Tips on Avoiding Appraisal Scams

October 2, 2019 1:53 am Published by Leave your thoughts

Unfortunately, appraisal fraud is common in the mortgage industry. It’s important to be aware of these scams so that you can avoid falling victim to appraisal and estate appraisal fraud in Napa County, CA.

Appraisers are hired by mortgage companies to value property, which can create pressure on the appraiser’s part to fudge the numbers—but to knowingly give an improper appraisal is to commit fraud. It also has terrible real-world repercussions. If, for example, a home is valued too high, a borrower can use that false equity to get a higher loan. However, if the home needs to be sold and the market simply won’t bear what the house is valued at, the borrower won’t be able to pay back the loan.

So, what can you do to protect yourself against appraisal fraud? Here are five tips from the experts:

  • Hire your own appraiser: Hiring your own independent (and ethical) appraiser is a great way to get a second opinion. If there’s a significant discrepancy between their valuation and the mortgage company’s valuation, you’ll know if someone’s trying to pull a fast one on you.
  • Research your appraiser’s credentials: Always do your research by asking your appraiser for proof of licensure. You can check these licenses with the issuing state, county and city agencies. You can even perform a Google search to see if any negative news articles pop up.
  • Ask for references: Word of mouth is often the best way to find an appraiser. Ask your loved ones with whom they’ve enjoyed working, or if they’ve heard anything about your prospective appraiser choices. Ask your appraiser if they have any client testimonials, or if they can provide references. Finally, online reviews from Google and Yelp can help you evaluate how happy clients are with their appraisers’ services.
  • Review the property’s title history: One sign that a house could be over-valued is if it was “flipped.” Flipping houses is the practice of buying, renovating and then selling a home at a profit. While there’s nothing inherently wrong with flipping, sometimes flipped properties can be purposely overvalued in order to increase profit. A flipped property combined with some of the other warning signs on this list can be a good indicator of appraisal fraud.
  • Ask yourself if it’s too good to be true: Approach everything with a healthy sense of skepticism. If you’re being promised an extraordinary value or profit, it doesn’t necessarily mean you’re about to be defrauded—but it does mean that the situation warrants some further investigation on your part. Ask your appraiser and lender plenty of questions, and do your own research. You can easily find out online about comparable sales in the area, as well as ask for tax assessments and other documentation to support the appraiser’s valuation.

For honest estate and winery appraisals, contact the team at County Appraisals Inc. today. We’re proud to offer objective valuations of your property as well as answer all of your questions about appraisal fraud in Napa County, CA.

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