How To Prevent Liability Lawsuits As A Home Appraiser

The possibility of a lawsuit is real if you’re a real estate evaluator. Mortgage companies constantly pressure you for higher values, lenders are searching for fall guys, and shady "investors" are searching for a sucker to help them commit fraud. Here are some ways you need to do so as to manage this threat.

1.) Prevention. Be a less attractive target.
2.) Shift. Reassign the burden to another person such as a client or somebody else.
3.) Control. The legal 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 lawyers.
4.) Recognition. Accept the fact that the threat is true and have yourself insured with some insurance company.
5.) Pay no attention it. Imagine it is not real and wish it goes away.
6.) Throw in the towel. Change your profession to something that is less adversarial.
The most common reasons for home appraiser complaints and legal actions are:

1.) Unable to find out and inform somebody of any progress and inconsistency. During purchase appraisals, it’s an excellent idea to get the signed Seller’s Disclosure forms when requesting a duplicate of the purchase agreement. Remember to note that you, as the appraiser, have read and reviewed the Seller’s Disclosure Statement. Keep a duplicate of it in your work file. When it’s time to check the site, keep in mind to discuss with the retailer if there are problems regarding molds. The evaluator could even present the seller with the evaluator’s own form for the seller to evaluate, answer, and sign.

2.) Incorrect computation of total living area. Do not just rely on data from the former appraiser, data taken from the multiple listing system, county records, or plans from the architect. The construction plans of the living area should be verified using a CAD software. If the evaluator waits for the final inspection to verify it is too late. If the subject has an addition to the living area, like an enclosed garage/carport or veranda, this area should at all times 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 calculated area is still the same should be noted separately in the report and on a separate sketch.

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

4.) Increasing or lowering the value of a property. You’re likely to cheat if you do not have the required skill and E&O will not back you up 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 house.

6.) You did not verify, period. Includes items throughout the 1004 form of the Federal National Mortgage Association such as utility hookups, zoning, lot dimensions, County taxes/assessments, correct owner of record, history of the subject (both listing and sales), etc… Appraisals should be loaded with substantiation.

7.) Defamation. A review appraiser can get sued if he or she defames the appraiser instead of the report.

As an appraiser you can’t fully get rid of the burden of liability for your evaluations rather by being conscious of and steering clear of these drawbacks you may be able to prevent any costly litigation.

Article Source: http://www.search4allinfo.com

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

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