What to Do if You Suspect Appraisal Fraud

November 20, 2020

Buying a home is one of the biggest investments you will ever make. To ensure that you pay fair market value, an appraiser will inspect the property and complete a report that includes the amount they believe the property to be worth. This report is then used to help you decide whether to buy it. Your mortgage lender will also review the appraiser’s feedback to determine whether to issue you a mortgage.

Although most professional appraisers in and around Fort Lauderdale are honest and take their responsibilities seriously, fraud does occur in the real estate industry. Appraisal fraud happens when the value of a home or other piece of real estate is intentionally and materially misrepresented. For example, when lenders induce appraisers to provide inflated or deflated appraisal values, borrowers end up being deceived as to the true value of the property they are buying.

Why Does Appraisal Fraud Happen?

The short answer is greed. When a real estate appraisal is artificially “adjusted” so that it diverges from the property’s actual fair market value, someone gets a material advantage. For example:

  • When the value is overstated, a dishonest owner can get more money when they sell the home, refinance it, or secure a home equity loan.
  • Understating the value is often done as part of short sale fraud or fraud related to an improper house flipping. When the appraiser claims that the property is worthless and a buyer purchases it at a lower rate, the bank takes a loss and the buyer realizes a huge profit when they resell. A deflated value can also decrease the amount owed on a mortgage during a loan modification.

It also isn’t unheard of for real estate agents to bend the rules in this manner in order to sell more homes and close deals more quickly, especially if they advertise themselves as being specialists in these areas.

Has Your Home Been Improperly Valued?

If you have reason to believe that your home was improperly valued before purchase or sale, an experienced Florida real estate attorney can help you collect the evidence needed to pursue a claim against the appraiser and recover damages. At Schlegel Livingston, LLC, we help to protect the rights of real estate sellers and investors who have suffered losses due to appraisal fraud and will provide you with diligent, experience-based advice throughout your case. To meet with one of our attorneys, call us at 1-954-771-8929 or contact us online.