Securing your practice against appraiser complaints

Appraisals have incredible power in real estate transactions, with the ability to make or break a deal. What happens when the appraiser makes an error, intentional or otherwise?

The Bureau of Real Estate Appraisers (BREA) regularly receives complaints from:

• appraisal management companies (AMCs);
• lenders;
• brokers and agents;
• government agencies, such as:
  • Fannie Mae;
  • Freddie Mac;
  • the Federal Deposit Insurance Corporation (FDIC); and
  • the Federal Housing Administration (FHA);
• homeowners; and
• other appraisers.

The majority of complaints about licensed appraisers are submitted by lenders, AMCs and government agencies. On the other hand, individual appraisers file the vast majority of complaints about AMCs.

To determine whether the complaint warrants an enforcement action, the BREA’s Enforcement Unit establishes if minimum appraisal standards were met under:

• the Uniform Standards of Professional Appraisal Practice (USPAP);
• the Real Estate Appraisers’ Licensing and Certification Law; and
• California appraiser law. [Calif. Code of Regulations Title 10 Chapter 6.5]

Not sure if a complaint is warranted? Read more about California’s appraisal regulations here.

Avoiding appraisal complaints

Maintaining professionalism at all times is the best way to avoid complaints, according to the Spring 2021 BREA Bulletin.

When an appraiser is professional and courteous, an individual who takes issue with an appraiser is more likely to contact the appraiser directly. However, when an appraiser is hostile and unapproachable, consumers and other real estate professionals are far more likely to skip an unpleasant interaction and simply file an official complaint.

Other than maintaining a friendly business persona, there are some basic actions appraisers can take to avoid complaints, including:

• requiring all appraisal terms to be agreed to in writing;
• maintaining all documentation and reports as required by BREA and USPAP;
• examining engagement documents fully, and not signing unless you have the capacity and knowledge necessary to complete the appraisal; and
• avoiding boilerplate or unspecified language when describing subject property.

Handling appraisal complaints

Still, despite an appraiser’s best efforts, they may find themselves on the receiving end of an official complaint. When an appraiser finds out they are the subject of a complaint, they will need to prepare to cooperate with the BREA’s Enforcement Unit. Allowing access to all documents and notes will help this process along.

When an error was made, whether it be intentional or unintentional, the appraiser needs to be prepared to accept the consequences. Fortunately, the BREA has standardized their responses to violations of appraisal law.

For example, an appraiser who fails to update their contact information with the BREA will receive at most a suspension and payment of fine. [Calif. CCR Title 10 Chapter 6.5 §3527(b)]

However, an appraiser who is found to have committed fraudulent or dishonest acts may have their license revoked as well as be required to pay a fine. [Calif. CCR Title 10 Chapter 6.5 §3721(a)(2)]

Read the full list of disciplinary actions here.

To file an official complaint about an individual appraiser, visit the BREA’s online complaint form, here. To file a complaint about an AMC, visit the BREA’s online AMC complaint form, here.