Real Estate Appraiser’s Manual to Evading Liability Lawsuits

The likelihood of a complaints is real if you are a real estate evaluator. There are lenders who are looking for scapegoats, shady “investors” who are searching for a suckers in order to carry out rackets, and mortgage agencies who always order you for higher values. There are very little ways on how to deal with this threat.

1.) Evade it. Be a less attractive mark.
2.) Reassign it. Convey the burden to something else such as the client or somebody else.
3.) Manage it. Know and use the legal system to your benefit; create a connection with a capable attorney who can help you in your business affairs to pre-avoid liability. Have Errors and Omissions Insurance from a well-respected agency that will defend you with local contract lawyers.
4.) Admit it. Don’t Deny the fact that the threat is true and have yourself insured with some insurance agency.
5.) Turn a deaf ear. Act as if it never occurred and pray it never will.
6.) Leave it. Change your profession to something that is less antagonistic.
Here are a few common reasons a real estate appraiser gets involved in a complaint and litigation.

1.) Not able to find out and let somebody know of any development and inconsistency. If you request for a duplicate of the purchase agreement, it is best if you can get a Seller’s Disclosure form signed. Add a note to the evaluation that indicates that the evaluator has reviewed the Seller’s Disclosure Statement. Ensure that you get a duplicate of the Seller’s Disclosure Statement. When the time comes to inspect the place, remember to check with the retailer if there are problems regarding molds. When the check up is complete, the seller can evaluate, answer, and sign the appraiser’s form.

2.) Erroneous calculation of gross living area. Do not just rely on information from the previous appraiser, data taken from the multiple listing system, county records, or plans from the architect. The construction plans of the living area should be confirmed using a CAD software. If the evaluator waits for the final check up to confirm it’s is too late. If the subject has something to add to the living area, like an enclosed garage/carport or veranda, this area should always be separated in the sketch and in the report – even though the area still has equal contributory value. All changes to the living area even though the computed area remains the same should be indicated separately in the report and on a separate sketch.

3.) Did not report leakage of the roof, foundation cracks, basements that are wet, termite infestation and mechanical defects.

4.) Increasing or lowering the value of a property. You are likely to cheat if you don’t have the needed skill and E&O will not back you up if found guilty. A study shows that approximately 15% of fraud cases deal with inexperienced appraisers.

5.) You are appraising the wrong house.

6.) You did not verify. Consists of items of the entire 1004 form of the Federal National Mortgage Association such as utility hookups, zoning, dimensions of the lot, County taxes/assessments, correct owner of record, history of the subject (both listing and sales), etc… Confirmation should be the primary job during an appraisal.

7.) Slander. The review appraiser degrading the appraiser instead of the report itself, as a result the appraiser defamed sues the review appraiser.

As an appraiser you cannot fully remove the burden of liability for your appraisals rather by being aware of and avoiding these drawbacks you may be able to prevent any costly litigation.

Article Source: http://myarticlezine.com

This article was written by Bill Cobb with the assistance of R Chandler Smith. Bill owns and operates Accurate Valuations Group and has been licensed as a residential appraiser for 15 years now primarily in the Greater Baton Rouge, LA market. For more information on Bill Cobb and Accurate Valuations Group, visit Baton Rouge, LA Real Estate Appraisal. R Chandler Smith is an accomplished real estate professional in the Houston and Austin area. He manages

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