Typical Claims Filed Against Real Estate Appraisers

Claims against professionals in your field typically fall into one of two categories: negligence or fraud, and the vast majority of claims in either category are filed by borrowers. While by no means an all inclusive list, here are a few examples:
Appraiser Negligence
Appraiser negligence occurs when an appraiser does not exercise the degree of care or skill that a client may reasonably expect from a professional appraiser: for example, using outdated sales comparisons or incorrectly adjusting a property value for location, age, etc. 
Negligence claims may often relate to the condition of the housing market. Today, for example, many distressed borrowers who purchased property near the peak of the recent housing bubble are now seeking a financial payoff by claiming appraisers overstated the value the properties purchased. Conversely, many recent complaints allege that the appraiser undervalued the property resulting in the buyer’s inability to secure a mortgage.  
Accusations about incorrect measurement of square footage also constitute claims of negligence.  A buyer may allege that the appraiser’s overstatement of square footage caused the purchase price to be too high, or on the flip side, that the understatement of square footage resulted in the buyer purchasing a home that was smaller than needed. 
Negligence claims may also arise from:
-Incorrect determinations of flood zones
-Issues concerning property lines and easements
-Failure to identity neighborhood issues (e.g., presence of nearby factories)
-Omission of issues with the property itself (e.g., electrical problems)
Appraiser Fraud
An intentional and significant misrepresentation of the value of real estate would be classified as appraiser fraud. Many of the negligence claims noted above could be considered fraud if the appraiser’s error or omission is proven to have been intentional. 

Many such claims have alleged that the lender pressured the appraiser to provide an inflated property value in order to facilitate the loan for a transaction such house flipping, or risk the loss of future referrals from said lender.