The likelyhood of a lawsuit is real if you are a real estate appraiser. Mortgage companies relentlessly force you for higher values, lenders are looking for simpletons, and shady "investors" are looking for a sucker to help them carry out mortgage fraud. There are only a few ways on how to cope with with this danger.



1.)Avoidance. Don't do anything that would turn you into a likely mark.

2.)Movement. Shift the liability to somebody else, such as the client or the purchaser.

3.). Know and make use of the legal system to your advantage; build a relationship with a proficient attorney who will help you with your business affairs to pre-avoid liability. Get an insurance company that is highly regarded to back you up.

4.)Accept it. Declare that the problem is real and insure against it, such as with an errors and omissions insurance.

5.)Ignorance. Pretend it is not real and pray it disappears.

6.)Give it up. Change your career to one that is less adversarial.

Here are some frequent reasons a real estate appraiser gets stuck in a complaint and court cases.

1.)Failing to discover and declare enhancement and site flaws. If you request for a copy of the purchase agreement, it's best if you can get the Seller's Disclosure form signed. Include a note to the appraisal that indicates that the appraiser has reviewed the Seller's Disclosure Statement. Secure a copy of it in the work file. During inspection, ask the seller if they have any knowledge of any mold issues. Once the inspection is finished, the seller can evaluate, answer, and sign the appraiser's form.

2.)Erroneous calculation of total living area. When performing an assignment, the appraiser should not depend upon what's in the multiple listing system for living area, the former appraiser's sketch, an old survey, and the county records mentioning the living area or the set of plans from the architect. As soon as the appraiser receives a set of details for proposed construction, those details should be confirmed with CAD software to confirm the size of the living area. It will be too late if you will wait for the information obtained after the final examination. If the seller has an addition to the living area, such as an enclosed veranda or carport/garage, this area should at all times be separated in the sketch and in the report ? even if the area is given the same contributory value. All modifications to the living area even if the computed area remains the same should be indicated separately in the report and on a separate sketch.

3.)Not indicating in the report that there's roof leakage, wet basements, foundation cracks, termite infestation, and major or minor mechanical defects.

4.)Reaching a decision in which the property's value is increased or decreased. You are likely to cheat if you do not have the required skill and E&O will not protect you if found guilty. Appraisers who are not experienced with their responsibilities and duites are prone to be charged with fraud.

5.)You are appraising the wrong estate.

6.)Failure to check and double check, period. Includes items throughout the FNMA 1004 form such as utility hookups, zoning, lot dimensions, County assessments/taxes, correct owner of record, history of the subject (both listing and sales), etc? Appraisals should be loaded with substanciation.

7.)Defamation. The review appraiser humiliating the appraiser rather than the report itself, therefore the insulted appraiser sues the review appraiser.

As an appraiser, you can prevent any litigation if you are aware of the hazards regarding your appraisal and avoid them as much as possible.