As an evaluator in the real estate industry, the danger of legal actions is real. Mortgage companies constantly force you for higher values, lenders are looking for scapegoats, and notorious "investors" are looking for easy target to help them commit mortgage fraud. Here are a few things you need to do to handle this threat.

1.) Avoid it. Be a less attractive mark.
2.) Movement. Transfer the burden to something else such as the client or another user.
3.) . Know and apply the legal system to your benefit; create a relationship with a proficient lawyer who will help you with your business affairs to pre-avoid liability. Get an insurance company that is well respected to back you up.
4.) Recognition. Accept the fact that the problem is real and get yourself insured with an insurance company.
5.) Turn a deaf ear. Act as if it never occurred and hope it never will.
6.) Disappear. Change your career to something that is less adversarial.
The most familiar reasons for real estate appraiser lawsuits and litigation are:

1.) Failure to discover and report enhancement and site flaws. When you request for a duplicate of the purchase agreement, it is best if you can get a signed copy of the Seller’s Disclosure form. Remember to indicate that you, as the appraiser, have read and reviewed the Seller’s Disclosure Statement. Ensure that you get a duplicate of the Seller’s Disclosure Statement. When the time comes to examine the site, remember to check with the retailer if there have been issues about molds. As soon as the check up is complete, the seller can evaluate, answer, and sign the appraiser’s form.

2.) Miscalculation of the living area. While on an assignment, the evaluator should never rely upon what is in the MLS system for living area, the previous evaluator’s sketch, an old survey, and the county records stating the living area or the set of plans from the architect. Any construction plans of the living area should be confirmed using a CAD software. It will be too late if you’ll wait for the information obtained after the last inspection. If the seller has something to add to the living area, like an enclosed carport/garage or veranda, this should always be separated in the sketch and in the report – 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 noted separately in the report and on a separate sketch.

3.) Not indicating in the report that there is leakage of the roof, basements that are wet, foundation cracks, infestation of termites, and minor or major mechanical failure.

4.) Reaching a decision in which the property is overvalued or undervalued. Fraud is most commonly a competency issue and Errors and Omission Insurance doesn’t protect the appraiser when you’re charged with fraud. It was shows that approx. 15% of all fraud cases deal with appraisers who have little or no experience.

5.) You’re appraising the wrong estate.

6.) You didn’t make sure. Everything in the FNMA 1004 form should’ve been confirmed. Evaluations should be loaded with substantiation.

7.) Slander. A review appraiser can get sued if he or she insults the appraiser rather than the report.

As an appraiser you can’t entirely take away the burden of liability for your evaluations rather by being conscious of and avoiding these pitfalls you may be able to avert any costly litigation.