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Real Estate Appraiser’s Guide to Avoiding Liability Charges

As an evaluator in the real estate industry, the risk of legal actions is a very real one. There are lenders who are looking for scapegoats, notorious “investors” who are looking for a suckers in order to commit rackets, and mortgage agencies who always demand you for higher values. Here are a few methods you have to do to manage this threat.

1.) Avoidance. Do not do something that can turn you into a likely mark.
2.) Reassign it. Reassign the weight to another person such as the client or somebody else.
3.) Manage it. The justice system is your friend; use it to your benefit. Get an insurance company with a good reputation to support you.
4.) Recognition. Accept the fact that the problem is true and get yourself insured with some insurance company.
5.) Turn a deaf ear. Act as if it never happened and pray it never will.
6.) Give it up. There are other careers that have more potential than this uncertain business.
The most common reasons for home appraiser complaints and legal actions are:

1.) Failing to determine and report improvement and site defects. When you want to request for a duplicate of the purchase agreement, it’s best if you can get the Seller’s Disclosure form signed. Remember to note that the appraiser have read and reviewed the Seller’s Disclosure Statement. Secure a duplicate of it in the work file. During inspection, ask the seller if they have prior knowledge of any mold problems. When the check up is complete, the seller can review, answer, and sign the appraiser’s form.

2.) Miscalculation of the living area. Do not just rely on information from the previous appraiser, notes taken from the multiple listing system, county records, or details from the architect. The construction details of the living area should be verified using a sketching software. If the evaluator waits for the final check up to verify it’s is too late. If the subject has something to add to the living area, such as an enclosed garage/carport or veranda, this area should at all times be separated in the report and in the sketch – even if the area is given the same contributory value. Any changes to the living area even though the computed area remains the same should be noted separately in the report and on a separate sketch.

3.) Not indicating in the report that there’s leakage of the roof, wet basements, foundation cracks, infestation of termites, and minor or major mechanical failure.

4.) Making a decision in which the property’s value is increased or decreased. Fraud is sometimes a competency issue and Errors and Omission Insurance does not protect the appraiser when you are charged with fraud. A study shows that approximately 15% of fraud cases deal with inexperienced appraisers.

5.) Evaluation of not the right real estate.

6.) Failure to check and double check, that’s it. Consists of items of the entire 1004 form of the Federal National Mortgage Association such as utility hookups, zoning, dimensions of the lot, County assessments/taxes, the right owner of record, subject’s history (both listing and sales), etc… Verification should be the chief duty when doing an appraisal.

7.) Insult. 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.articlemap.com

This article was written by William Cobb with the assistance of R. Chandler Smith. Bill operates Accurate Valuations Group and has worked as a real estate appraiser for 15 years now primarily in the Greater Baton Rouge, Louisiana market. For more information on William Cobb and Accurate Valuations Group, visit Baton Rouge Louisiana HouseAppraisal. R. Chandler Smith is an adept real estate professional in the Houston Texas area. He maintains Houston Real Estate Appraiser

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