Claim Alerts

Avoiding Court: A Common Sentiment Among Appraisers

Many appraisers are reluctant to testify in court. This hesitation might stem from a past negative experience or hearing about someone else’s difficulties.

During an appraiser's career, testifying in court as a witness may become unavoidable if they are served with a subpoena. Typically, the testimony is brief and limited to factual questions about a single appraisal report.

Unfortunately, despite their aversion to court, some appraisers inadvertently take actions or make statements that lead them directly into the courtroom.

If you Don’t Want to Go to Court...Don’t Accept Assignments Likely Destined for Litigation

An insured appraiser called, furious after a conversation with a private client. The client claimed the appraisal the appraiser prepared was "worthless" and demanded an immediate refund of the $1,500 fee. If not refunded, the client threatened to involve his lawyer.

As the appraiser vented, several issues became apparent. The appraiser had provided a report that simply stated a current value of the client’s property ($4 million). However, the client was yelling about wanting a diminution in value report. He wanted to know to know how much less his property was worth due to a neighbor's newly planted "spite fence"—tall shrubs obstructing the client's lake view. The client had tried to reason with the neighbor but he went ahead with the planting and without an HOA to mediate, the client anticipated a potential court dispute with the neighbor.

When asked if the client mentioned the term "spite fence" during their initial conversation, the appraiser confirmed he had. The appraiser also stated the intended use in the appraisal was "Market Value." Upon further questioning, the appraiser admitted he wasn't sure what the client intended to do with the report. Reflecting on the conversation, he realized he should have paid more attention to the term "spite fence" and understood the report was likely for a "neighbor vs neighbor" dispute—something he did not want to be involved in.

The appraiser decided to refund the entire fee and sought advice on how to do so without it appearing as an admission of guilt. Calmer now, he tactfully explained to the client that he had misunderstood the nature of the assignment. He referred the client to two other appraisers willing to provide the type of diminution in value report needed and serve as experts if the dispute went to court. The insured appraiser fully refunded the fee and apologized for the misunderstanding.

The appraiser realized he created the problem by not listening carefully and preparing a report that would have been "embarrassing" if reviewed by peers. He admitted he didn't consider the "intended use" and should have asked more questions. This situation served as a wake-up call, and he felt fortunate it was resolved amicably, knowing it could have easily gone another way.

If you Don’t Want to Go to Court...Resist the Urge to Tell People What a Skilled Appraiser You Are

An insured appraiser called in a panic, seeking help with a pile of paperwork he had received. He had appraised a custom high-end home twice in the past five years, both times for the same lender, with values between $7 million and $8 million for refinancing.

About three weeks ago, an attorney representing the husband in a divorce case contacted him. The attorney praised the appraiser’s extensive experience and local knowledge, saying he had heard the appraiser was the best in the area. Flattered, the appraiser, who is 75 years old and no longer does expert work, declined the offer and recommended a local MAI appraiser for the case.

However, the conversation didn’t end there. The attorney mentioned a current appraisal valuing the property at over $12 million, which he found astonishing. The appraiser agreed that the $12 million valuation seemed excessively high. Curious, the appraiser offered to look at the $12 million appraisal report if the attorney sent it to him. He also sent the attorney his resume to provide more context on his background and experience.

When the appraiser opened his mail later, he found a subpoena to testify about the two refinance appraisals he had prepared and noticed he was also designated as a supplemental expert. He never agreed to be an expert. There was no engagement letter. He told the attorney that he doesn’t do expert work and he referred him to someone else.

The appraiser realized that he might have created some confusion when he offered to look at the other report and when he sent his resume. But, he was just curious. He couldn’t understand how anyone could have reached such a high value. The appraiser was upset and needed to set the record strait – he did not want to do any expert work.

We told the appraiser to immediately call the attorney and speak to him, to clarify that he would only testify about his two refinance reports and had not agreed to testify about the other appraisal. He emphasized that he no longer did expert work and had referred the attorney to another appraiser for that role. He admitted that he let his curiosity get the better of him.

If the attorney needed an expert he better try to retain that other MAI they had discussed. Thankfully, the attorney had reached out to the other appraiser and it sounded like things were going to work out there. He only sent that supplemental designation as a “backup” in case he couldn’t find anyone else.

Relieved, the appraiser realized he needed to be more cautious with his words in the future. For appraisers who do not enjoy or seek expert work, it is crucial to think carefully before speaking and avoid accepting assignments likely to lead to litigation. Being mindful can prevent confusing and uncomfortable situations, saving time, and avoiding unnecessary stress. ◆