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Buying & Selling a Home

Appraisal Apoplexy

New rules for home mortgages mean higher fees and long delays.

Jim Couture sold his home in Methuen, Mass., last spring in just ten days, for a sum within 1% of his asking price. You'd think he'd have no complaints. Instead, Couture is hopping mad about new appraisal rules that are supposed to protect consumers. His sale required two $400 appraisals, the first of which took weeks to schedule and relied on suspect comparable sales, he says, to arrive at a value roughly $30,000 less than the selling price of his home. The second came closer to the mark, but only after blown deadlines nearly derailed the contract. "The whole ordeal was stressful," he says.

The Home Valuation Code of Conduct, which applies to loans purchased by Fannie Mae or Freddie Mac, was designed by regulators to protect appraisers from undue pressure by interested parties. Inflated appraisals got a fair share of blame for the housing crisis.

But the fix has so many kinks that Congress is debating a moratorium on the new rules. Independent appraisal-management companies now assign much of the work and, as middlemen, keep part of the fee. "For my customers, the cost has gone up $50 to $75 per appraisal," says Kevin Iverson, a mortgage broker in Denver. Others say more-exacting standards are what's driving closing costs higher. Real estate agents complain about appraisers who don't know the area. "We get appraisers from two hours away," says Rick Coco, Couture's broker in Andover, Mass. Turnaround times are terrible. Plan on at least 45 days to close and allow at least 30 days for an appraisal.