When must an appraiser avoid referencing demographic characteristics in a property report?

An appraiser must avoid referencing demographic characteristics in a property report specifically in credit-related transactions to ensure compliance with fair lending laws, such as the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act. These laws prohibit discrimination based on demographic factors, including race, color, religion, sex, national origin, marital status, or age. Including demographic information can inadvertently suggest bias or discrimination, which could lead to violations of these laws.

In other appraisal contexts, such as residential or commercial appraisals not linked to credit decisions, there may be a broader allowance for including various aspects of a property, including characteristics of the neighborhood. However, during credit-related transactions, the appraiser must remain objective and ensure that their analyses and opinions do not reflect or imply bias based on demographic characteristics. This adherence to ethical standards is critical to promoting fairness and equity in the housing market.