I'm sorry to keep banging on the appraisal drum, but I can't seem to help it. I came across this column by Tom Lyons at the Herald-Tribune.Lyons pretty much treads along the same path of disbelief and incredulity asThe Wall Street Journal's James Hagerty, who recently blogged about all the so-called "moaning"that mortgage brokers, builders, and real estate agents were doing over the issue with appraisals often coming in below sale prices. (You can read my blog post inresponse to Hagerty's piece here.)

Lyons calls the criticisms,which have really come to a head since the Home Valuation Code of Conduct wentinto effect on May 1, a "tough sell." He wrote:

"Of course, even one lost sale resulting from financing that falls through is sadfor a hopeful home seller and the real estate agent hoping for a commission.And so I won't make light of the problem-if there is one.

But is there really a regulation glitch that could damage housing sales just whenthey need a boost?

And should the remedy be a moratorium on new rules that put more distance between professional real estate appraisers and lenders who rely on their work?

I'm going to be a tough sell on that, because the gripes seem to be based on nothing but an anecdote here and a disagreement there. They feature the sort of disagreements that naturally arise if appraisers do their jobs and don't upwardly tweak all value estimates to facilitate whatever sales deal is on the table."

I just have a hard time understanding why these guys think this problem is overblown. We're not talking about splitting hairs here, where appraisals are coming in a few hundred dollars or even a thousand dollars short. We're talking as much as $100,000 in some extreme cases. (Don't believe me? Just check out this photo of a Pringle Development home in Florida. The home went to contract for $250,000; the appraisal came in at $150,000.)

Let's do the math here for a second. If the average price of a new home today is $221,600 and--let's suspend reality here for a minute--the average home builder makes an 8% margin (we know that many builders today are losing money on every sale in name of simple cash generation, but bear with me).That means theoretically that the home builder would pocket in profit somewhere around $17,728.

But then factor in the incentives the builder might be offering--no closing costs, free upgrades, price reductions, etc. Let's put that figure at $10,000 (again that's probably conservative). So, that $17,728 in profit is really like $7,000. Now what happens when the appraisal comes in$5,000 below that $221,600 contract price? You guessed it. It comes right off the builder's bottom line as he has to slash the price (probably for the second or third time) or cancel the sale, sending a finished inventory home back onto his books. I'll just skip factoring Realtor co-ops and the like for now.

So, let's review. Now our builder has seen profits--assuming they were making some--shrink by nearly 85%. I don't know any industry that would think that was no big deal, as Lyons suggested.

In fact, this issue is a huge deal because it is a matter of life and, well, solvency for many builders. Backlash from the new code has grown shrill enough to reach Capitol Hill. On June 25, Reps. Gary G. Miller(R-Calif.) and Travis Childers (D-Miss.) introduced H.R. 3044, a bill that would place an 18-month moratorium on the new code.

So, in respectful disagreement to Lyons, who boils the issuedown to "gripes [that] seem to be based on nothing but an anecdote here and adisagreement there," here's a slideshow I put together that shows real-life examples of new homes that have been caught in this appraisal angst. You've got to see it to believe it.