- How to Verify a Real Estate Appraiser
- Real Estate Appraiser License Search by State
- What is Real Estate Appraisal Fraud?
- Questions to Consider Following a Home Appraisal
- What To Do If Your Home Was Appraised Incorrectly
- Frequently Asked Questions
Before buying or selling a house, a home appraisal is necessary for banks to approve a loan and ensure that the amount matches the appraised value. However, if you’re not careful, you can end up being scammed by real estate appraisers who intentionally misrepresent the value of your home or other piece of real estate.
Here’s how to verify an appraiser's license and ensure that you're working with a legitimate real estate professional.
How to Verify a Real Estate Appraiser
Typically, to find an appraiser by state, you’ll do so via your state’s agency that is responsible for overseeing appraisers. Here you’ll find basic information about the requested appraiser’s license and qualifications as well as any restricted, suspended, surrendered, or revoked renewals on their record.
However, if you need written verification of the license information due to a lawsuit or other formal proceedings, you’ll need to request this information through the agency. These documents can be obtained by submitting the required form and fee to the agency.
Real Estate Appraiser License Search by State
What is Real Estate Appraisal Fraud?
The real estate industry is no stranger to fraud, and appraisal scams are unfortunately all too common. Appraisal and property fraud account for more than 1 in 10 mortgage fraud cases.
There are a couple of ways in which scammers can target homeowners or buyers including:
- Fake Appraisals: This occurs when a group of scammers pretend to be legitimate real estate professionals and then inflate up a property’s selling price for a quick profit.
- Inflated Appraisals: When this happens, phony appraisers hike up a home's value, leaving buyers owning a home worth less than they thought.
Thankfully though, if you know what to look out for, you can avoid getting scammed by fake or fraudulent appraisers.
Questions to Consider Following a Home Appraisal
To avoid running into issues with your loan or end up owing more than the house is worth, ask yourself the following questions during the appraisal process. The answer to these may be red flags of appraisal fraud.
- Given what you know about the neighborhood, does the stated home value seem reasonable? It’s important to know the local and current market when dealing with an appraiser. Keep in mind that the real estate market is constantly changing, so if you’re selling your home, it may not be worth as much as it was a few years ago. But if the amount seems extremely low or overly inflated, this could be a red flag.
- Which homes is the appraiser citing when comparing home sales? Are they focusing on nearby houses? If your appraiser is comparing homes that are more than six miles away, ask them why since this is often a red flag. Typically, you want to compare homes within the same school district.
- Does the appraisers' house description match what you know of the home? Does the home have five bedrooms, but it only has five? Or maybe they’re misrepresenting the square footage that you estimated or already know about the home. If their information is wrong, even a little bit, ask them to correct it. Appraisers who refuse to update incorrect information may be trying to scam you.
- Can you get a copy of the appraisal? If asked, lenders are required to provide homeowners with a copy of the appraisal. Lenders refusing to show you the paperwork may be a red flag.
What To Do If Your Home Was Appraised Incorrectly
If you feel your new or existing home was appraised incorrectly, you’ll want to do a few things to correct the discrepancy. In some cases it may have been genuine human error, but if something feels off about the appraiser, the appraised amount, or your lender, you'll want to take further action.
Verify the Appraisal Amount
First, make sure that you’re confident of the incorrect appraisal. In some instances, changes in the market may have affected your home’s value. When possible, look for a qualified appraiser to get a second opinion and see if their appraisal was similar or far off from the original quote.
If it was off by a lot, it was likely fraudulent. You’ll need to call your lender and let them know about the incident.
Report It to Authorities
It’s always a good idea to report the phony appraisal for your own records and to potentially save others from falling for a fraudulent appraiser. Below are local and federal agencies that you may contact to report mortgage fraud:
- Your local state appraisal agency
- Better Business Bureau
- The Federal Trade Commission
- The Appraisal Institute (if they’re a member)