Who Can Complain About Appraisals


Time to get on my soapbox and complain about a complaint filed against me (not a charge, but merely a complaint). I did an appraisal of a multi-family property near my office. The property owner/borrower called me to complain about the appraisal since it came in far less than she thought it should (not unusual). Clearly, I could not answer her questions since she was not the client. This upset her greatly, so she filed a complaint with the State. The complaint had no basis in substance. In fact, the complaint was that my appraisal was too low. Since neither USPAP nor state statute see coming in “too low” as a violation, the complaint had not merit.

Anyway, the state contacted me with the complaint. I sent in a copy of the workfile and report, as well as answered all of the state’s questions. Eventually, the State of Idaho decided not to charge me with anything (there was, after all, not a violation of anything). All of what was needed to be in the workfile was in it. All that needed to be in the report was in it. My due diligence was obvious. My adjustments came from proper market data support. My value conclusion was credible and the appraisal report was not misleading. So, as I said, the state declined to file a charge against me. This entire process lasted just under one year and subjected me (and, to some extent, my family) to a lot of unnecessary stress, sleepless nights, and so forth. But, as I said, it all eventually went away.

Now, here’s my complaint: The property owner/borrower was not my client, therefore I had no responsibility to her (other than common courtesy). I had not agreed to appraise the property for her, nor had she paid me, so we did not exchange any good and/or valuable consideration. We were not in privity in any way. So, why did she have any standing to file a complaint against me? Idaho should have dismissed this complaint just as soon as it read her letter. Why? Because the complaint had no basis in law or fact, with which the state eventually agreed. The potential borrower was just mad at me for what she thought was a low-ball appraisal.

Now, it is clear to me that anybody can file a complaint against an appraiser at any time for any reason at all, including no reason at all. So, should a borrower be able to go directly to the state and file a complaint? More importantly, should a state appraisal board take seriously a complaint from someone who is not a client or named intended user? I say no!

But what if there are specific USPAP violations? That’s a different question. Nevertheless, it should not even consider a complaint that alleges merely the appraisal was not high enough – that the property owner (not my client; not a named intended user) merely disagreed with my value opinion.

Please let me know your thoughts on this. I know the state board has its responsibilities. But do those include bothering me for 75 or 80 of my precious hours to defend myself against a charge the state eventually concluded was baseless? Even the Standard Three review of the appraisal the state ordered found nothing amiss. So, chime in on this. Let me know if I’m wrong. I’ll appreciate hearing from you!

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 186 Should Only Intended Users Be Allowed to Complain About Appraisals?

34 thoughts on “Who Can Complain About Appraisals”

  1. Nobody gets excited when the State Appraisal Board sends a letter. Its either a complaint or time to send them more money to renew a license. These letters either raise funds or blood pressure. State boards need to vet these cases, so that they dont waste the appraisers and courts time-and cause undue stress. The California Case Tindell v Murphy ruled against an unintended user that sued an appraiser. Appraiser Billy Phillips went through this same scenario recently, the state found no wrongdoing, Mr Phillips sued all parties involved and prevailed. Valuing a property under contract is not necessarily “coming in low” Sorry you had to endure this nonsense

  2. Very well said
    Your story was not emotional but factual
    I have been through the same situation and was raising three kids and neefed my job
    Appraisal too low so got a complaint
    NC appraisal board dug and dug to try to get me on something
    NEVER a word about what the non client complained about
    But it raised a big flag with my e and o insurance
    I would not let my kids go into this business. One should not be nervous every time one walks to a mailbox

  3. TILA Truth in Lending Act (Regulation B), addresses who can respond to an appraisal report for a consumer’s primary residence. This is what I call consumer ‘rights’. In this case, does the owner live in the multi family property. If no, TILA may not apply. If yes the complaint by the borrower/owner is found to have no merit, does an appraiser wrongly accused have the right to sue the party providing the complaint for costs/damages? 80 hours time spent in the ‘defense’ is likely low.

  4. I experienced the exact same thing, twice. Once in 2003 and again, in 2016. The results were exactly the same, both times, just as you experienced, all ended well. But it took 9 months of stress and time. And the reasons for the complaints were ridiculous. The values were “too low.” I have decided to quietly leave the appraisal business (after 40 years) and focus on brokerage (I am also a broker). As a broker I am not subject to the same type of potentially ridiculous scrutiny as I am as an appraiser. Yes, there is serious oversight, however, it’s not absurd, like it is for an appraiser. I will retain my license, but I will not actively appraise. The potential for another nitwit to upset my life for 9 months, will be significantly mitigated. I appreciate all you do!

  5. Scott Hammond

    I completely agree. Went through a very similar situation in which the borrower did not like my value. Filed a complaint with the state which also dragged out for about a year. Borrower stated two areas of complaint (houses built in the 80’s when his house was 2002 and houses on opposite side of river). All houses were on the same side of river as his and my oldest house was built in 1998. Neither of his statements were even close to true, yet it started a full investigation into every facet of the appraisal. Again based on a borrower (not the client) who did not like the value despite having no evidence it was wrong. The borrower was able to go online and fill out a ten minute form which launched a year of headaches for me. If every borrower that did not like the value filed a complaint with the state there would be a back log for decades. There needs to be some level of fact presented before a full investigation begins. I now am paying higher E & O rates as I was “investigated” and had to disclose this to some clients as well as they have an annual form I fill out that asks if I am under investigation. Since this dragged out for a year, I had to answer yes when this form came do. Horrible process!

  6. Same thing happened to me here in Montana. I did an appraisal for a bank on a tract of land that was in foreclosure. The owner of the the land had come close to defaulting numerous times. The land is close to a blue-ribbon trout river just north of Yellowstone Park. There is no access to the river from the tract. In my report, I wrote a comprehensive description of this land, and put into the report the results of a conversation with a prominent broker, who confirmed no river access, along with my supporting research. That was in 2011; flash forward to 2014, when, after the owner lost the land and went about suing all others involved, he came after me, claiming there is a deeded river access and that my report had a serious flaw in it’s analysis. He isn’t an intended user and his intent was obvious, plus he has a poor reputation in the community…but the state threw the book at me. When the state letter came, I called my E&O and hired the attorney they directed me to. Mind you, I had no formal complaints, and in our area, there is a stygma surrounding complaints within our appraiser network. In the end, I prevailed, after $4500 in attorney fees and a lovely 15% rider added to my E&O. What an insane ride that was…

  7. Several years ago a compliant was filed against an appraisal I provided to a lender client. The complainant was made by the girl friend of the owner, she was not an owner of the property or listed as a borrower for the loan. The complainant called me to complain about the appraisal and when she didn’t get satisfaction from our conversation I received a letter from the state licensing board with her complaint a couple of days after our telephone conversation. I was required to submit the appraisal and work file to the state licensing board and address all of her complaints about the appraisal within 30 days. The compliant was dismissed rather quickly, within a few months. I would think that the licensing boards should vet these complaints more thoroughly in regards to whom is making them and what the complaints are actually about.
    Interestingly I received a call from her lawyer about a year later wanting me to provide a new appraisal because she was claiming rights to his property after their break up. I guess she was looking for a low appraisal then? This is just another example of why there aren’t new appraisers wanting to get into this business.

    1. Tindell V Murphy is an interesting read. What I found most interesting was the continued misunderstanding concerning mobile, manufactured and modular homes by an appraiser.
      If I read the case correctly the appraiser identified a 1972 yr built home as being a modular home. The listing and inspection identified the home as a manufactured home and the buyers (plaintiff) had hand written 1979 on a copy of the listing.
      I think most know that getting loan on a 1972 “mobile’ home can be very difficult. A loan for a 1972 modular home no problem, a 1972 “manufactured” home, big problem… there is no such thing… The term manufactured home did not come about until 1980’s. And the magic date is June 15, 1976 when “mobile” homes had to comply with the Nation Mobile Home Construction and Safety Standard Act.

      It sounds like the appraiser misidentified the home but the court recognized the plaintiffs were not the intended user of the appraiser report.

      A correct identification of the home by the appraiser for the intended user would have probably killed the deal and kept the appraiser out the big mess it later became.

      Has anyone taken the new AI course on Manufactured homes which is supposed to include “the next generation manufactured homes”?

  8. I have been there before also. The owner filed a complaint for a low value. When you are found “innocent” you feel the urge to sue for damages, of which there are many far reaching. However, this one case is hidden from the rest of the world and doesn’t further our cause. Appraisers simply need more power in the process. Forgive me for implying that Realtors are any less of a professional, but every day I see grave mistakes made by Realtors that, if they did not have the power they have in their collectivism, would lose their license. If there is a complaint filed against them, it is much less of a burden on them. Because they have had a collective strength base for their members. As we all know, appraisers are solitary lambs out there and if we don’t increase our collective strength, this will continue to happen. The base point in this story, well put, is the owner/borrower should have no basis for filing a complaint without credible evidence of wrongdoing.

  9. Michael jones

    The vast majority of complaints are because of a disagreement in the value and often by someone who is not an intended user. So the million dollar question is “why do the boards not dismiss these immediately?” The answer is because we as the appraiser allow them too bully us over a frivolous complaint. Stop playing ball with them and fight them. If the complaint has no merit then there is nothing they can legally do. They don’t need your work file or report to determine this. That is up to the person filing the complaint to prove and the first question the board needs answered is “was this person the client”. If not, case closed. If case isn’t closed then the appraiser needs to lawyer up and start suing starting with the person filing the complaint, then the board, then the board members individually. A frivolous lawsuit to fight a frivolous complaint might just make them realize that they are over stepping their authority. The complaint must indicate that the appraiser violated USPAP in order for it to be legally actionable by the board in my opinion. A response that I got From our board when I had a question was this: “The board only addresses questions that relate to USPAP, approved education and licensing.” Disagreement in value does not fit any of these.

  10. I basically went through this process when a complaint was filed against my associate and better half almost 5 years ago. The borrower(s) recently received the subject as an estate property. The upper level of this 1.5 story was unlivable due to no fixe heat and “ongoing” remodeling and the first floor, graciously, in average condition at best. When the appraised value came in almost 30% below the assessed value (their perceived value), they filed a complaint.

    In the complaint they stated they requested a Reconsideration of Value, but that the appraiser refused to address this. What we found out later is that the lender’s underwriting department did receive the ROV, but deemed it baseless and never informed the appraiser one had been filed. Not to denigrate the borrower’s but, what was obviously clear in the complaint is that they were being “coached” by whom we strongly suspect was the L.O. Nevertheless, the gist of the complaint was a “lowball” appraisal, yet they provided no supporting documentation for their position. As is usual, the State requested the obligatory paperwork to include work file and a response to the complaint. What followed next was nothing short of what could only be deemed akin to a proctology exam.

    The State demanded all requested doc’s within 30 days of receipt of the complaint, which my associate complied with. However, because they were short-staffed and weren’t hiring to fill these positions, it took almost 2.5 years to get through this thing. The overwhelming questions for response had nothing to do with value, yet never once did they assert a USPAP violation. In assisting my associate, who’s rather non-confrontational and doesn’t write “legalese” as well as I do, we had at least 80 hours, if not 100 in defending this. The E&O company was pretty good about it (no assistance; Just no premium increase), but with any proceeding of this nature you’re always concerned about the outcome.

    In the end, the State rendered a determination that effectively stated: “You didn’t do anything wrong, but don’t do it again”. While obviously my associate can conduct an “airtight” appraisal, this has led to her declining assignments that have a similar “stench” and potential outcome. While I “get it” having been an assessor for 17 years, it’s astounding what governmental bodies can get away with in “quasi-judicial” settings. What’s no less astounding is the percentage of complaints filed against appraiser’s who conduct themselves professionally and supportively as opposed to those who don’t.

  11. Cynthia Grant

    We appraisers need to make our individual State Boards see reason when it comes to vetting complaints. Why do we even bother defining Intended Users within our reports – if just anybody can use the report and file complaints against the appraiser. What can we do to stop this ?

    1. In my state the Division of Real Estate mission is to protect the public and promote responsible business practices through education, licensure, and regulation of real estate, mortgage, and appraisal professionals.

      Limiting who can complain would not help them protect the public, but they could do a better job of screening, processing and completing complaints that do occur. (having someone with actual appraisal experience in these roles is essential)

      In answer to your question I think appraisers should be more active in attending board meetings, using the time allotted to the public in those meetings to present concerns, ideas, and solutions for the boards and real estate divisions to consider. Having attended a number of these meetings I am surprised by the lack of appraiser attendees.

  12. I think we all have similar stories, but one new one that happened to me recently was a homeowner complaint filed with the local Better Business Bureau; in addition to being ‘low’ I was ‘rude and unprofessional’ from my first phone call to schedule the Inspection. The BBB contacted me and asked for my response before they would publish the complaint. I sent a reply to the BBB explaining there was a formal complaint process, that the homeowner had not followed it, and was only disappointed my value was not higher. It sounds to me like our local BBB is smarter or at least more fair than most State Boards, as they sent the homeowner my response and refused to publish their complaint against me.

  13. Vince Slupski

    The appraiser is in a position of public trust. The appraisal affects the interests of multiple parties beyond the intended user. In an estate settlement, the client and intended user would be the attorney handling the estate, or possibly the administrator of the estate. But the result of the appraisal may also affect the distribution to the heirs and the IRS. In lending, appraisals affect the interests of the bank shareholders and the FDIC or other guarantors, as well as buyer and seller. How can these parties be represented to ensure fair and competent appraisals? The legal system doesn’t seem to be the right venue, and the reach of professional organizations is not comprehensive enough. There is no question that state board complaints are poorly handled fishing expeditions. A mere disagreement regarding value is an excuse to examine every aspect of the appraisal, and the processes are time consuming, expensive, and often arbitrary and unrelated to the motivation for the complaint. But to Dustin and the Amen Chorus represented in the comments above: how would you ensure that appraisals are fair to secondary parties?

    1. First, there is NO obligation to un-named ‘secondary parties’, but, the only way to ‘… ensure that appraisals are fair…’ is to ensure that the Report is honest and reliable, etc. As in many cases, like a divorce settlement, someone will think it’s too high and the another too low.

      1. Vince Slupski

        Respectfully, Bob, that’s a complete non-answer. “…ensure that the Report is honest and reliable” – who’s going to do that? Some kind of disciplinary authority? Like the state appraisal regulatory authority?

        1. Vince I was attempting to be brief in my answer and presumed you do NOT need a USPAP primer from me; my point is that our obligation is to the client and per USPAP to produce a report that is NOT misleading, or in my words, ‘honest and reliable’. I don’t find the word “fair” or a requirement to be concerned about what all potential secondary parties might think of the Report in USPAP. And that is a good thing, as I’m quite certain that would be impossible.

  14. Jennifer Seybold

    Wow, What a great topic! And I really appreciate all of the responses above. Great food for thought!

  15. I am not sure if many appraisers have seen this disciplinary Matrix that was produced by the Appraisal Foundation but i do know state agency’s reference it.


    I have attended Level I and Level II of the Investigator training classes provided by TAF and AARO. The classes were good, but as an appraiser I was pretty dismayed by the lack of appraisal knowledge of those attending and were in positions to investigate or regulate appraisers. The investigator sitting next to me had several professions and businesses he investigated and because he had bought a few homes he became the go to guy for appraisal complaints in his state. The weekend before he was at an MMA fight to make sure it complied with the state rules and regs. Appraisal complaints were just one of the many professions he looked into.

    Pushing to have experienced appraisers involved as investigators in your state would be helpful in resolving some of the issues brought up here.

    At the start of the class the instructor asked a few basic T/F USPAP questions and the class was evenly divided on the answers. It was eye opening for me.

    1. Vince Slupski

      Excellent point. Department of Licensing staff often don’t have any background in appraisal. Sometimes DOL investigative staff don’t either. That makes them depend on outside contract reviewers who may be competitors or axe grinders or otherwise not focused on the big picture – did the appraiser fulfill his or her responsibilities honestly and competently?

  16. Sounds all too familiar. Mine was a realtor to a buyer, was trying to sue me because the property had multiple offers and they lost. She thought she could get her commission from me. So after 1 year with the state, then having to spend time before a civil judge, he dismissed the case. But as with you I spend over a year stressed out because the state doesn’t tell you what the complaint was. I think it’s time the APPRAISER had an advocate. Insurance (E&O) companies are only worried about being sued, not your rights or your innocence.

  17. I also went through the same thing and it was so stressful! I had to contact my E&O which caused a red flag until the determination was concluded. I totally agree that the state should not even waste our time or cause us undue stress for a complaint for value. It is definitely the worst part of the job!

  18. Not quite tracking. You use the term property owner/borrower, so to me that seems to be a re-finance. Technically, not your client but with the lender’s permission, ……. For what it’s worth, if my above assumption is correct, I inform them I can’t answer any of their questions without permission, commiserate with them about the absurdity of it all, etc., etc. and have never had a problem.

  19. The TN Appraisers board Is doing this to me right now. I did an appraisal on a fully renovated vacant home and several months after it closed, the sewer backed up in the basement. I was more than friendly to the borrower when she called and offered to help in anyway I could. The lender helped her find an atty to discuss the issue with the person that renovated the home and instead the atty told her to file complaints on everyone involved…agent, appraiser, inspector etc.. I contacted her and told her this was not right and explained how damaging it was and that I would peruse legal action myself to try and recoup my loses. The borrower laughed and said, “I dont blame you for the issue and only submitted you for as the atty said to, but now im angry and will not retract the complaint.” (I have all this in email).

    Enters the great state of Tennessee and they have been reviewing it for 5 months, have been rude, treat me like I have done something wrong, all on my tax dollar. I had a reviewer boast about finding Uspap in 100% of all reports reviewed. I almost cant work anymore from stress. Ive recently had 3 different appraisers tell me because of the state board they look to see if a property looks low on paper prior to accepting an assignment and decline the order if it does. I had another agent tell me that they threaten to submit all low appraisals because the state board beats us up so bad. Our board is hurting the public and being used as pawns for the unethical. Many of the members are appraisers. It disgusts me to the bone. I have already contacted an atty. I am also gathering appraisals from the board members. I had several ordered under straw buyers.

    I hate to make a post like this, but im absolutely disgusted at this situation.

  20. On top of everything, look at each appraisal boards conviction rate. Like one user said, I have had the NC board dig and dig and dig to try to make a complaint stick. When I was just entering as a novice in this field, they made an illegitimate complaint stick and it has followed me around forever and cost me tens of thousands of dollars. I did nothing wrong, but because there were some foreclosures in the subjects area, they determined I should have used some in the report. This was a house where the people had lived there for 20+ years and taken good care of the house, I used regular market sales, yet the NC Board investigator said if there was more than one foreclosure in the subjects market, then they should go in the report. As an experienced appraiser, do you know how stupid that sounds now? Yet my professional career was stained permanently because of this investigators bias and clueless antics. I think the NC Board and most other Boards in the US conviction rate is almost 100%, you think something is off? Yea, me too!

  21. What follows may be helpful, but if not, you’ve wasted a minute. No way to confirm the number, but I believe some appraisers might be focusing on the sale price of the property with their MLS search. My procedure is to input any type of property, $1,000 as minimum and leave the maximum with no $ figure. If there are lot/land sales in the neighborhood you have something for estimation of land value. The other sales will indicate how your subject fits in. In this business, to CYA, all data is relevant. Not mine; can’t remember where I saw/heard it.

  22. And just think, now we will be doing appraisals with some random inspector? However they decide to do it.
    Imagine the can of worms that will open? Twice the complaints….Will someone be defending the inspector or is that on our time and our dime too. What about the Appraisal trainee? Does he/she get to inspect our appraisals without the Valuation License?
    Does your insurance cover this random inspector? Mine doesn’t.

  23. I’ve been through this three times and the State has ruled in my favor all three. All were home owners unhappy with the appraised value. Although I was very confident in all aspects of my reports, it is stressful and takes months to hear back. I wonder how many appraisers out there subconsciously or otherwise inflate the appraised value to avoid this stress.

  24. I have read these comments because I am a homeowner that is unhappy with my recent appraisal. The appraiser did not ask if we had done any upgrades and we had done so much that I was very disappointed to not have them included. I called and spoke with the appraiser and she said that based on what I was telling her that she would raise the appraisal by at least 5% but didn’t know how to make changes to the appraisal. She said that she had never been asked about one of her appraisals before and didn’t know how to do that. Besides the missing upgrades, the square feet is not correct by 100 square feet. It is a town home and from my purchase of the home, previous appraisal, tax records, comparison to the other homes on my street that are the same model and floor plan, She has my square feet lower than my records and the other homes. She must have measured incorrectly. How do I get her to take another look and fix the errors? Even if she uses the same comps my house would value what I need it to just by having the correct square feet. Wouldn’t proper square feet and upgrades be reason to file a complaint? I realize that everyone wants their house to be of more value but there are obvious mistakes.

  25. William Martin

    LF, I feel your pain. I do understand that the Appraiser’s job is difficult especially in a volatile market but there are cases where the Appraiser is wrong and if, like in our case, the buyer is applying for a FHA loan, a low appraisal will sit with your property for 6 months. In our case the appraiser wasn’t rude, just very business like, which would normally be fine. However, we had an appraisal done 3 month prior for a refinance and the market has been on the upswing in terms of value. First thing the appraiser said when our agent offered the recent appraisal to them was, “I do my own work and I don’t use comps”. How can sales comparisons not be used? Everything I can find on how appraisals are done indicate that sales comparisons are the most used methodology. After receiving the word that the appraisal came in 5% below our asking price, 10% below the offer we accepted and 12% below the previous appraisal we were shocked. So I paid for another independent appraisal even though it couldn’t be used by our current buyers. The newest appraisal, 22 days after the current one, came in at 3% higher than the previous higher appraisal that was 3 month old. Bottom line, we are all held captive by the “whim” of the appraiser, so better hope you don’t get appraised when they are having a bad day.

  26. Coming in too low is not a reason to complain, so you had a beef. If you did what happened to me, in that they provided factual errors, gross errors in judgement, and multiple errant details throughout, fully ignored facts directly pointed out to them, then they are negligent and deserve a compliant, which I just filed. The bank did the appraisal, but the appraiser chosen isn’t necessarily up to them. They did an appraisal and it has an impact on me when they flub facts and have seriously outdated cost approach (I do cost/price analysis all day for far more than they could dream of), then they deserve a complaint. The guy in particular just is outdated, uses outdated modality, his cost approach is flawed, and it is questionable as to if he has Alzheimer’s or some sort of other issue where he can’t recall facts well. His observational skills are terrible, and he even presents a physical risk because he is so frail he almost fell down the stairs and has difficulty navigating around. Some people need to retire. He’s already on most lender’s disapproved list, except the one I used, and I find out he’s widely known as a bad apple, with my realtor who he wrecked a buy the prior year for being pig-headed and not accepting new factual information he missed. Some appraisers thing their sh* doesn’t stink. Wake up time.

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