Today's weak home-lending market is beginning to hurt the appraisal industry.

Last week, Foster Ousley Conley, a Walnut Creek, Calif., company that offers real estate-related products and services, closed its appraisal operations.

The company will continue to run its Appraiser Panel Management, a nationwide data base listing appraisers' qualifications.

"Our difficulty just reflects what a lot of the industry is going through," said Roger A. Conley, executive vice president. "The appraisal industry is downsizing, as the lending industry is."

Some appraisers said the move at Foster Ousley Conley was only the beginning, and that tough times will continue to plague the industry.

Appraisals "were sort of a core business" at Foster Ousley, said Mr. Conley. It began the business four years ago. At its height last year, Foster Ousley did 20,000 to 25,000 appraisals a month.

But Mr. Conley said three market developments this year gnawed away the appraisal business: the end of heavy refinancing activity, the shift away from retail business, and the aggressive cost reductions going on at many lenders.

"There are appraisers out there who will do any appraisal for $35 in one day, because they have nothing better to do," he said.

The long term looks no better for the appraisal industry, said Mr. Conley.

He said bank regulators' raising the threshold this summer for loans that require appraisals will reduce the business for appraisers, as will the continuing replacement of appraisers by computerized appraisal systems.

Foster Ousley is not the only appraisal outfit feeling the effects of a downturn in the loan market.

"I have a lot of dear friends who are suffering right now," said Joseph A. Cuffaro, president of Cuffaro Appraisal Services Inc., Coronado, Calif.

Mr. Cuffaro said his business was off 50% from this time last year. And he said competition has forced down fees for appraisals in his area to $225, from $300.

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