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The possibility of a lawsuit is real when you are a real estate evaluator. There are lenders who are searching for scapegoats, shady “investors” who are looking for a suckers in order to commit rackets, and mortgage companies who constantly demand you for higher values. There are not so many options on how to cope with with this threat. 1.) Evade it. Be a less attractive mark. 2.) Shift. Move the problem to somebody else, such as the client or the other intended users. 3.) Cope with it. Understand and apply the legal system to your benefit; build a relationship with a capable attorney who will assist you in your business dealings to avoid beforehand any liability. Get an insurance agency that is well respected to back you up. 4.) Accept it. Declare that it 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 goes away. 6.) Throw in the towel. There are other promising careers than this risky business. Here are a few frequent reasons a real estate appraiser gets involved in a complaint and court cases. 1.) Unable to find out and let somebody know of any development and inconsistency. If you request for a duplicate of the purchase agreement, it is best if you can get the Seller’s Disclosure form signed. Remember to note that you, as the appraiser, have read and analyzed the Seller’s Disclosure Statement. Make sure that you obtain a duplicate of the Seller’s Disclosure Statement. During inspection, ask the seller if they have any knowledge of any mold issues. The evaluator can also offer the seller with the evaluator’s own form for the seller to review, answer, and sign. 2.) Incorrect calculation of total living area. Do not simply rely on data from the former appraiser, notes taken from the multiple listing system, county records, or plans from the architect. When the appraiser obtains a set of plans for proposed construction, the plans should be verified with CAD software to confirm the living area size. If the evaluator waits for the final inspection to confirm it is too late. If the seller has an addition to the living area, such as an enclosed garage/carport or porch, this area 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 computed area remains the same should be indicated separately in the report and on a separate sketch. 3.) Not indicating in the report that there is roof leakage, basements that are wet, cracks in the foundation, termite infestation, and minor or major mechanical failure. 4.) Overvaluation or Undervaluation of a property. You are likely to cheat if you don’t have the needed skill and Errors and Omission will not back you up if found guilty. It was stated that approx. 15% of all fraud cases deal with appraisers who have little or no experience. 5.) Evaluation of not the right real estate. 6.) You did not confirm. The whole thing in the FNMA 1004 form should have been verified. Verification should be the chief duty when doing an appraisal. 7.) Libel. A review appraiser can be sued once he or she insults the appraiser instead of the report. As an appraiser, you can prevent any litigation if you are aware of the hazards regarding your appraisal and avoid them as much as possible.
Article Source: http://www.articletap.com
This article was written by Bill Cobb with the assistance of Chandler Smith. Bill heads Accurate Valuations Group and has operated as a home appraiser for 15 years now primarily in the Greater Baton Rouge, Louisiana area. For more information on Bill Cobb and Accurate Valuations Group, visit Baton Rouge Home. Chandler Smith is an up and coming real estate whiz in the Houston area. He maintains Austin Real Estate Appraisal
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