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The possibility of a litigation is real if you’re a real estate appraiser. There are lenders who are looking for fall guys, notorious “investors” who are looking for a dupe in order to carry out scams, and finance agencies who constantly order you for higher values. There are only a few options on how to deal with this risk. 1.) Avoid it. Don’t do something that would turn you into a liable target. 2.) Shift. Reassign the weight to something else like the client or another user. 3.) Be in charge. Know and apply the legal system to your benefit; build a relationship with a proficient attorney who can assist you in your business affairs to avoid beforehand any liability. Have an insurance company like Errors and Omissions Insurance from a well-respected agency that will support you with local attorneys. 4.) Recognition. Declare that the problem is real and insure against it, such as with an errors and omissions insurance. 5.) Ignore it. Imagine it doesn’t exist and hope it disappears. 6.) Give it up. There are other promising careers than this dangerous business. The most familiar reasons for real estate appraiser complaints and litigation are: 1.) Failure to determine and declare enhancement and site flaws. During purchase appraisals, it is an excellent idea to get hold of the signed Seller’s Disclosure forms if you demand for a copy of the purchase agreement. Add a note to the evaluation that shows that the appraiser has examined the Seller’s Disclosure Statement. Ensure that you obtain a copy of the Seller’s Disclosure Statement. During inspection, ask the seller if they are aware of any mold problems. Once the inspection is complete, the seller can review, answer, and sign the appraiser’s form. 2.) Miscalculation of the living area. While doing an assignment, the appraiser should not rely on what is in the multiple listing system for living area, the former appraiser’s drawing, an old inspection, and the county records mentioning the living area or the set of plans from the architect. The construction details of the living area should be confirmed using a sketching software. It will be too late if you will wait for the data gathered after the last examination. If the subject has something to add to the living area, such as an enclosed porch or carport/garage, this area should at all times be separated in the sketch and in the report – even if the area is given the same contributory value. All modifications to the living area even though the computed area is still the same should be indicated separately in the report and on a separate sketch. 3.) Did not indicate in the report that there is roof leakage, basements that are wet, settlement, termite infestation, and major or minor mechanical defects. 4.) Overvaluation or Undervaluation of a property. You are likely to cheat if you don’t have the required skill and Errors and Omission will not protect you if found guilty. A study shows that approx. fifteen percent of fraud cases deal with inexperienced appraisers. 5.) Evaluation of wrong property. 6.) Failure to check and double check, that’s it. Includes items of the entire FNMA 1004 form such as hookups for utility, zoning, dimensions of the lot, County taxes/assessments, correct owner of record, history of the subject (both sales and listing), etc… Verification should be the main duty during an appraisal. 7.) Defamation. The review appraiser degrading the appraiser instead of the report itself, thus the defamed appraiser sues the review appraiser. As an appraiser you can’t fully take away the weight of liability for your appraisals rather by being aware of and steering clear of these hazards you may be able to prevent any expensive litigation.
Article Source: http://www.articletap.com
This article was written by William Cobb with the assistance of R Chandler Smith. Mr. Cobb is with Accurate Valuations Group and has succeeded as a residential 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, LA House. R Chandler Smith is an acknowledged real estate whiz in the Houston and Austin area. He operates
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