Best Practices for Appraisal Mistakes

September 4, 2020

No matter how long a real estate appraiser has been doing their job and doing it well, there’s always a chance that they make a mistake in a report. Like any job, appraisal mistakes can occur at any given time and potentially set back an appraiser and their process after an original report is submitted.

From purchase price to names and addresses to parcel numbers, appraisal report mistakes have the potential to cause a logjam for all involved. Fortunately, some steps can be taken to correct an appraisal report and get it back on track.

Here are some best practices when it comes to real estate appraisal corrections.

  • Disclose Immediately: Report any modifications, corrections, or responses to the original report right away. This helps to limit any potential for confusion or even legal complications and allows clients to understand what went wrong and how it’s being fixed. If an appraiser tries to hide their mistake, it could be grounds for legal ramifications, which only hurts them even more with legal, financial, and reputational loss.
  • Insert an Addendum Page: Anytime you need to do anything after an original report is published, it’s wise to include an addendum page. This helps the readers understand exactly what was changed or added to the original report and covers an appraiser in the event of confusion. On the addendum page, write in the date a request was received and what was updated.
  • Adding Written Documentation: Any time a client provides additional written documentation, include it as an additional page following the new Addendum page.
  • ROV Requests: Lenders are allowed to send additional appropriate sales for consideration. Most often, these are higher-priced properties or have other differences that don’t make them comparable to the subject.
  • Comparable ROV Properties: If it’s obvious that an Opinion of Value will change, contact the client and let them know that the original appraisal report is no longer valid, and a new report under a different appraiser file number was submitted.

Following these steps makes a new report more accountable and easy to navigate. By disclosing everything and keeping transparency as the main focus, real estate appraisers correct their mistakes without worrying about trouble, both legally and reputationally.

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