Regardless of the line of work you do, everyone experiences some type of risk associated with their business. This is no different for real estate appraisers. There are steps you can take to avoid potential hazardous situations before they even occur, which at the end of the day means less lawsuits that you have to deal with and more happy customers.

In the real estate business you find yourself dealing with people at a very important time of their lives, whether that be selling their home to move onto something different, or buying their dream home after cramping up in a single bedroom and bath house for the last 5 years. Anytime you are an intricate part of a life event, there are expectations and standards that may be higher than fair. Make sure you do everything you can allow the process to go smoothly, and to avoid any potential lawsuits that you can.

Property Damage

One of the most popular claims against real estate appraisers are those that are related to property damage. When appraising a home, it is always best for somebody else to be with you, whether that be the homeowner, buyer or realtor. It may seem silly as you are totally capable of appraising without them, however, if something were to be wrong with the house after your appraisal, it becomes their word against yours in court. How do you prove that it wasn’t you if there was nobody else there? Some of the more common property damage scenarios include: stains on carpet/flooring, windows/doors left open allowing weather to come in, marks or damage to walls and even claims as serious as stolen property!  

If you are faced with one of the accusations above, you could be sued to claim compensation for damage to the property. This is why it is so important to have the right real estate appraiser errors and omissions insurance policy in place so that you are protected in these scenarios.


Another very common reason to file a claim against a real estate appraiser is when the client feels that you did not meet the expectations that were agreed upon between the two of you initially. We all face this at some point in our lives where we had an expectation and then the product/service just didn’t quite meet up to what we thought we were getting. It is important to be clear from the beginning when appraising property. Communication is key, make sure that you are aware of what the homeowner is seeking, while still providing realistic advice and guidance about the potential value of their property. Creating a formal contracting agreement for your clients to sign may be beneficial in helping prevent such issues from arising. For example, often times if a client has borrowed money against their home, their estimate of what the home is worth can be heavily influenced by what they owe on it. As you know, that is not a factor that you can take into consideration during the appraisal process, and it is important they are clear on that from the beginning. That’s why setting up safe guards, like agreements, and being a clear communicator from beginning to end is important!  


What about getting sued for fraud or incompetence? Obviously not every single client is going to agree with your appraisal report and findings, but what makes it cross the line from a mismatch in expectations, to fraud? There have been times when appraisers will falsify the comparables or intentionally ignore an attribute on the comparable property that is game changing. To give you an example, if you are appraising a property that is right by a busy intersection, but fail to mention this on your report and fail to find a comparable property, the property would be valued very differently with this element left off the appraisal therefore resulting in a lower value than the home is actually worth. To avoid situations like this, make sure you are very thorough and detailed in your reporting, taking note of every single detail of every single property.

At the end of the day, as long as you’re aware of potential risks, take your time during your appraisals and keep your word as an appraiser, you should be able to avoid most lawsuits headed your way. 

Connect with an E&O insurance provider to find industry-leading coverage to protect yourself from these situations.