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Negligent Appraisal

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Misfit

Freshman Member
Joined
Jul 15, 2017
Professional Status
General Public
State
California
Recently the appraisal on my property, that was under contract, came in unrealistically low, putting the sale of the home in jeopardy. My agent ran it by another local appraiser for his review and he too was astounded at the way it was done. He felt that the first appraisal contributes to giving the profession a bad name so, feeling angered by it, he took it to the lender, who he also had prior business with. He stressed to them that the approach the appraiser took was all wrong and there were other errors. My agent requested a reappraisal knowing that this would be a long shot. After a couple of weeks and after having the underwriter review it, the buyer's lender agreed to let us get a new appraisal but, I would have to pay for it. My concern was that we would have to disclose the first, horrible appraisal to subsequent buyers. I understand that getting a lender to agree to a reappraisal is unheard of generally however, they had to agree too the that first appraisal was negligent in several ways. So, I paid to have another appraisal done and it came in at the agreed sales price. However, by now the buyers exercised their appraisal contingency and found another home that they are now in contract with. I lost the sale of the home and it is now relisted.
What recourse do I have? My agent says that he will file a complaint but, I want to sue the appraiser and I think that I have enough to prove my case. Is this a route to take? I lost the sale of my home because of this. Had the appraisal been done correctly the first time, the house would have been closed and sold over a month ago. I am livid.
 

Red Flint

Member
Joined
May 15, 2005
Professional Status
General Public
State
Michigan
Talk to your attorney. You will likely be facing attorney from appraiser Error & Omission Insurance, and this could take a while. Focus on the relisting, chalk it up to bad luck. You can also complain to the state, but likely will not receive recompense from that route, but the appraiser could face fines, penalty, or loss of license. Good luck.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Revenge probably won't translate into money, especially since you are likely to sell it anyway. The appraiser works for the bank. YOU are not the client, nor an intended user, and "privity" is a term you might discuss with your attorney because they are going to claim it, and possibly counter claim for legal expenses since you are not an "intended user" of the report....period. Don't pretend because you are involved that you are, it is really clear in law. Put it behind you, file a complaint to the board if you will, but suing will likely not get you anything to stick in your pocket but your lawyers bill.
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
Why would you sue the appraiser? Shouldn't you be suing the lender for hiring an inept appraiser (if he really is)? The lender is responsible for using qualified appraisers. The lender is the appraiser's client, not you. They are an agent of the lender for their benefit, not yours. Why wouldn't you sue to lender to force a new appraisal? What if the appraisal is not judged to be inaccurate? An appraisal can have multiple errors and still have the value correct. Then, the appraiser could sue you for damages. If would be easier to ask the lender for a field review if your feel the appraisal is inaccurate.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Why would you sue the appraiser? Shouldn't you be suing the lender for hiring an inept appraiser (if he really is)? The lender is responsible for using qualified appraisers. The lender is the appraiser's client, not you. They are an agent of the lender for their benefit, not yours. Why wouldn't you sue to lender to force a new appraisal? What if the appraisal is not judged to be inaccurate? An appraisal can have multiple errors and still have the value correct. Then, the appraiser could sue you for damages. If would be easier to ask the lender for a field review if your feel the appraisal is inaccurate.
The OP is the seller not the now gone prospective buyer/borrower...there is nothing he can succesfully sue the lender (or the appraiser) for
 
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TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
What recourse do I have? I lost the sale of my home because of this. Had the appraisal been done correctly the first time, the house would have been closed and sold over a month ago. I am livid.
So it has been over one month ago that your home has been back on the market with no new offers? The longer it sits on the market at that same price, the better the first appraiser may look if no other potential buyers step in at that price.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
All kinds of questions:

1. How unrealistically low was it? In $$$$.
2. "My agent ran it by another local appraiser for his review" How much did the appraiser do his review for, since its a lot of work for an appraiser to do a real "review." "Ran it by him" is shoddy.
3. Lenders and appraisal management companies do second appraisals all the time.
4. A complaint will take a long time and is mostly between the state board and the appraiser.
5. Of course you can sue anybody about anything. Did you ask the first appraiser for a review of value and did he respond?
6. Without seeing the appraisal and any of us appraisers not knowing your particular market, it is virtually impossible for us to give a knowledgeable opinion of the credibility of your report, other than he didn't "hit value."
 

Tim Hicks (Texas)

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Texas
The OP is the seller not the now gone prospective buyer/borrower...there is nothing he can succesfully sue the lender (or the appraiser) for
But anybody can sue anybody. The lender has deep pockets, the appraiser probably not so much.
 

reviewbe

Sophomore Member
Joined
Oct 4, 2016
Professional Status
Certified General Appraiser
State
California
You are from California, is the house here too? The state licensing board here will generally not accept a complaint for investigation if there is pending court action. So, have to decide, go after the license, or go to court. This is aside from merits and deserves, etc., just a practical consideration.
 
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