As you are not a licensed appraiser you probably don't know the reasons for the choice of comparables used. There are several valid reasons why what you describe could be perfectly good practice if you understand the process. For example, a more recent sale of a different floor plan might well be a better qualified choose. You simple have to use standard modifiers to adjust for differences.
It is possible that the Sales Agents had you sign documents which you did not fully understand at the time, but it would be difficult to prove anything fraudulent as you were obviously not forced to sign them. Incompetence is not usually the same as fraud.
Re compensation through legal channels. Have you actually lost anything other than some time through this chapter of errors. This path would most certainly require you discuss possibilities with a Real Estate Attorney.
Unless you are absolutely determined that this is a great deal for you, then I think you might be better off getting away from dealing with people you obviously don't trust and starting a new search, and considering whether going it alone is such a good idea. What you don't know can cost you dearly.
I have multiple instance of suspicious stuff.
1. Appraisal: The comps used were all irrelevant. There are similar units in the community (same floor plans etc) which can be used as comps but he used different floor plans in the community for his comps.
2. Sales Agent: He made me sign a purchase agreement misrepresenting facts?! Is that acceptable? I have email proofs of his incorrect information.
3. The contracts are definitely favorable to the seller but can I go to small court to get compensated? The estimated closing was 2 weeks ago and still there is no word of a target closing date. Latest news is loan type needs to be switched from conventional to FHA since they are not able to influence mortgage insurance company.
To answer your original question;
From what you say I see no evidence of appraiser fraud as it is no longer possible for a Lender to choose an appraiser. Under the recently implemented HVCC guidelines All Conventional appraisals must go through an Appraisal Management Company who will give the job to someone on their approved list.
A badly performed appraisal does not constitute a fraudulent one.
I think you need to take a very careful read of your purchase contract before doing any thing at this time. Builders contracts always favour the Seller over the Buyer, and many of the safeguards normal with the "standard" Purchase Contracts we use are eliminated. However, it is still a binding contract.
In addition you should get second loan approval done as soon as possible. Show them a copy of the Loan Disclosures provided by the Builders pet broker. The in-house Lender will seldom have your interests in mind and will rarely be the best choice regardless of any apparent closing cost assistance.
You might also consider raising your voice, stamping your feet, and refusing to sign anything until you get satisfactory answers to your questions.
2. No, I do not have my own mortgage broker. The builder has a mortgage company which does the lending. They offer closing cost coverage if we pick them for the loan which is what we did.
3. It is conventional loan.
4. The lender picked the appraiser. I suspect they have some understanding in spite of all the new regulations which is not very surprising.
1. Do you have your own Agent representing you in this purchase?
2. Do you have your own Mortgage Broker arranging the loan for you?
3. Is it an FHA or V/A loan.
4. Who selected the appraiser.
Obviously something smells bad here but it's no possible to give you the advice you need without having this additional information.