A year ago, the nation's housing industry adopted new rules aimed at preventing the kind of appraisal-related fraud that helped drive home prices to ridiculous and unsustainable heights. Now, many Tampa Bay real estate agents say the appraisal rules are a good idea gone bad, delaying and threatening sales as the market struggles to recover. Take the case of Luke Neumann, who was planning a move from Tampa to Pinellas County. In February, Neumann found his dream home: a lovingly restored, 1936 traditional with garage apartment in St. Petersburg's desirable Woodlawn area. He signed a contract for $375,000, and the lender ordered an appraisal. The results flabbergasted everyone. A Tampa appraiser unfamiliar with Woodlawn valued the property at $315,000 $60,000 less than the amount the buyer and seller agreed was a fair price. Even the normally conservative property appraiser's office showed the house to be worth $331,000. 'I was shocked,' says Neumann, a pharmaceutical representative. 'My concern was that the appraisal would come in too high. And then to have it come in that low with so many glaring inaccuracies just really pointed out the rule of unintended consequences.' During the boom, mortgage brokers and others whose fees were tied to loan production sometimes worked with appraisers to set home values. To prevent collusion, the 2009 Home Valuation Code of Conduct bars loan originators from directly selecting appraisers. As a result, most appraisers are now hired through so-called appraisal management companies. Critics complain that the companies sometimes hire inexperienced appraisers who know little about an area. The problem can be acute in older neighborhoods, like Woodlawn or Tampa's Palma Ceia, where there is a greater mix of housing than in cookie-cutter subdivisions. 'In South Tampa, you might have a 12,000-square-foot house next to a 4,200-square-foot house, and the 4,200 may suffer in a valuation,' says real estate agent Bob Glaser. 'Or one person might have an older home with a new roof and $100,000 in structural improvements that may not count in the valuation.' After the code of conduct took effect in May, the sale of a Palma Ceia home was nearly scuttled when a St. Petersburg appraiser unfamiliar with South Tampa valued the house at $100,000 less than the $1.5 million contract price. 'I actually had to put the appraiser in the car and show him other homes that had sold so he could get a really good comparison,' Tampa agent Ed Gunning says. 'This house had undergone an $800,000 restoration it was not the same house that had sold before for $1.4 million.' Thanks in part to Gunning's chauffeured tour, a second appraisal came in higher, and the house sold for close to the asking price. A common misconception is that appraisers no longer are allowed any contact with real estate agents. In fact, agents can provide information about the property or the local market, especially important when an appraisal management company dispatches an appraiser from a different city. 'As Realtors, we get to see pretty much every single house in the areas we work,' Gunning says. 'To get an appraiser that's not even from the area where the property is, there's no way they're going to have any idea of what's going on.' That's what happened with the Woodlawn house, a case study in what can go wrong under the new rules. The 3,000-square-foot house, part of an estate, had been on the market several months when Neumann and his fiancee walked in and were instantly smitten with the original hardwood floors, plaster walls and high ceilings. 'Nothing had to be done to move in, it was just in perfect condition,' Neumann says. After the sales contract was signed, the lender Provident Funding of California arranged for an appraisal. Instead of hiring an appraiser from St. Petersburg, the appraisal management company sent a Tampa appraiser who had been licensed for less than three years and apparently knew little about the area's quirks. Like many homes in Woodlawn and other older Florida neighborhoods, the house had a garage apartment a legacy of the 1920s and '30s when seasonal residents often built the garage first so they would have a place to stay while the main house was under construction. Some historic neighborhoods still have multifamily zoning even though current land use regulations discourage rentals. 'The appraiser picked up on this multifamily zoning and decided he had to compare it to duplexes and triplexes when it historically has been a (more valuable) single-family home,' says Julia Brazier, Neumann's real estate agent. Brazier enlisted the help of veteran appraiser Frank Gregoire, former chairman of the Florida Real Estate Appraisal Board. He found several problems that had contributed to the lower valuation: The appraisal report failed to note that the house had expensive, double-glazed insulated windows. It understated the size of the double lot. And for recent 'comparable' sales, the appraiser had used two short sales a house sold for less than what is owed on it while overlooking sales much closer to true market value. Confronted with those findings, the lender agreed to a review that confirmed problems with the original appraisal. A second appraisal, conducted by someone familiar with Woodlawn, came in at $387,000. On April 8, the house closed for $375,000. Brazier says it is the only case she knows of in which a lender authorized a review of an obviously flawed appraisal. 'The original appraisal cost us a month in the closing process and easily could have doomed the transaction,' she says. 'I've shared our story with other Realtors who've lost sales due to faulty appraisals since the (code of conduct) was enacted. Appraisal management companies are hiring inexperienced appraisers willing to work for a lot less. They do inaccurate appraisals that are serving to further the blight of the housing market.' The first appraiser declined comment and it is not known which company hired him. A trade organization defends appraisal management companies, saying that appraisers actively working for its 45 member companies have an average of 15 years' experience. 'It would seem to me that if the average appraiser has 15 years, the likelihood that an experienced appraiser is coming out to do the job is pretty good,' says Jeff Schurman, executive director of the Title/Appraisal Vendor Management Association. But, Schurman added, 'if anyone asks them to do an area they're not familiar with, they should turn that assignment down.' The Florida Legislature is considering a bill that would require appraisal management companies to register with the state and the owners to disclose their licensing and criminal histories. A Clearwater man whose appraisal license had been revoked subsequently started an appraisal management company. As for Neumann, he is thrilled to have gotten the Woodlawn house even though the second appraisal cost him an extra $185 and considerable stress. 'If I didn't have stick-to-it-ivness and wasn't so invested in that house emotionally I would have dropped it. It all kind of falls apart when government tries to fix an issue and doesn't really look at it all the way through to conclusion.' Susan Taylor Martin can be contacted at susansptimes.com. 