But fraudulent appraisals are common, as buyers are eager to move into houses and as lenders are eager to close on loans. Many in the value assessment industry have long complained of being under pressure to appraise a home at a “desired” value, pressure that can cause them a loss of future work if they fail to “make the numbers.” But houses that appraise for more than they are actually worth costs everyone money and artificially inflates home values.

Some new guidelines and paperwork may soon help reduce the amount of fraud that goes on in the industry. New appraisal requirements for Fannie Mae, Housing and Urban Development, Freddie Mac and Veterans Administration loans have recently gone into effect. The new rules require more details about the comparison properties that were used to determine the value. In addition, the appraisal most note any “concessions” made by the seller to the buyer in order to facilitate the sale of the property. If the house was for sale at $150,000 but the seller offered $5000 back to the buyer to fund the replacement of carpet, then the appraisal should reflect that the sale amount is actually $145,000.

These new guidelines should help in an industry where fraud losses were estimated at more than $400 million in 2005. Will it eliminate the problem? Almost certainly not. There is a lot of incentive to produce false numbers in the lending industry and there are too many people in the chain of paperwork who stand to benefit from cooked numbers. Still, it is a step in the right direction, and all Americans would benefit from a more honest and equitable process of determining an accurate value of real estate offered for sale.