Home appraisal mistakes cost Dallas man thousands

A Dallas homeowner says a bad home appraisal cost him six figures and left him unable to sell his house.

- A Dallas homeowner says a bad home appraisal cost him six figures and left him unable to sell his house.

Chris Bruning reached out to FOX 4 consumer reporter Steve Noviello as part of his mission to help other homebuyers avoid ending up in the same predicament. 

In 2007, Bruning first set his sights on buying the home he now calls "Shangri-La" and a "place of great sanctuary."

At the time, he relied on a home appraisal ordered by his mortgage company to ensure a sound investment.

It clearly noted 2.2 acres, three bedrooms, two bathrooms and a value of $295,000.

Bruning loved the property so much, he ended up paying about $5,000 more to get the deal done.

"It wasn't the house. It was the land. It was this place that got me," he said, referring to his lush and wooded backyard.

That land Bruning fell in love with turned out to be the beginning of his troubles.

In 2010, when he looked into selling his home, Bruning discovered a series of unfortunate mistakes in the initial appraisal.

"The survey was very accurate: 2.2 acres, but the survey didn't study the quality of the land," he said.

The back of the property is heavily wooded and adjacent to a large pit on his neighbor’s property. So, only 1.4 acres are fully useable. The rest has "diminished site utility."

Then, Bruning learned another piece of bad news. His three-bedroom home wasn't technically three bedrooms at all.

The third bedroom, an add-on by the previous owners, had another tricky phrase: "functional obsolescence."

"The only way to get there is to either go through a master bedroom or to go outside the house and enter the front door or back door or garage," Bruning said. "That's not a bedroom."

Despite having "diminished site utility" and "functional obsolescence," the 2007 appraisal document clearly states, "No functional or external obsolescence was noted."

Now aware of the enormous sum of money at stake, Bruning ordered an appraisal review, a report that examines the initial appraisal for mistakes and offers a second opinion.

"What the property should have appraised for was a two bedroom, 1.4 acre with .8 diminished site utility," Bruning learned.

He also learned the home should have been valued at $210,000, which is $90,000 less than he paid.

Over time, Bruning estimates he lost $300,000, based on not only the property value, but also the increased tax value he paid for years before discovering the appraisal errors.

Bruning filed formal complaints against the appraiser and his supervisor to the Texas Real Estate Commission through the Texas Appraiser Licensing and Certification Board. The TALCB issued each individual a non-disciplinary warning and four hours of mentorship.

The TALCB declined FOX 4's requests to comment on-camera for this story, but offered this statement:

"The disciplinary action taken by TALCB and imposed on each of the appraiser respondents in this matter was reasonable and fell within the scope of TALCB’s governing laws and rules for appraiser discipline that were in effect at that time of the actions cited in [Bruning's] complaint."

Bruning tried to pursue legal action, too, but discovered one more twist of fate -- the statute of limitations to sue for negligence expired in 2009, two years after he first bought the house.

Bruning has filed multiple appeals, arguing he didn't discover the problem until 2010 and therefore should be allowed to sue. As of November 2015, his case is being appealed to the Texas Supreme Court.

Bruning has also proposed a plan to Texas lawmakers: Add one line into a mortgage contract that gives homebuyers the option to conduct an appraisal review within a two-year period. He believes this will help catch and remedy appraisals errors before it's too late.

An appraisal review costs about $275, or 76 cents a month on a 30-year mortgage.

Resources:

The Appraisal Institute is the nation’s largest professional association of real estate appraisers. Immediate past president Ken Wilson shares four easy ways homebuyers can get involved in the appraisal process.

What Consumers Need to Know about Home Appraisals (PDF)

Home Appraisal Myths and Realities (PDF)

 


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