How To Evade Liability Lawsuits As A Real Estate Appraiser

By: R Chandler Smith
As an appraiser in the real estate industry, the risk of legal actions is a very real one. Mortgage companies relentlessly pressure you for higher values, lenders are searching for simpletons, and infamous \"investors\" are searching for a sucker to help them carry out fraud. There are very little methods on how to deal with this threat.

1.) Prevention. Don’t do something that can turn you into a liable target.
2.) Movement. Transfer the burden to something else like a client or somebody else.
3.) . The justice system is your friend; employ it to your advantage. Have an insurance company like Errors and Omissions Insurance from a reputable company that will defend you with local attorneys.
4.) Acceptance. Don’t Deny the fact that the threat is true and have yourself insured with some insurance company.
5.) Pay no attention it. Act as if it never occurred and pray it never will.
6.) Disappear. Alter your career to one that is less adversarial.
Here are a few common reasons why a real estate appraiser gets involved in a lawsuit and court cases.

1.) Failing to discover and report enhancement and site flaws. When you want to request for a copy of the purchase agreement, it would be best if you can get the Seller’s Disclosure form signed. Add a note to the appraisal that shows that the appraiser has reviewed the Seller’s Disclosure Statement. Ensure that you obtain a copy of the Seller’s Disclosure Statement. When it is time to examine the house, keep in mind to check with the retailer if there are issues regarding molds. The appraiser could even present the seller with the appraiser’s own form for the seller to evaluate, answer, and sign.

2.) Incorrect computation of total living area. While performing an assignment, the appraiser should never rely upon what is in the MLS system for living area, the previous appraiser’s sketch, an old survey, and the county records mentioning the living area or the architect’s set of plans. If the appraiser receives a set of details for proposed construction, those details should be verified with sketching program to verify the living area size. It will be too late if you’ll wait for the information gathered after the final examination. If the subject has an addition to the living area, such as an enclosed porch or carport/garage, this should at all times be separated in the sketch and in the report – even if the area still has the same contributory value. Any modifications to the living area even if the calculated area is still the same should be noted separately in the report and on a separate sketch.

3.) Did not report roof leakage, foundation cracks, basements that are wet, infestation of termites and mechanical failure.

4.) Reaching a decision in which the property is overvalued or undervalued. You’re likely to cheat if you do not have the needed skill and E&O won’t protect you if found guilty. Appraisers who are inexperienced with their responsibilities and duites are prone to be convicted with fraud.

5.) You’re appraising the wrong estate.

6.) You didn’t verify, that’s it. Includes items throughout the 1004 form of the Federal National Mortgage Association such as utility hookups, zoning, lot dimensions, County assessments/taxes, correct owner of record, history of the subject (both listing and sales), etc… Confirmation should be the primary job during an appraisal.

7.) Libel. A review appraiser can get sued if he or she defames the appraiser rather than the report.

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

Article Source:http://www.articleboy.com


This article was written by William D. Cobb with the assistance of Chandler Smith. William operates Accurate Valuations Group and has been licensed as a residential appraiser for 15 years now primarily in the Greater Baton Rouge, LA market area. For more information on William D. Cobb and Accurate Valuations Group, visit Baton Rouge, LA Appraisals. Chandler Smith is a top real estate expert in the Houston and Austin area. He oversees Houston Appraisals