’s counterclaim against Connolly and Mott, Lanham has also filed an entirely separate 28-page Motion to Dismiss with the Court—asking the judge the dismiss their initial claim against him because they have no factual support that he discriminated against them based on their race.
Here is a very abbreviated version of Lanham’s arguments:
- Even if Plaintiffs can prove he completed his appraisal “negligently,” without direct or circumstantial evidence that Lanham’s alleged professional errors had discriminatory intent, the case must be dismissed. Otherwise, “every professional malpractice or negligence action would give rise to facts sufficient to allege discrimination.”
- Plaintiff’s “whitewashing” experiment does not prove Lanham acted with a racially discriminative motive; it merely establishes that two different appraisals, seven months apart, resulted in different appraisal values. A second appraiser assigning the home a higher value does not prove discriminatory intent.
- Plaintiffs repeatedly allege that Lanham should have used comparable properties in the portions of the Homeland neighborhood that are “predominantly white.” Still, without an allegation that Mr. Lanham knew that the comparable properties he selected were “in a majority-Black census block,” Plaintiffs cannot prove discriminatory intent.
- Plaintiff’s allege that Lanham’s 10 percent “busy street” adjustment shows discriminatory intent, but have failed to allege that Lanham has not applied the same or similar deduction for property owners of different races.
In short, Lanham argues that Connolly and Mott have no actual evidence or facts to support their argument that he is a racist or had discriminatory intent.
“Plaintiffs cannot transform allegations of incompetence or a breach of appraisal industry standards into racial discrimination by baldly alleging that Mr. Lanham believed that Plaintiffs did not belong in their neighborhood and that their home was worth less than other homes because of their race. There are no facts alleged in the First Amended Complaint, and none can be alleged with good faith, that Mr. Lanham treated Plaintiffs any differently than homeowners of other races,” the motion reads.
Appraisal industry stakeholders will be watching this case closely in the months ahead.
This is a developing story. Please check WorkingRE.com regularly and subscribe to our digital newsletter for the latest appraisal news and information.
> A copy of Lanham’s Counterclaim can be found here (Counterclaim starts on Pg. 18).
> A copy of Lanham’s Motion to Dismiss can be found here. (A copy of Lanham’s appraisal is on Pg. 55)
> A copy of Connolly and Mott’s initial claim can be found here.
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About the Author
Isaac Peck is the Publisher of Working RE magazine and the President of OREP, a leading provider of E&O insurance for real estate professionals. OREP serves over 10,000 appraisers with comprehensive E&O coverage, competitive rates, and 14 hours of free CE for OREP Members (CE not approved in IL, MN, GA). Visit www.OREP.org to learn more. Reach Isaac at isaac@orep.org or (888) 347-5273. CA License #4116465.
OREP Insurance Services, LLC. Calif. License #0K99465
by Chris A
To a hammer, everything looks like a nail..
-by RH
My personal experience with some home inspectors and appraisers has been disheartening, to say the least. I’ve encountered what I believe to be discrimination, where my home, as a person of color, received a significantly lower appraisal despite efforts to improve its condition.
It was a frustrating and hurtful experience to see how my home’s value was seemingly whitewashed and not given the fair assessment it deserved. As a person of color, it’s disheartening to feel that certain factors may have influenced the appraisal process and outcome.
However, I refuse to let this discrimination go unchallenged. I am determined to fight back against this unjust treatment and strive for fair and equal evaluations in the real estate industry.
I am in the process of documenting all evidence of this discriminatory appraisal and will not hesitate to report my concerns to the appropriate authorities and regulatory bodies. It is crucial to shed light on these issues and hold accountable any individuals or institutions engaging in discriminatory practices.
I believe in the importance of diversity, inclusion, and equal treatment for all individuals. No one should be subjected to unfair treatment based on their race or any other factor. By speaking up about my experience and taking action, I hope to contribute to a more equitable and just real estate industry.
While I understand that not all professionals in the field engage in discriminatory practices, my personal experience has led me to question the integrity and fairness of some home inspectors and appraisers. It is my responsibility to advocate for change and ensure that all individuals receive unbiased and accurate evaluations of their properties, regardless of their background.
In my pursuit of justice, I will seek legal advice and consult with real estate professionals who specialize in addressing such issues. Their guidance will help me navigate this complex landscape and explore potential solutions or recourse.
It is my hope that by sharing my experience and fighting against discrimination in the real estate industry, others will be inspired to do the same. Together, we can work towards a future where fairness, equality, and respect are upheld in all aspects of life, including real estate transactions.
-by MIMI
A property thst I was buying came in 20% below my contract price. The appraiser was a moron; the entire complex was massively underpriced for the market and was shooting up in price even as I purchased at a fair price for the improved unit. Now the units are selling for 59% MORE than what I paid, just 4 years later. No discrimination. Just not smart.
-by Howard W.
There are many questions and concerns regarding this lawsuit against this appraiser. One that comes to mind is why did the second appraiser conduct an appraisal 7 months after the original one. Should he/she not have conducted a retrospective appraisal? I am I missing something?
-by Greg McDonald
In gerneral, we have no room for racism or bias against people of color in the appraisal industry.
-by Vince Slupski, MAI
In every profession or trade, there are incompetent practitioners, ethically challenged individuals, and racists. I’m not in a position to judge whether Lanham or Appraiser #2 is either – the courts will decide. Appraisal is an art and science, appraisal is an opinion of value, and people will have different opinions. But since FIRREA in 1989, we’ve had 34 years of oversight of the appraisal process: licensure with qualifying education, continuing education, state enforcement, encouragement if not the reality of appraiser independence, lenders as the client and engagers of appraiser services, regulation of bank credit/appraisal functions including appraisal review, AMCs, professional review designations, etc. And still, we have the same property appraised for $472,000 and $750,000. Were both appraisals reviewed and approved? Were both submitted to Collateral Underwriter or a similar system? With results like this, it’s no wonder that clients simply have no faith in appraisal and are running away from it as fast as they can.
-by Deborah
Who set the “target price” of $550,000?? That is an appraisal.
-by Michael Schlemmer
If the appraiser doesn’t win, we have a problem.
-by Stephen Bruha
Way to go Shane Lanham for fighting back! This is wonderful news and I wish him the best in his lawsuit. It’s about time someone sticks up for appraisers and the bullying we encounter on values. Looks like just another person being upset with their value, and now blaming it on the only thing they know. And again, we are being forced to go outside the market area and find comps that fit their own “idea” of value, while all the while IGNORING the close comparables right under our noses! How on earth could the “other” appraiser come up with $750k when he has plenty of what appears to be very good comps, and one of them being right next door?? Something is really fishy there, why isn’t the appraisal being provided?? If anyone out there thinks there is no longer influencing of values going on, just because the lenders can’t do it, is WRONG! This is a perfect example, they are pretty much just bullies, that’s all. Keep up the good fight!
-by Larry Thomas
How am I just finding out about this industry standard adjustment for an external obsolescence? I could have saved so much time over the years using the industry standard, that’s much easier than extracting an adjustment from paired sales. Geez. You learn everyday, I can’t believe it took homeowners and a loan officer to fill me in.
-by Craig Larson
Is there a go fund me page for this wrongly accused appraiser?
-by ERIC
michael, exactly!
-eric b
by ERIC
Craig, He actually does not want one right now.
-eric b
by mary@marycummins.com
Based on the background of the Plaintiffs I’m seeing an agenda.
I did some research on the property. I think they originally over paid for the property.
I would love to see that second appraisal.
-by ERIC
mary,100% there is an agenda!
-by denise S Henning
There is no industry standard. Hope you are being facetious.
-by Christine
Why is no one questioning why a “loan officer” is giving a valuation of real property. Proper appraisal practice seems to have been taken. I hope the first appraiser succeeds in the suit.
-by Mike W
It should take any Judge about 10 seconds to figure out which parties are the “Real Racist.” It actually appears the original value may have been slightly high. Oh and the borrower’s are Absolutely high on being racist professors.
-by 3rd party observer
Great response by appraiser. There may be discrimination but not all are simply because you don’t get the value you want.
-by FRED VANDER WAL
wow…wow….wow. that could have been me or maybe 90% of the appraisers who ran into these wackos. so we’re all racists for using the house next door on the same undesirable street. And the 2nd appraisal….why isn’t that appraiser in front of a board? These owners were highly educated…..in how to use the race card. I’d better not say anything more.
-by ERIC
exactly Fred! this is unreal. This could be any appraiser these days! this needs to stop.
-by Rob
I’d like to see the 2nd appraisal. Based on the information provided (2 sales on Northern in the $465-500k range) it seems like the OA was pretty accurate. So what comps did the 2d appraiser use? What were his adjustments? I had a complaint filed against me. The individual had a copy of an appraisal of his neighbors house that was significantly higher than my appraisal. They never provided that appraisal too me … just the comps in the other report. The comps were ALL model houses (some selling furnished), some with extensive updating, some with pools, spas, BBQ’s, etc etc. My subject had standard builder upgrades and a dirt back yard. I had done 4 other appraisal over the past 18 months in the community and my appraisal was in-line with those appraisals and the appreciation rate in the community. Needless to say the complaint went nowhere. But it certainly is distressing being accused of something you know you didn’t do. Good luck to Mr. Lanham.
-by Robert Wessel
The first paragraph of the Background section says it all.
-by Mike W
Agreed!
-by Christine Grote
My thoughts exactly!
-by ERIC
100%. the plaintiffs have EVERYTHING to gain. the appraiser has EVERYTHING to lose.
-by Joe Cicalese
Shane Lanham- This is exactly what I have been waiting to see- An appraiser smart enough to point the racist finger right back at the accuser. From what I read, you have a very strong case, smartly presented. I hope your victory is so strong that chokes the life out of this nonsense.
-by jeff m
looooooooooooool
-by Doug
Sounds like the OA has a really good case and will come into some money. Good for him.
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