Plan on spending more for an appraisal

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PHOENIX -- Buying a home or maybe refinancing the one you're already in? Plan on paying a hefty price for an appraisal.

It turns out appraisals have gone through the roof.

The reason? Well, a new mandate went into effect called the Home Valuation Code of Conduct. What it means is you're going to be paying more for your appraisal.

Nino Almerez and his family are about to take a big step.

"We're going to buy a house," he said. "We were looking for a new house."

The good news is they found one. In fact, they have an offer in on a Valley home right now. All they have to do is pay for an appraisal so their lender will know the home is worth the asking price.

"As far as I know, the gentleman comes in and he looks at the house and estimates the value of the house," Almerez said.

Almerez was expecting to pay around $300 for an appraisal, but he ended up paying more than $400 and he's not happy.

"My lender showed me yesterday that it's gone up to $400 because he said certain laws have been enacted that went into place in May," Almerez said.

Almerez is talking about something called the Home Valuation Code of Conduct, which went into effect in May and this new code of conduct is jacking up appraisal prices.

In years past, real estate agents may have been a little too cozy with appraisers, and some say actually influenced them to appraise a home for more than it was worth.

In fact, some believe it's one of the reasons why we're in this housing crisis right now. Homes went up in value too fast but couldn't sustain that price forever.

And sometimes that influence was between lenders and appraisers.

Dean Wegner is a mortgage broker here in the Valley and says the Home Valuation Code of Conduct now requires lenders to go through a middleman to hire an appraiser. That way there's no hanky-panky.

"The reason for that is to keep mortgage and real estate agents as far apart as they can from each other so there is no conflict," Wegner said.

But someone has to pay the extra cost for the middleman and that someone is homebuyers like Almerez.

"Well, the Obama administration thought it was needed to have more regulation during the appraisal process," Wegner said.

As for Almerez, he's not thrilled about paying 30 percent more for an appraiser, but says at least now he understands why.

"We're paying $400 for what? Almerez asked. "The job hasn't changed and stuff like that. It's just a new middleman."

"Well, they don't like it," Wegner said. "They're used to paying $300 for an appraisal. It's just an extra fee and it goes into someone else's pocket."

Here's another problem. Before, you could roll your appraisal into your closing costs and pay for it then. Not anymore. Now you have to pay anywhere from $400 to $480 upfront.

Experts say it's one reason why refinancing is down drastically.