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Appraiser Calls me from Missouri feels he is in deep Doo Doo

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Ray Miller

Thread Starter
Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
A friend of mine from Missouri called me this morning and it appears he is getting in deep doo doo.

He had and has no E & O Insurance. This spring he gets a call in March that a home he appraised in 2003 it went into foreclosure this past winter and they had a review done of his appraisal and the reviewer found the value to be over $30K to much at the time. He counter with his answers of what the reviewer over looked and the comparables the reviewer used. He thought it was put to bed as he had heard no peep from the lender. Yesterday he gets a call from the lender saying they place the property on the market in March it sold for $50K less then his appraisal. They want him to pay them the $50K and they will go away. If not they plan on suing him and reporting him to the state appraisal board., they would give him ten days to get a check to them before they started legal action.

He understands that this was a loan kicked back from an investment back that the lender is having to pay for because the home went into foreclosure.

He was asking me what he should do, being me I told him to tell them where they could place the legal action and the action of the state, if he was sure he was correct in his number and could support his report.

He said he had talked with a lawyer yesterday afternoon and the lawyer said it could cost as much as a $100,000 to defend such an action. I told him from my experience that was no doubt in the ball park.

Me thinks the doo, doo is going to really start hitting the fan for appraisers once these houses are sold.

My home was appraised at $210K when we bought it, 30 months ago it was appraised at $550K and just this month it was reappraised for our estate planning for $170K. Should I go after the two appraiser because the value dropped?

What do you think and what advise would you give him????

By the way he has a very great fear of the State of Missouri figures they will take his license away he has had for 10 years.
 

KYLECODY

Senior Member
Joined
Apr 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
I think threats are a dime a dozen.

What it recently sold for has no bearing on what he appraised it for in 2003. A $30000 difference really isnt that far off on many properties, its an opinion of value. As long as he feels he can support it, who cares.

I wouldnt respond to them at all. They would have to spend money to sue also. Theyre not going to pony up $40-$50k in legal fees on a $30-50k difference. Just making idle threats that are best ignored, itll blow over imho. Good luck to him.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Wow, I didn't know when I appraised a property it included the 5 year
value guarantee, I must have missed that in the regs/cert/USPAP.

I'd suggest he see an attorney and next time buy E/O.
 

Mikyl

Sophomore Member
Joined
May 23, 2008
Professional Status
Certified Residential Appraiser
State
California
I would also suggest he hire an attorney. I don't agree with the it will blow over theory. With all the hype about how appraisers created this mess, this could start a witch hunt in his area.

Mike Johnson
 

PLCG

Member
Joined
Jul 12, 2006
Professional Status
Certified General Appraiser
State
Pennsylvania
Maybe he should talk to a lawyer who may be able to get a copy of the review appraisal. That would give him an idea if the review has any merit.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
lawyer said it could cost as much as a $100,000 to defend such an action
he needs a better lawyer. I can still hire 'em for $100 - 200 an hour. What is that lawyer going to spend 1000 hours on?
 

Walter Kirk

Senior Member
Joined
Jun 24, 2003
Professional Status
Licensed Appraiser
State
New Jersey
He should consult an attorney now. I also think that such threats are a dime a dozen however if a suit is filed it can be defeated on summery judgement since the appraiser is only responsible for the value stated in his appraisal at the time of the appraisal.
 

TEL2002

Elite Member
Joined
Jan 16, 2002
Professional Status
Retired Appraiser
State
Louisiana
I would do everything in my power to contact the new owner and try to get into that property. It is key to find out what the condition was when it sold for 50K less than the appraisal. I have done many REO's with 50K worth of repairs to be done. If at all possible he should get pictures, and a signed statement from the new ower regarding the condition of the property when purchased. If it was listed in the MLS, get the MLS pictures and a statement from the real estate agent that had the listing.

He also needs to do some very serious neighborhood market analysis with regards to declining prices. If the neighborhood is in decline he needs to document this 3 ways from Sunday.

Get a lawyer...should they actually file suit.
 

Lost Cause

Senior Member
Joined
Sep 17, 2004
Professional Status
Certified General Appraiser
State
New York
It does sound like a BS threat, but you shouldn't completely ignore it. I would not (ever) respond to the lender, but I would consult an attorney.
 
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