A real-estate agent gave a house-flipper inflated numbers for a property's after-repair value, then acted as the appraiser without a license through an appraisal management company. The buyer lost money when the true value was far lower. The agent was fined $10,000, but the AMC faced no penalties.
Is an appraiser's value of your house different than the real estate agent's value? This is a cautionary tale, y'all, and also lots of good information for you if you are an agent or an appraiser, or if you're looking to buy or sell. There was a lady who wanted to buy a house that she thought she was going to flip and make great oodles and scads of money, just like she saw on HGTV. So she called an agent and said, "Hey, after I do all this backbreaking work, what's this house going to be worth?" And the agent made up some numbers. And then the buyer said, "Ooh, that sounds amazing." So she reached out to her bank. The bank, knowing this was a high-risk loan because you're talking renovations and guesses and future markets and whoa, the bank said, "We're going to have to get an appraisal on this." And so they reached out to an appraisal management company. The AMC reached out to the agent and said, "Hey, why don't you just do the appraisal? You've seen the house." First of all, what? Okay, so yes, the AMC allowed the agent to perform an appraisal without an appraiser's license. So this agent thinking, "Ooh, I got a big payday coming up," made up some numbers, inflated it, inflated the number for what it was worth in existing condition and the what we call ARV, the after repair value. And so the buyer relied on this information and closed on the house. Then she does 6 months' worth of backbreaking work to make this house cute and brought back to its glory. She finishes the project and wants to sell it. And turns out it wasn't worth what she thought it was worth because she had been given inflated information. Then she finds out that there was no real appraisal done on the property, that the appraisal management company had allowed the real estate agent to provide a number and allowed that agent to impersonate an appraiser. So the property was not worth what it should have been worth, and the lady lost a great amount of money. She then did what a lot of savvy people do and called who? The lawyers. And who wins when you call a lawyer? The lawyers do. That's right. So the lawyer started digging into this and said, hang on just a cotton-picking minute, this real estate agent did not have an appraiser's license yet gave an opinion of value, which is something that only a licensed appraiser can provide. And then they discovered that it was the appraisal management company who had shoehorned this whole deal because they were going to make more money on an inflated number. At the end of the day, the real estate agent got fined $10,000. Didn't lose their license though. Shame on that, but lost $10,000 in a fine. The appraisal management company, according to the article that I read, did not receive any negative consequences. Who did receive a negative consequence in that whole messy little story there? Mm-hmm. Write it in the comments. You know, it was the consumer.
