How about this scenario the next time you refinance or apply for a mortgage: The real estate appraisal that used to cost $325 now costs $425 even though the appraiser doing the work is only getting $175 or $200. Plus, your appraisal related charges may now be subject to add on fees that you would never heard of before – $50 to $100 extra in "no show" penalties if you get stuck in traffic and miss your appointment with the appraiser. Or an extra $50 to $150 tacked on if the property is worth more than $500,000. On top of all this, the mortgage broker requires you to pay for the appraisal upfront with a credit card or debit card, rather than including the fee with the usual lender origination costs at settlement. In some cases your card may be charged more than the anticipated cost of the appraisal itself. Worse yet, the person now conducting your appraisal may be new to the field, therefore willing to work for a cut rate fee and may not be as familiar with local value trends and pricing adjustments as an appraiser with more experience.
If your mortgage application is denied by one lender, you could be forced to pay for a second full appraisal since the new lender may not accept the first one.
This scenario is now being played out as the controversial new appraisal rules imposed nationwide on May 1, 2009 by Fannie Mae and Freddie Mac. Advocates of the rules vigorously deny the new system is flawed and say any increase in appraisal costs should be manageable for most consumers. The rules, which go by the name Home Valuation Code of Conduct, are intended to improve the accuracy of appraisals by eliminating pressure on appraisers from loan officers. The code pushes most lenders to use third party "appraisal management companies" that contract with networks of independent appraisers who have no direct contact with the loan officers. Mortgage brokers who formerly chose appraisers and kept a competitive eye on appraisal fees claim that Fannie's and Freddie's rules are adding 20 percent to consumer appraisal costs.
