April 17, 2020
Real estate property appraisers may face a number of different risks in their daily work. From working with clients to making sure the properties they represent are accurate and up to date, appraisers need to make sure they are doing what they can to avoid liability claims. While no one wants to go into their job thinking a lawsuit may be brought against them, in the real estate appraising world, it happens more often than you would think.
To make sure you don’t face a lawsuit or have to go through litigation that could take your focus away from your work and potentially tarnish the reputation you’ve tried hard to build up over the years, it’s important to know what potential hazards are ahead of you.
Property Damage
It’s not unheard of for real estate property appraisers to appraise a property without an owner onsite- this is usually the case for vacant properties. But it may be possible that a real estate appraiser faces accusations about property damage after a visit to appraise a house. From marks on the wall to chips in the paint to carpet stains, a real estate appraiser may be wrongfully accused of these issues.
Unfortunately, it is difficult to prove otherwise if you went through an appraisal unattended. Essentially, it’s your word against someone else’s. A real estate appraiser may be sued to claim compensation for damage to a property. In this case, having special errors and omissions insurance in place for a Real Estate Appraiser can help protect yourself and your business.
Misunderstanding of Expectations
A big risk that property appraisers face is a misunderstanding of expectations of an appraisal that a client may have. To avoid this, communication and transparency need to be prioritized in the process, identifying what exactly the client is seeking. A real estate appraiser should be able to provide guidance about what is possible for the customer’s property, opening up a conversation around what can be expected.
It’s common for appraisals to not meet the expectations of homeowners who may be expecting a different figure as far as market value goes. This may stem from an overestimation of the value of improvements to a home and renovations. By keeping conversations ongoing and working with clients to set out realistic expectations, you can avoid major lawsuits or claims down the line.
We All Make Mistakes
Sometimes, even the most seasoned real estate appraiser makes a mistake. This can end up as an undervaluation of a property and one unhappy customer. Even the slightest misstep can end up turning into a big legal battle.
No matter how honest your mistake was, you may find yourself facing a big lawsuit on the basis of negligence. Failure to exercise due care in your duties as a real estate appraiser and failure to provide credible appraisals can also lead to a breach of contract claim.
To protect against these risks, real estate appraisers should be sure to keep their insurance up to date with enough coverage to their needs. Having errors and omissions coverage can help to limit the financial risks during a lawsuit and can provide the right resources so you can focus on your other work while your representation takes care of your legal matters.
About Associations Liability Insurance Agency (ALIA)
The ALIA Team (part of the Riverton Insurance Agency Corporation), specializes in helping real estate professionals find the affordable and comprehensive liability insurance they need, without the hassle. ALIA dates its roots to 1991 with the founding of FREA, Foundation of Real Estate Associates. In 2013, ALIA was created to work with multiple insurance companies thereby broadening the portfolio of products to customers. For more information about our products and services, contact us today at (800) 882-4410.