Appraisal Fraud is the intentional misrepresentation of the value of a home using an appraiser’s statement. Appraisals are necessary for large loans and real estate transactions, and appraisal fraud is common.
Fraud can be committed in this manner by the appraiser or by a person falsifying an appraiser’s statement. A common example would be overstating the value of a home so that a borrower can get a larger home equity loan.
An appraiser hired by a selling real estate agent might also bump the value up to help the sellers make more money. It is easy to see how fraud could be committed in such situations, and it wouldn’t take much effort to commit such a crime.
Actions to prevent exposure to such fraud would be hiring multiple appraisers, or finding a trustworthy and impartial appraiser with lots of good references.
Most states have an active association or bureau meant to regulate the actions of appraisers, which can record and handle complaints and accusations for consumer protection.