How to Evade Liability Charges as a Home Appraiser

As an appraiser in the real estate industry, the threat of legal actions is a very real one. Mortgage companies relentlessly pressure you for higher values, lenders are looking for simpletons, and infamous "investors" are looking for easy target to help them carry out mortgage fraud. There are very little ways on how to deal with this threat.

1.) Prevention. Be a less attractive target.
2.) Shift. Transfer the liability to somebody else, such as the seller or the other intended users.
3.) Cope with it. Understand and use the legal system to your advantage; create a relationship with a competent attorney who can help you with your dealings to pre-avoid liability. Have Errors and Omissions Insurance from a reputable company that will defend you with local contract attorneys.
4.) Accept it. Accept the fact that the threat is true and have yourself insured with an insurance company.
5.) Pay no attention it. Pretend it does not exist and hope it disappears.
6.) Throw in the towel. There are other careers that have more potential than this risky business.
The most familiar reasons for real estate appraiser complaints and legal actions are:

1.) Unable to observe and tell somebody of any development and inconsistency. During purchase appraisals, it is a very good idea to obtain the signed Seller’s Disclosure forms when requesting a duplicate of the purchase agreement. Remember to indicate that the appraiser have read and analyzed the Seller’s Disclosure Statement. Secure a duplicate of it in the work file. When the time comes to check the house, remember to discuss with the seller if there are problems regarding molds. As soon as the check up is complete, the seller can review, answer, and sign the appraiser’s form.

2.) Incorrect calculation of gross living area. Don’t simply depend on information from the previous appraiser, notes taken from the multiple listing system, county records, or plans from the architect. If the appraiser obtains a set of plans for proposed construction, those plans should be verified with sketching program to verify the size of the living area. If the appraiser waits for the final check up to verify it’s is too late. If the seller has something to add to the living area, such as an enclosed carport/garage or porch, this area should always be separated in the sketch and in the report – even though the area still has the same contributory value. Any changes to the living area even if the calculated area remains the same should be noted separately in the report and on a separate sketch.

3.) Did not indicate in the report that there’s leakage of the roof, wet basements, settlement, termite infestation, and minor or major mechanical defects.

4.) Increasing or decreasing the value of a property. Fraud is most commonly a competency issue and E&O Insurance does not protect the appraiser when fraud is found. Appraisers who are inexperienced with their duties and responsibilities are prone to be charged with fraud.

5.) Appraisal of incorrect property.

6.) You did not make sure. Everything in the FNMA 1004 form should’ve been verified. Confirmation should be the primary duty when doing an appraisal.

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

As an appraiser, you can prevent any litigation if you’re aware of the hazards regarding your appraisal and steer clear of them as much as possible.

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

This article was written by Bill Cobb with the assistance of R Chandler Smith. Bill heads Accurate Valuations Group and has worked as a real estate appraiser for 15 years now primarily in the Greater Baton Rouge, Louisiana area. For more information on Bill Cobb and Accurate Valuations Group, visit Baton Rouge Louisiana Appraiser. R Chandler Smith is a young and bright real estate whiz in the Houston Texas area. He maintains Austin Home Appraiser

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