A Complaint Is Not a Verdict: Guidance for Appraisers

SPONSORED CONTENT

by LIA Administrators & Insurance Services

A disciplinary complaint can happen to any appraiser, even those with long and careful careers. In 2025, disciplinary proceedings accounted for nearly 70% of all new matters reported by insured appraisers to LIA — a reminder that complaints, allegations, and grievances are not rare exceptions, but professional risks appraisers should be prepared to address.

Over the past year, many highly experienced appraisers have faced allegations for the first time. We received complaints from insureds with 30 or more years of experience who were genuinely shocked to receive their first notice of a disciplinary matter.

Depending on the state in which the matter is initiated, the identity of the complaining party, and sometimes even the substance of the complaint, it may be kept confidential. This lack of transparency can add significantly to the appraiser’s frustration.

In states where the complainant’s identity is disclosed, we know that more than 90% of investigations are initiated by third parties, including borrowers or purchasers, sellers, and real estate agents.

It remains true that the underlying reason for most complaints is a disagreement with the appraiser’s value conclusion. Most of these complaints allege that the appraiser undervalued the subject property.

When complainants believe a property was undervalued, they often assume that the appraisal caused them a financial loss. When money is involved, complaints frequently begin with allegations of incompetence and can escalate into personal attacks against the appraiser.

Many complaints begin with a disagreement over value, but the narrative often expands beyond valuation issues. Complainants may raise concerns about communication, punctuality, professionalism, or conduct during the inspection. These allegations reflect the complainant’s perspective, not established facts, but they can still make the process feel personal, frustrating, and unfair.

Receiving notice that a disciplinary proceeding has been initiated is stressful enough. Being accused of negligence or incompetence is difficult. Facing personal attacks on top of that makes the experience even worse.

So, if you receive notice of a complaint, what should you do, and what should you not do?

Best Practices When Facing a Disciplinary Complaint

• DO notify your E&O insurer promptly.
  Errors & Omissions policies require timely notice of complaints, allegations, or grievances from state regulators. Confirm what coverage may be available to assist with the investigation or defense.
• DON’T take your anger out on the investigator.
  No matter how insulting or upsetting the complaint may be, investigators are required to review all complaints. They are not judging you. They are doing their job, often with heavy caseloads. Sarcasm or hostility will only hurt your position.
• DO carefully read all correspondence from the state and respond accordingly.
  Letters will specify deadlines for document production and, where required, written responses. Missing deadlines can create unnecessary problems.
• DO organize your work file before submitting it.
  Proofread all written responses. Consider the impression your submission creates. Does it reflect a thoughtful, organized professional, or someone careless and unprepared?
• DO ensure your response is complete.
  Some states require only documents. Others require written responses or completion of specific questionnaires. Provide everything requested.
• DO provide meaningful responses.
  Even if you strongly disagree with the complaint, your answers must be substantive. For example, if asked to explain the steps you took to research and select comparable sales, it is not appropriate to respond with, “I chose the best sales available.”
• DON’T expect your E&O insurer to write your response.
  You prepared the appraisal, inspected the property, and selected the comparables. Only you can provide a meaningful explanation of your work.
• DON’T panic.
  The process is stressful, especially if this is your first complaint. If you have no prior disciplinary history, a single allegation is unlikely to result in license revocation. Repeatedly calling the investigator will not speed up the process.

Possible Outcomes

The good news is that most investigations we have seen over the past five years have resulted in findings of no USPAP violations and dismissal of the complaint. In some cases, the dismissal may be conditional, requiring the appraiser to complete recommended education.

In certain states, a dismissal may be accompanied by a Letter of Warning, which alerts the appraiser to issues or practices that warrant attention. These matters are handled confidentially between the appraiser and the licensing board and are not published.

Do not take a conditional dismissal or letter of warning as an insult. No one is so perfect that they cannot learn something new. Sometimes you discover that practices you have followed for years could be improved.

Several insureds have told us that, in hindsight, the experience, while uncomfortable, taught them lessons they found valuable.

Fewer than 10% of reported disciplinary proceedings result in formal discipline. When discipline is imposed, it most commonly includes a fine, reimbursement of investigation costs, and required education hours. These outcomes are typically published on the state licensing board’s website and, in almost all cases, involve appraisers with a history of prior discipline.

Conclusion

Take the complaint seriously, but do not take it personally. Do not misdirect your anger, especially toward the investigator, who is simply doing their job.

Personal attacks may be insulting, embarrassing, or false, but the investigator has no choice but to open a file and proceed.

The disciplinary process is not easy, especially if you have never faced it before. Remember that you do not have to navigate it alone. Contact your E&O insurer for guidance, support, and, if necessary, a referral to experienced local counsel.

Disclaimer: This article is sponsored content provided by LIA Administrators & Insurance Services. The views, opinions, and information presented are those of the sponsor and do not necessarily reflect the official policy, position, or views of the Appraisal Institute, its leadership, or its members. Publication of this article does not constitute endorsement by the Appraisal Institute of the specific views, claims, or recommendations presented herein.