According to Walt Molony of the National Association of Realtors in October, up to 16% of transactions have had problems related to appraisals. "There's been a pendulum swing in appraisals, from foolishly lax to overly restrictive," said Molony.

Given recent history, it is not surprising that the appraisal system has changed. Unrealistic valuations were one of the underlying causes of the recent bubble. Buyers paid more and borrowed more to purchase homes in what turned out to be an unsustainable market.

Congress reacted by drafting the Home Valuation Code of Conduct (HVCC) and subsequent Appraiser Independence Requirements. These requirements protect the independence of the appraisal process by placing a firewall between appraisers, who work for a fee, and the other parties involved in the transaction whose compensation may be commission based.

Although intended to reduce the chance of an appraiser being unduly influenced there have been other consequences. The distance between the appraiser and the other parties has led, in some cases, to a lack of consistency and continuity.

The current market makes valuations more complicated. Added to the general drop in prices over the past couple of years, is the number of homes in a short sale or foreclosure situation.

One further factor is the risk-averse stance of lenders. After suffering losses from financing homes at inflated prices, banks and other lenders are naturally cautious when accepting an appraisal. As appraisers must now take into account recent sales in the area, there have been reports of appraisals coming in under the sales price and even the build cost of homes.

In response to growing concerns, the Appraisal Institute, released tips to help homeowners and buyers make sure their sales are completed in a timely manner

"Too many consumers in this struggling real estate market face problems with appraisals," said Appraisal Institute President Joseph C. Magdziarz. "But rather than passively endure delays in closing a sale, homeowners and buyers can take proactive steps to avoid pitfalls."

Among other things, the Appraisal Institute encourages consumers to learn about and be involved in the process. They also urge consumers to make sure their lender hires a qualified, local appraiser.

Magdziarz noted that credible opinions of value can help to stabilize the real estate market. Adding that neither the lender nor the consumer benefits by entering into an upside-down mortgage.

Rejected appraisals or low valuations can mean delays in closing or the collapse of the deal. The buyer may be faced with the prospect of coming up with the difference. Sometimes an arrangement with the seller to split the costs or lower the price can be negotiated. The appraisal can be challenged or amended based on additional information. A second appraisal can also be considered.

It is worth noting that many of the reported problems come from the areas with the largest declines from market highs. These markets also have the highest levels of foreclosure activity.

Windermere Mortgage Services has noted that less than 5% of the deals they are involved with require more than one appraisal. For this area the rate of appraisals at or above the purchase price has been 97% since May 2009. As local knowledge is a key factor in attaining accurate valuations, the average appraiser they use works or lives within five miles of the homes they appraise.

Kathy Roarke of Windermere Mortgage Services says she misses the ability to communicate directly with the appraiser. "Over my career I have established good relationships with various appraisers. I like being able to give my customers a direct answer as to the timeline for the appraisal process."

She also added that she has seen few problems with recent valuations. For her, open lines of communication and setting clear expectations are keys to avoiding frustration.

"I have adjusted to the new system and communicate the process to customers. Most clients actually tell me they are glad we order our appraisals in this manner. They want an impartial value and feel comfortable that we are following this system. They want to deal with someone who is honest."

Adopting a proactive and informed approach is always good advice. In this market it is truer than ever. By making sure the professionals you work with are associated with certified, experienced, and local appraisers the chances of problems are minimized. Being aware of the process and the options available will help the sale or purchase of a home go smoothly.