Claim Alerts

A Complaint Is Not a Verdict: Guidance for Appraisers

Disciplinary proceedings accounted for nearly 70% of all new matters reported by insured appraisers to LIA in 2025. If you have not yet had to respond to a complaint, allegation, or grievance, it is likely that you will at some point during your career.

Over the past year, many highly experienced appraisers have faced allegations for the first time. We received complaints from insureds with 30 or more years of experience who were genuinely shocked to receive their first notice of a disciplinary matter.

Depending on the state in which the matter is initiated, the identity of the complaining party, and sometimes even the substance of the complaint, may be kept confidential. This lack of transparency can add significantly to the appraiser's frustration.

In states where the complainant's identity is disclosed, we know that more than 90% of investigations are initiated by third parties, including borrowers or purchasers, sellers, and real estate agents.

It remains true that the underlying reason for most complaints is a disagreement with the appraiser's value conclusion. The majority of these complaints allege that the appraiser undervalued the subject property.

When complainants believe a property was undervalued, they often assume that the appraisal caused them a financial loss. When money is involved, complaints frequently begin with allegations of incompetence. Fueled by anger, they can quickly escalate into personal attacks against the appraiser.

Dealing with complaints is simply part of life as a professional. You must accept that reality and handle the situation professionally. When you first receive a letter or email from the state, you may experience a wide range of emotions, including anger, fear, disbelief, shock, embarrassment, or even depression. Take a deep breath and focus on what needs to be done.

Some of the complaints we have seen over the past year included particularly ugly and insulting personal attacks.

These attacks often focus on an appraiser's conduct. Appraisers are frequently accused of being "rude" for not engaging in conversation with homeowners or for declining to answer questions. One appraiser was accused of not knowing the definition of "common courtesy." Another complainant expressed surprise that an appraiser was able to obtain a license, claiming he "barely spoke a word of English."

Other allegations involved perceived disrespect for the subject property. Several complaints alleged that an appraiser used a restroom without permission and failed to flush. One appraiser was accused of "spitting or vomiting" in a bathroom sink. According to one homeowner, "He showed up late for the appointment without an apology and left a disgusting mess behind."

A few complainants even commented on physical appearance. One homeowner stated that when a female appraiser arrived, "her clothes were filthy and she smelled so bad that I did not even want to let her step foot in my home." In another case, a male appraiser was described as "obese," with the complainant asserting that he could not perform a thorough inspection because he could not "fit" into the attic or crawlspace openings.

Receiving notice that a disciplinary proceeding has been initiated is stressful enough. Being accused of negligence or incompetence is difficult. Facing personal attacks on top of that makes the experience even worse.

So, if you receive notice of a complaint, what should you do, and just as importantly, what should you not do?

Best Practices When Facing a Disciplinary Complaint

DO notify your E&O insurer promptly.

Errors & Omissions policies require timely notice of complaints, allegations, or grievances from state regulators. Confirm what coverage may be available to assist with the investigation or defense.

DON'T take your anger out on the investigator.

No matter how insulting or upsetting the complaint may be, investigators are required to review all complaints. They are not judging you. They are doing their job, often with heavy caseloads. Sarcasm or hostility will only hurt your position.

DO carefully read all correspondence from the state and respond accordingly.

Letters will specify deadlines for document production and, where required, written responses. Missing deadlines can create unnecessary problems.

DO organize your work file before submitting it.

Proofread all written responses. Consider the impression your submission creates. Does it reflect a thoughtful, organized professional, or someone careless and unprepared?

DO ensure your response is complete.

Some states require only documents. Others require written responses or completion of specific questionnaires. Provide everything requested.

DO provide meaningful responses.

Even if you strongly disagree with the complaint, your answers must be substantive. For example, if asked to explain the steps you took to research and select comparable sales, it is not appropriate to respond with, "I chose the best sales available."

DON'T expect your E&O insurer to write your response.

You prepared the appraisal, inspected the property, and selected the comparables. Only you can provide a meaningful explanation of your work.

DON'T panic.

The process is stressful, especially if this is your first complaint. If you have no prior disciplinary history, a single allegation is unlikely to result in license revocation. Repeatedly calling the investigator will not speed up the process.

Possible Outcomes

The good news is that the majority of investigations we have seen over the past five years have resulted in findings of no USPAP violations and dismissal of the complaint. In some cases, the dismissal may be conditional, requiring the appraiser to complete recommended education.

In certain states, a dismissal may be accompanied by a Letter of Warning, which alerts the appraiser to issues or practices that warrant attention. These matters are handled confidentially between the appraiser and the licensing board and are not published.

Do not take a conditional dismissal or letter of warning as an insult. No one is so perfect that they cannot learn something new. Sometimes you discover that practices you have followed for years could be improved.

Several insureds have told us that, in hindsight, the experience, while uncomfortable, taught them lessons they found valuable.

Fewer than 10% of reported disciplinary proceedings result in formal discipline. When discipline is imposed, it most commonly includes a fine, reimbursement of investigation costs, and required education hours. These outcomes are typically published on the state licensing board's website and, in almost all cases, involve appraisers with a history of prior discipline.

Conclusion

Disciplinary proceedings can be upsetting, frustrating, and frightening. Many appraisers worry more about these investigations than lawsuits because their license is at stake. It is critical to take the right steps promptly and handle the process correctly.

Take the complaint seriously, but do not take it personally. Do not misdirect your anger, especially toward the investigator, who is simply doing their job. It is not their fault that the complaint exists or that the process may take a year or more to resolve.

Personal attacks may be insulting, embarrassing, or completely false, but the investigator has no choice but to open a file and proceed. Anger will not help your case.

The disciplinary process is not easy, especially if you have never faced it before. Remember that you do not have to navigate it alone. Contact your E&O insurer for guidance, support, and, if necessary, a referral to experienced local counsel. There is nothing wrong with asking for help. ◆