When Clients Lie

I recently worked on an appraisal for the marital home in a divorce case. This referral came from a family law attorney I collaborate with regularly. My client, the husband, planned to keep the house and buy out the wife’s share. The wife had already obtained an appraisal, and the husband wanted one to confirm its accuracy. It seemed straightforward: a simple ranch with plenty of comparable sales. However, I encountered an issue that surfaces from time to time—the client lied.

Private appraisals often carry the same pressure and external influences as lender work, just in different forms. In both cases, clients or third parties may attempt to influence the outcome to achieve their desired numbers. In lender work, it’s typically a seller or listing agent pushing to meet the sale price. In this case, the husband wanted the appraisal to come in as low as possible, reducing the amount he’d have to pay his wife in the buyout. Understanding client motivations is crucial in divorce appraisals: one party wants a high valuation to maximize their payout, while the other seeks a low number to minimize theirs. But how do you handle it when a client lies to manipulate the outcome—and you catch them in the act?

In this instance, I noticed water damage on the ceiling in the family room and breakfast area. When I asked the husband about it, he claimed the flat and main roof were nearly 20 years old and needed replacement. As part of my standard process, I reviewed available permits, which showed the roof had been replaced only two years ago. Initially, I thought this might be an error, but to confirm, I reviewed year-over-year aerial photos—a tool easily accessible through the county appraiser’s office. The photos clearly showed the roof had been replaced, with a visible color change, which was further corroborated by the assessor’s photos.

When I reported my findings to the client, he was almost speechless, claiming he didn’t remember replacing the roof. (I thought to myself, who forgets spending $20,000 on a roof just two years ago?) He reluctantly admitted that if the permit stated so, it must be accurate. His motivations were evident from the start. During the observation, he had insisted I classify the home as a two-bedroom, even though half the family room had been converted into a functional third bedroom with a door, window, closet, and appropriate layout. He justified this by saying he would remove the third bedroom after the divorce. His attempt to lower the appraisal value by claiming the roof needed replacement was unsurprising given this context.

When information cannot be verified, disclosure is key. For example, if a client tells me a home has foundation issues but provides no evidence, I include a statement in the report: “Ms. Smith indicated the home had foundation issues. No reports or repair bids were provided to support this claim. The appraiser is not qualified to determine foundation issues, and the report is subject to an inspection by a qualified third party.” I have no hesitation making a report subject to an inspection when necessary. In this particular appraisal, I didn’t mention the husband’s false claim about the roof. Instead, I stated the permits showed it had been replaced two years prior. Regarding the bedroom issue, I reported it as a two-bedroom home converted into three bedrooms.

With any type of assignment, the approach of trusting and verifying works well. If you’d like to learn more about private appraisal work and scenarios like this, the Appraisal Referral Network offers over 25 lessons. You can also unlock opportunities by connecting with colleagues, exchanging referrals, and growing your non-lender business. Visit ReferAppraisals.com to explore free and paid memberships tailored to your needs. Unlock your potential by connecting with other appraisers today!