As an appraiser in the real estate business, the threat of lawsuits is real. credit agencies constantly pressure you for higher values, lenders are looking for fall guys, and shady "investors" are looking for easy target to help them commit fraud. Here are some methods you have to do to manage this danger.

1.) Prevention. Don’t do anything that would make you a liable target.
2.) Shift. Convey the burden to another person like the client or somebody else.
3.) Cope with it. Understand and apply the legal system to your advantage; create a connection with a proficient lawyer who can assist you with your dealings to avoid beforehand any liability. Get an insurance agency with a good reputation to support you.
4.) Accept it. Declare that the problem is real and insure against it, like with E & O insurance.
5.) Turn a deaf ear. Imagine it does not exist and hope it disappears.
6.) Leave it. There are other promising careers than this dangerous business.
The most familiar reasons for home appraiser lawsuits and litigation are:

1.) Failure to discover and declare enhancement and site defects. During purchase appraisals, it’s an excellent idea to obtain the signed Seller’s Disclosure forms when requesting a copy of the purchase agreement. Remember to note that the appraiser have read and reviewed the Seller’s Disclosure Statement. Make sure that you get a copy of the Seller’s Disclosure Statement. When the time comes to check the place, keep in mind to discuss with the retailer if there are issues regarding molds. As soon as the inspection is complete, the seller can evaluate, answer, and sign the appraiser’s form.

2.) Wrong estimation of the living area. Don’t simply rely on data from the previous appraiser, data taken from the multiple listing system, county records, or plans from the architect. When the appraiser obtains a set of plans for planned construction, those plans should be confirmed with CAD program to confirm the living area size. It would be too late if you’ll wait for the data gathered after the last examination. If the subject has something to add to the living area, like an enclosed garage/carport or porch, this should always be separated in the sketch and in the report – even if the area still has the same contributory value. Any modifications to the living area even if the computed area remains the same should be noted separately in the report and on a separate sketch.

3.) Failure to report roof leakage, foundation cracks, wet basements, infestation of termites and mechanical failure.

4.) Reaching a decision that the property is overvalued or undervalued. You’re likely to cheat if you do not have the needed skill and Errors and Omission won’t back you up if found guilty. Appraisers who are inexperienced with their duties and responsibilities are likely to be charged with fraud.

5.) You’re appraising the wrong estate.

6.) Failure to verify, that’s it. Consists of items of the entire FNMA 1004 form such as utility hookups, zoning, dimensions of the lot, County taxes/assessments, correct owner of record, subject’s history (both listing and sales), etc… Appraisals should be full of verification.

7.) Slander. A review appraiser can get sued if he or she defames the appraiser instead of the report.

As an appraiser you can never entirely get rid of the burden of liability for your appraisals but by being aware of and steering clear of these pitfalls you may be able to avert any expensive litigation.