How should an appraiser respond if a client asks to adjust values based on neighborhood demographics?

• A. Agree to adjust based on demographics.
• B. Refuse to adjust based on demographics, provide data-driven rationale based on market transactions, and document.
• C. Adjust only for minority demographics.
• D. Ignore the request and adjust anyway.

Answer: (B)

In appraisal work, adjustments must come from objective market data and property attributes, not from who lives in the neighborhood. Using neighborhood demographics to justify adjustments would amount to discriminatory bias and violate fair housing laws.

So the proper response is to refuse to adjust based on demographics, and instead justify any change with data from market transactions—comparable sales, observed market behavior, and measurable property or location factors (like size, condition, amenities, and each factor that buyers actually consider). Document all data sources and the rationale for each adjustment in the report. If a client insists, you stay firm on using market-based evidence and maintain documentation to support the approach.

Why the other options aren’t appropriate: agreeing or adjusting for demographics would be discriminatory and illegal; ignoring the request and adjusting anyway isn’t compliant with ethical standards or legal requirements. The best practice is clear: base adjustments on market data and document transparently.