My appraiser gave details to the seller
I am in the middle of purchasing a home as a fix and flip rehab loan. The ARV did not come in at value and the lender is asking for $50k more out of my pocket. I wasn't feeling comfortable with the deal and was debating using a finance or appraisal contingency to back out, but with the appraiser telling the seller that the house appraised at value but not the ARV and the specifics, I lost all of my leverage. I had asked the seller to drop the value $50k (The purchase agreement was $50k over asking) which they were contemplating, but now they know this, all bets are off. No reduction of price and they are holding firm on the deal. I had also offered $5k in escrow to walk away because the numbers weren't working, but with this info, they will now not cooperate. I have $75k in escrow on a $1.5M home.
There is a breach of confidentiality with the appraiser speaking directly to the sellers and seller's agent as well as professional negligence. Unless I want to walk from this deal and lose $75k in escrow, I now have to follow through on a deal I am not comfortable with due to the negligence of the appraiser. I have never sued anyone in my life, but this leak of information is turning out to be very costly to me. Do I have recourse on this? Based on my research with USPAP, it seems I do have a case here as there are strict rules about sharing appraisal information to anyone but the lender and the buyer. My agent called the appraiser yesterday and mentioned he breached his confidentiality and he said so what. Just doesn't seem to care. The home is in Oregon. Thanks!
Most Popular Reply
What starts out crazy only ends crazier...
The appraiser is engaged by the lender and can only speak with whomever the lender authorizes him to speak with about it. As such, your agent should not be the one who is calling him. He/she has no standing. The appraiser was wrong - so go to the lender and raise hell.
But know this: unless your contract stated that the property must appraise at ARV, then you're wrong. You can't claim it didnt appraise - because it did - and the ARV could be negatively impacted by a whole host of things like possibly it being over-improved for the market.
Should you had chosen to back out of the contract due to valuation, you would have had to provide a copy of the appraisal report to the seller and the seller's agent - and it would have been obvious that it had appraised at value (or contract price). The ARV is on you - not on the seller (unless you wrote that into the contract). You need to be focused on why the ARV isn't there and possible adjust that plan to get where you want to be.
Yes, you were wronged - and you were wrong...just a whole lot of not good here. Move forward with a lawsuit and you'll be running up legal fees for some time and getting nowhere. You're better off filing a complaint with the lender (possibly getting your appriasal fee refunded) and then filing a complaint with the Department of Business and Professional Regulation against the appraiser's license. They'll slap his hand.
Justice is a funny thing...it rarely occurs. Get back to business. You can make this deal work.