As an appraiser in the real estate world, the danger of legal actions is real. There are lenders who are looking for scapegoats, notorious ?investors? who are looking for a dupe so as to carry out scams, and mortgage agencies who always order you for higher values. Here are some methods you need to do to manage this threat.



1.)Prevention. Make yourself a less attractive target.

2.)Transfer it. Reassign the weight to something else like the client or somebody else.

3.)Cope with it. The justice system is your friend; employ it to your advantage. Have an insurance company like Errors and Omissions Insurance from a reputable agency that will defend you with local contract lawyers.

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

5.)Turn a deaf ear. Act as if it never happened and hope it never will.

6.)Leave it. There are other promising professions than this risky business.

Here are some frequent reasons why a home appraiser gets stuck in a lawsuit and court cases.

1.)Not able to observe and tell somebody of any development and irregularity. On purchase appraisals, it is a very good idea to get hold of the Seller's Disclosure forms that were signed if you demand for a duplicate of the purchase agreement. Remember to indicate that the appraiser have read and reviewed the Seller's Disclosure Statement. Secure a duplicate of it in a work file. When it's time to examine the site, bear in mind to discuss with the seller if there have been problems about molds. As soon as the check up is complete, the seller can review, answer, and sign the appraiser's form.

2.)Wrong estimation of the living area. Do not just depend on information from the previous appraiser, data taken from the MLS system, county records, or plans from the architect. When the appraiser receives a set of plans for proposed construction, the plans should be confirmed with sketching program to confirm the living area size. If the appraiser waits for the final check up to confirm it is too late. If the seller has an addition to the living area, such as an enclosed carport/garage or veranda, this should at all times be separated in the report and in the sketch ? even though the area is given equal contributory value. All changes to the living area even if the calculated area is still the same should be indicated separately in the report and on a separate sketch.

3.)Didn't indicate in the report that there is leakage of the roof, basements that are wet, foundation cracks, termite infestation, and major or minor mechanical failure.

4.)Overvaluation or Undervaluation of a property. Fraud is at times an issue of competency and Errors and Omission Insurance does not protect the appraiser when fraud is found. It was stated that approx. 15% of fraud cases deal with inexperienced appraisers.

5.)You're appraising the wrong estate.

6.)Failure to verify, that's it. Includes items throughout the 1004 form of the Federal National Mortgage Association such as utility hookups, zoning, dimensions of the lot, County assessments, correct owner of record, history of the subject (both sales and listing), etc? Evaluations should be loaded with verification.

7.)Insult. A review appraiser can get sued if he or she defames the appraiser rather than the report.

As an appraiser you can never fully remove the weight of liability for your evaluations but by being aware of and steering clear of these drawbacks you may be able to prevent any expensive litigation.