As an evaluator in the real estate business, the threat of lawsuits is real. credit companies relentlessly pressure you for higher values, lenders are looking for scapegoats, and infamous "investors" are looking for a sucker to help them commit mortgage fraud. There are not so many ways on how to cope with with this danger.



1.)Prevention. Don't do anything that would turn you into a likely mark.

2.)Shift. Convey the burden to another person like the client or another user.

3.)Be in charge. The legal system is your friend; use it to your benefit. Have an insurance company like Errors and Omissions Insurance from a well-respected agency that will defend you with local attorneys.

4.)Acceptance. Admit that the problem exists and insure against it, such as with an errors and omissions insurance.

5.)Turn a deaf ear. Act as if it never occurred and pray it never will.

6.)Disappear. Alter your career to something that is less antagonistic.

The most familiar reasons for home appraiser complaints and legal actions are:

1.)Failing to determine and report improvement and site flaws. During purchase appraisals, it is a very good idea to get hold of the signed Seller's Disclosure forms if you request for 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 a work file. When the time comes to check the house, remember to check with the seller if there have been problems regarding molds. The evaluator could even offer the seller with the evaluator's own form with questions for the seller to evaluate, answer, and sign.

2.)Wrong estimation of the living area. While on an assignment, the evaluator should never depend on what is in the MLS system for living area, the former evaluator's sketch, an old inspection, and the county records stating the living area or the architect's set of plans. Any construction details of the living area should be confirmed using a CAD program. It will be too late if you'll wait for the data obtained after the last inspection. If the subject has something to add to the living area, such as an enclosed veranda or carport/garage, this area should at all times be separated in the sketch and in the report ? even though the area is given equal contributory value. All modifications to the living area even if the computed area is still the same should be indicated separately in the report and on a separate sketch.

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

4.)Reaching a decision in which the property is overvalued or undervalued. Fraud is at times an issue of competency and Errors and Omission Insurance does not cover the appraiser when you are charged with fraud. A study shows that approx. 15% of all fraud cases deal with inexperienced appraisers.

5.)Evaluation of not the right property.

6.)Failure to verify, period. Everything in the FNMA 1004 form should've been confirmed. Appraisals should be full of verification.

7.)Slander. The review appraiser degrading the appraiser rather than the report itself, therefore the defamed appraiser files a lawsuit against the review appraiser.

As an appraiser you can never fully remove the burden of liability for your evaluations but by being conscious of and avoiding these pitfalls you may be able to avert any costly litigation.