Should I keep quiet about an appraisal error that's possibily in my favor?

August 30, 2009 12:47 PM

I'm buying a house, and the bank appraisal came back 1-2% lower than the purchase price, so I renegotiated with the seller, and had them lower the price to the appraised value. Today I was looking over the appraisal, and found an error. What to do?

The square footage on the appraisal is about the same as what the tax records say, but this 5 bedroom house has been appraised as 4 bedroom house. In the floor plan that the appraiser drew out, two bedrooms have been combined into one.

Should this make any difference in the appraised value? If all parties have a copy of this appraisal, the paperwork for the price reduction has already been signed, and the closing date is fast approaching, is there any reason for me to speak up about this error?

(email [e-mail] for any questions)

posted by anonymous to work & money (10 comments total)

is there any reason for me to speak up about this error?

Do you mean other than common decency?
posted by Flunkie at 1:02 PM on August 30

Speak up. You know you should, otherwise you wouldn't be on here asking.
posted by you're a kitty! at 1:06 PM on August 30 [1 favorite]

It's the right thing to do. Also, IANAL, but it seems to me you might conceivably open yourself up to charges of fraud if you went through with the deal based on information you know is false.
posted by EarBucket at 1:06 PM on August 30

It sounds like the drawing is wrong. If you intend to buy the house and sell it later it may be in your interest to make sure this paperwork is correct. Also common decency, etc.

If it's just a matter of opinion as to which room qualifies as a bedroom, that's another matter.
posted by odinsdream at 1:08 PM on August 30

I believe this is what's known as a "material fact." If your broker caught this instead of you and failed to disclose, they could lose their license over it.

You, on the other hand, merely have to endure being able to look yourself in the mirror every morning.
posted by aquafortis at 1:15 PM on August 30

start with the appraiser. it might be that there is little or no difference between a 4 and 5 bedroom house, from an appraisal viewpoint.
posted by lester at 2:57 PM on August 30

Speak up. You know you should, otherwise you wouldn't be on here asking.

That's the one.
posted by dirtynumbangelboy at 3:37 PM on August 30 [1 favorite]

Is there any chance that it's a typo? Speak up-- if it's just a typo, all will be well. If not, you'll feel better for having done the right thing any way.
posted by Maias at 3:42 PM on August 30

Yeah, speak up. The money's not worth selling yourself short, because this really boils down to an ethical question rather than a technical one (although odinsdream brings up a good point about how the house will be valued in the future). From an ethical point of view, there's no question -- if you want to do what's right, then be frank to the seller about it.

Maybe they will be understanding. Who knows, they may even appreciate the honesty enough to offer you a middle-of-the-road deal (I wouldn't count on it -- the ethical implication of not telling them would be reason enough for me).
posted by spiderskull at 6:54 PM on August 30

Ethical question instead of a technical one? Did anybody forget the financial question? Let it go and be glad you got to lose a bit less on a tickytack box. You probably haven't pushed as hard as others often do to get every single penny out of the transaction anyways.

IANAL, but I the appraiser screwed up, not you. Nobody is going to have an easy time proving you knew about it unless you start telling people, and I'm not even sure if you knowing about it is legally a problem.

</greedy>
posted by floam at 10:16 AM on August 31