The residential appraisal industry is undergoing one of its most significant changes in decades. In 2026, Fannie Mae and Freddie Mac are transitioning the mortgage industry to the new Uniform Appraisal Dataset (UAD) 3.6 and redesigned Uniform Residential Appraisal Report (URAR).
For homeowners, lenders, real estate professionals, attorneys and even experienced appraisers, the change may initially appear to be simply a new appraisal form.
It is much more than that.
UAD 3.6 fundamentally changes how residential property information is observed, documented, analyzed, structured and electronically transmitted throughout the mortgage appraisal process.
For appraisers, it represents a substantial change in workflow. For lenders and appraisal management companies, it requires new technology and quality-control processes. For consumers, it will eventually mean appraisal reports containing substantially more structured information about the property being valued.
Traditional residential appraisal forms have been in use, with revisions, for many years. Information that did not fit neatly into those forms was often explained through narrative comments and appraisal addenda.
UAD 3.6 moves the industry toward a much more data-driven and dynamic appraisal report.
Instead of forcing every property into essentially the same static form, the redesigned report can expand and adapt depending upon the characteristics of the property and the appraisal assignment.
In many respects, the residential appraisal is becoming less like a paper form that happens to be completed on a computer and more like a structured property-data report supported by the appraiser's analysis and conclusions.
The transition is already underway.
The industry entered broad production in January 2026, allowing lenders prepared for UAD 3.6 to begin using the new reporting system.
Under the current Fannie Mae and Freddie Mac implementation schedule, new appraisal reports submitted to the Uniform Collateral Data Portal (UCDP) on or after November 2, 2026 must use UAD 3.6.
This is an important distinction. The requirement is tied to the report's initial submission to UCDP, rather than simply the date an appraisal was ordered.
As a result, lenders, appraisal management companies, appraisers and software providers are beginning their transitions before the mandatory date.
One of the most obvious differences will be the appraisal report itself.
Consumers accustomed to seeing the traditional residential appraisal report should expect something that looks and behaves considerably differently.
The new reporting structure captures much more detailed information concerning the subject property's site, improvements, condition, quality, amenities, views, utilities and other characteristics.
For example, property views and site influences can now be described with greater specificity, including their characteristics and potential influence on marketability.
The objective is not simply to create a longer appraisal report. The goal is to communicate important property characteristics in a more consistent and structured manner.
For experienced residential appraisers, this is not simply a matter of learning where familiar fields have moved.
Terminology has changed. Data requirements have changed. Inspection requirements have changed. Reporting logic has changed. Appraisal software is changing.
Characteristics that previously could be explained primarily through narrative commentary may now require specific structured data entries.
Appraisers are also adapting to new software platforms, mobile inspection technology, floor-plan and sketching systems, expanded property data, analytical tools and new methods for collecting and reporting information.
That makes UAD 3.6 a much larger transition than simply replacing an appraisal form.
Major technology transitions rarely occur without growing pains, and UAD 3.6 involves far more participants than the appraiser alone.
A mortgage appraisal may travel through an ecosystem that includes the appraiser's software provider, an appraisal management company, lender quality-control systems, loan-origination technology, UCDP and ultimately the secondary mortgage market.
Each participant must be capable of correctly receiving, interpreting and transmitting the new information.
There will likely be a period during which experienced professionals are learning new systems while software developers continue improving their products and lenders refine their own processes.
Preparation and communication throughout the industry will therefore be extremely important during the transition.
This may be the most important point.
UAD 3.6 provides a much more sophisticated structure for reporting appraisal information, but an appraisal remains a professional valuation assignment.
Technology can organize property information. Public records can help populate factual characteristics. Software can perform calculations. Modern analytical and artificial-intelligence tools can assist with data analysis and consistency.
But those tools do not independently determine market value.
A professional appraiser must still understand the market, identify relevant market behavior, select appropriate comparable properties, analyze differences, develop supported adjustments when appropriate, reconcile the available evidence and arrive at a credible opinion of value.
The dataset is changing. The responsibility of the appraiser is not.
This is an important distinction for homeowners and other consumers.
The UAD 3.6 transition concerns appraisal reporting associated with the Fannie Mae and Freddie Mac mortgage-lending process. It does not mean every residential appraisal performed for every purpose suddenly has to use the new GSE reporting format.
Residential appraisals are performed for many purposes outside traditional mortgage lending, including:
Date-of-Death and retrospective valuations, estate appraisals, divorce and legal matters, pre-listing appraisals, private market-value appraisals, financial planning and other non-lending purposes.
The appropriate scope of work and appraisal reporting format depend upon the intended use, intended users, characteristics of the assignment and applicable professional appraisal standards.
That distinction may become increasingly important as consumers begin seeing different types of residential appraisal reports in the marketplace.
At West Valley Appraisal Services LLC, we believe technology should improve an appraiser's ability to understand, analyze and communicate information about a property—not replace professional appraisal judgment.
We have been actively studying the UAD 3.6 requirements, evaluating emerging appraisal technology and adapting our workflow in preparation for this significant industry transition.
There will be a learning curve throughout the appraisal and mortgage industries. There will almost certainly be additional software improvements along the way. And the first months of widespread adoption will teach appraisers, lenders and technology companies considerably more about how the new system operates in real-world assignments.
But the underlying objective of a professional appraisal remains familiar:
Understand the property. Understand the market. Analyze the evidence. Develop a credible opinion of value. Clearly communicate the results.
The technology surrounding that process is changing dramatically.
The fundamentals of good appraisal practice are not.
West Valley Appraisal Services LLC provides professional residential appraisal services throughout Maricopa County, Arizona, including Date-of-Death, Estate, Divorce, Pre-Listing, Retrospective and Private Market Value appraisals.
West Valley Appraisal Services LLC State Certified Residential Appraiser Serving Maricopa County, Arizona 602-717-8450 www.wvas.biz
Computer Generated Residential Real Estate Appraisals, Have They Failed?
My appraising career started in 1996 and in the early 2000’s, as a young appraiser full of drive and enthusiasm, the rumbling from large lender’s was beginning to reflect the possibility of replacing physical appraisers and appraisals with AI (artificial intelligence) generated valuations. FANNIE MAE & FREDDIE MAC implemented the UAD appraisal (Uniform Appraisal Dataset) in 2010 as an attempt to get more of a standardization for residential home appraisals making appraisal reports easier to read and interpret, along with gathering data on every lender required appraisal performed. This large database of information at the time was going to be able to also assist AI appraisals by providing the algorithm with all the information collected from the physical appraisal inspections by state licensed / certified appraisers.
This was 12 years ago, and over the past three to four years, big investment firms have also attempted to use AI algorithms to do immediate valuations for decisions regarding value of real property residential property. At this time, the rumbling from the large lender’s was getting loud and appraisers were considered a “hinderance” in the loan funding process, not to mention, an additional cost to the consumers, as their AI could value the property on a “risk” analysis basis for a lower cost and an increase in speed. Companies like Zillow, Open Door, Offerpad, etc. were all using AI to make purchasing decisions to accumulate residential home portfolios, oftentimes creating false shortages of available homes on the market as purchased homes would remain vacant to create a shortage while watching the home value increase. All this seemed great, property values were skyrocketing (partially due to the fake shortage) across the Phoenix metro area and the entire country. Unfortunately, this led to first time buyers and the typical home buyers having to pay well above market value for their home. But wait, oftentimes FANNIE / FREDDIE were allowing appraisal waivers (they already had their AI model in place with all the condition / square footage / quality ratings accumulated over the past 10 plus years from actual appraisers for their database), so why not, they are willing to assume the risk, why does a consumer have to pay for a $500 appraisal in the scheme of the process. I mean, FANNIE and FREDDIE implemented desktop appraisals, real appraisers would just sit in their office and rely on hand selected photos and measurements from others to value the house. This is a great idea, right? Not for the consumer, but for the real estate machine, now they can fast tract a sale (even if the consumer is paying well above market value) an extra week or so, and the machine can earn their fees / commissions. FYI, the commission on just a $500,000 home on the low side for a realtor is $25,000 (sure they often split that with another agent, so maybe only $12,500 each on the low side). Lender’s commission can vary from 1.5% to 3.5%, so to be on the low side let’s say $10,000, title fees vary but average approximately 1% ($5,000). An appraisal fee is $500-$600 for a typical home in a typical neighborhood (approximately 1/10 of 1%, appraisal fees are not based on home values but on complexity / time required for completion).
Fast forward to late 2022, large real estate investment companies that have relied on AI for their valuation purchasing decisions are all either out of business and/or suffer large losses reflected in their stock prices (this was happing as early as May of 2022). Now, as an appraisal company, we are seeing market dumps of real estate investment companies losing as much as 10-20% on their purchases just a few months ago. How did or does this hurt the everyday consumer? Well, these investment companies were artificially driving up prices using their AI algorithms and assuming the risk based on artificially increasing property values. Now, property values would have increased regardless, it is just the level at which it increased and the speed of that increase. The normal supply and demand curve was damaged which resulted in an excessive shortage. The consumers that had to or needed to purchase their home during this time suffered from having to compete with these companies, and oftentimes not even getting an appraisal to make an informed decision on their purchase.
Disclosure, I am an appraiser and an owner of an appraisal company, so has this hurt us as a company? The answer is difficult to answer, as we were busy during this time and have maintained our office staff during this downturn over the past six months. Residential real estate is as individual as humans, every home has its pros and cons, positives and negatives, unique characteristics, etc. Having a professional appraiser perform an appraisal on your home not only gives you information that is non-biased, not compensated on if the home closes or not, it is truly one of only a few processes in the home purchasing process that are not dependent on the purchase price of the home and/or if the home closes, only to report the property and to give an opinion of market value based on the similar sales / listings / pending sales in that specific neighborhood. In addition, the appraiser will measure the property to calculate the true livable square footage, garage square footage, provide the correct site size, and note any marketability issues the property may have (home inspectors / termite inspectors are also critical cogs in the machine that also are there to provide the lender and/or potential purchaser information to make an informed decision).
So, in conclusion, I do believe the AI model has failed, as the proof is in the pudding. I also do believe that AI has a place in the loan approval / purchasing market. It is a checks and balances on an actual opinion of market value provided by a professional, and although AI values are often way out of bounds either high or low on certain properties, they can provide valuable statistics for risk analysis. Due to the unique characteristics of every home and the differing locations (even when in the same community), differing levels of condition, upgrades, square footage, layout, etc. every home should have an appraisal so the buyer can have a non-biased opinion of market value of that individual home. History has proven over the past 26 years of my career, that Macro valuations (AI appraisals) are only useful for a range of value or a large tolerance in financial risk, while Micro valuations (individual appraisals) are useful for the individual home (Subject property).
Additional Thoughts
FANNIE MAE & FREDDIE MAC have implemented some rules and guidelines that have been beneficial to the physical appraiser, including the UAD data set to keep some conformity when reporting a property along with the recent ANSI measuring guidelines (which I have personally always wanted as a standard to protect the consumer). Appraisal waivers along with desktop appraisals, are (in our opinion) a negative in consumer protection, but as a consumer you can always request a physical appraisal from an actual state Certified appraiser for peace of mind and a thoughtfully reconciled opinion of current market value to make informed financial decisions.
by Jason Clow, owner and founder of West Valley Appraisal Services 12/04/2022 Through my 26 years of residential appraisal experience in the Maricopa County market, I have been asked countless times, “Should I get an appraisal before listing or buying a home?”. The short answer is “YES”. In this month’s blog, I will go over the pros and cons of ordering and having a private appraisal for each instance, and you can decide what is best for you.
Selling a home, why is a professional private appraisal a good idea?
Buying a home, why is a professional private appraisal a good idea (especially when paying cash)?
Think of it this way, getting a private appraisal on a property you are selling or buying is like taking a used car to a mechanic prior to selling or purchasing. Knowing the most information about the property can and will assist in making the best financial decisions regarding that property. Divorce and Estate Appraisals are some of our specialties also. These appraisals are typically performed the same way as regular market value, but often times we perform retrospective valuations based on a date of death or a date of separation, along with the current market values which is helpful in understanding the market change and / or having realistic asset valuations for important dates during those troubling times.
The housing frenzy appears to be over. Multiple offers above list price, sight unseen all cash purchases, bidding wars, homes contracted prior to the sign installation, and real estate agents with a listing guaranteed a commission have been the "norm" over the past two to three years, but then April 2022 came along with rising inflation / interest rates / fuel prices. Being an appraiser and owning a real estate appraisal firm, we are tip-of-the-spear, per say, and we feel the market by changes in volume of orders. This time (April 2022), we were unsure if it was the new Fannie / Freddie desktops or the market slowing, but we quickly noticed the inventory increasing and even seeing "price drops" on listings. What???? That has not happened for years in Arizona, it was then I realized we have crested the mountain and are now going down the mountain. This does not necessarily mean "Doom & Gloom" and actually is healthy. Appraisers not only provide lenders with opinions of market value, but we are also mostly real estate market analysts. We see the interiors of multiple homes each day and review interior / exterior photos of hundreds of homes per day. We drive to properties, look at the neighborhoods and recognize changes. During the past three years, we seen a market that did not care what the property was, only that there WAS a property to buy. This would be like starving and when you finally found food, you really would not care what it was if you could eat it. So, why is it healthy? Well, because at the current rate of appreciation, 90% of American families would not be able to afford a home, not to mention the repair expense of the home they found and had to bid well above market value for. There needed to be a reset, and hopefully the days of appraisal waivers and desktop appraisals are gone. I have firsthand seen so many cases of home owners that chose the waiver path then went to refi and found out the home wasn't even worth what they paid for it, although the market has went up over 1%, per month, during the past year. Interest Rates are a leading cause because it decreases the affordability curve in the wrong way for typical families. Rising gas prices hurts us all because everything we eat, use, and consume requires diesel trucks / boats / trains and that transportation cost raises consumer prices. Companies have shareholders and shareholders want to see profits. In addition, the housing run just ran out of steam, there were too many factors pulling down on the run over the past six months, and in April, it became too heavy and now down it goes. Do I believe that we are in a 2008-2011 drop? Not even close. Most mortgage loans in today's market, the owner has a pulse and a job and has verified income. But a correction is coming and if you did not pull out 100% equity, it will just be a hiccup in the long term. I am not going to estimate what I personally believe the drop will be, I will let the market be the market and will just report it as I see it. So how can homeowners, realtors, investors, etc. get ahead of it. Well, one thing would be to get a real appraisal from a real appraiser. Have them measure the home using ANSI Z765-2021 standards to get a real (Fannie / Freddie) accepted livable square footage. Ask the appraiser to do forecasting for an acceptable window of time, review all the comparable listings and the marketing times of those listings (along with price drops), get a real market value based on the market as of the effective date (not using sales contracted in February, March, or April when there was no inventory). This can be a great marketing tool and provide some reality to sellers for Realtors or Investors and even Homeowners. Times are changing and being at the forefront of the change may save you tens of thousands. We provide all types of residential valuations, measuring services, market analysis, and neighborhood observations. Visit our website and read the menu, not only does it explain our services it also has self-help guidance tips.
West Valley Appraisal Services
The following transactions are not eligible for the desktop appraisal option:
Desktop appraisals were temporarily allowed during the COVID-19 pandemic and in our experience were about as accurate as could be relying on data (square footage primarily) that is about 80% accurate, the other 20% of the time, the assessors square footage is substantially incorrect and we will discuss that a little further down in the blog. The main difference is now is the lender / client is required to hire a third party responsible for gathering measurements to calculate square footage and also include interior walls / doorways / stairwells / exterior ingress / egress along with labels for all rooms. *INCLUDING THE INTERIOR WALLS IS A NEW REQUIREMENT* So the big question is, how is the appraiser sitting at his or her desk going to obtain this drawing / sketch / meeting the new guidelines. Well, the way I understand it, the lender / client will now be required to hire third parties to come on site and perform the measurements / photos / labeling / etc. This third party can be Realtors, appraiser trainees, uber-drivers, home-owner, etc. This sound great, RIGHT? Yes if the house is a single level rectangle with no decorative pop-outs or false walls or arc's or non 45 / 90 degree angles, etc. This is approximately 5% of homes. Now there are software developers chomping at the bit to get their teeth in the mortgage dollar. I have watched many videos of drawing tools on a smart phone, or using the old measure wheel, they will not work for homes that are not perfect squares or rectangles in my opinion. I started as an appraisal trainee in December of 1996 and was first licensed in May of 1998. I have trained over 15 successful appraisers during my career and the most difficult part of the appraisal process over this time was the measuring process. I take my trainees to about 2-4 homes a day and have them watch me measure then as they feel confident, have them measure behind me so we both have sketches, and finally after about 10 months or so, will let them measure easy to moderately easy floorplans that I already have measured either prior to them coming to the property or in the past. Measuring a home to ANSI standards that is not a basic house takes skill and years of experience. Having Realtors or anybody else (other than experienced individuals, not just appraisers) measure the exterior dimentions of a house (especially in 120 degree heat, rain, or snow) will not only slow the process down, it will pollute the entire market with appraisals of incorrect square footage. Sure, sometimes it will be only a 100 sf or so, but on large or complex floorplans, one wrong angle can make it almost impossible to reconcile the sketch and when that happens we could see 10 to 20% variations of livable square footage. Now, lets get into the WHY are they offering this Desktop Appraisal. From what I can gather, it is not a Cost issue, and that is good because I think this will increase the cost of an appraisal, not just a little bit, but a lot over time. Speed as the mortgage industry wants to make more money faster, I suppose all of us do, but keep in mind, a mortgage brings the lender between 1-4% of the loan amount (on a $500k home, that is $5k to $20k), not including the interest being paid on the mortgage. The average appraiser is compensated $500 an appraisal for a "typical" full appraisal, which can take between 3 to 12 hours to complete (including inspection, paper-work, research, analysis, inspecting comparable properties, etc.). Having an appraiser now sit at their desk looking at 3rd party gathered data will lose the "rating / feel" the appraiser gathers while doing an interior inspection and reviewing / zooming into photos will actually take more time than the physical inspection. Also, now a 3rd party has to gather that data, sounds easy, but it will be a logistical / scheduling nightmare. Time will tell. Discrimination is also a reason for the desktop appraisal, keep the appraiser separated from home-owner so there can be no discrimination. I have no doubt there has been cases of this, I haven't personally seen one, but I feel this would be better weeded out (if thought to have happened) by having a second appraisal. Sure there is some more associated cost, but if it stops discrimination, that is a good thing. The final reason that I personally believe the Desktop appraisals are here for good is corporate greed. AMC's are appraisal management companies and are one of the biggest components to hurt consumers in the mortgage process. I will give you an example. Lender Y uses an AMC (AMC X for this example) to handle their mortgage appraisals. Lender Y charges the consumer $600 for their appraisal, then orders the appraisal from AMC X. AMC X collects $250 of the $600 fee and hires an appraiser from their pool of appraisers. The appraiser gets the assignment, completes the appraisal, and is paid $350. Well this seems okay, except, what appraisers would work for AMC X when they could work for Lender Z, which uses a portal to control the appraiser panel and collects a $25 fee to keep the separation between Loan Officer and appraiser (which is needed by the way), so an appraiser working for Lender Z, gets an appraisal fee of $575 for the same work. Good appraisers work for Lender Z and perform more detailed appraisals than for Lender Y, because the best and most experienced appraisers don't need to work for Lender Y. AMC's have created some software on mobile phones to use on these desktops and appraisers who are not on their panel, can't use or buy this software. Direct lender's who use appraisal portals like the Mercury Network, Appraisal Shield, Lender X, Appraisal Port, etc. will now have to order another job from another vendor and manage the timing of everything. AMC's know this will bog down the direct lender appraisal departments, and force them to join AMC's and again reduce the quality of overall appraisals, making the profit margins even greater for the AMC's. The hypocrisy now is Fannie Mae will require all appraisers to measure homes using the ANSI Standard Z765-2021 starting April 1st 2022. This is actually a great thing, my firm and the previous firm I worked for and trained many appraisers have always used ANSI Standards to measure a home, so this is not a change that really effects our firm. There are appraisers however, that use the assessors dimensions when providing the lender a sketch and again, as I have discussed in previous blogs can often times be off greater than 10-20% or just incorrect floorplans all together. So on one hand, Fannie Mae is cracking down on appraisers to ensure all appraisers are using the same standard and on the other hand, they are allowing Uber drivers to measure homes and have consumers rely on that square footage for one of the biggest purchases of their lives. In summary, the Desktop appraisal will not make the appraisal process any faster or any less expensive, but will more than likely increase the overall time and cost more to provide this service. An excellent example is the Judicial system, there are only so many judges and there is time required to perform the judicial system analyze the facts, and make a decision. Should the courts go out and hire grocery store clerks to hear cases to speed up the process? No of course not. This is an extreme example, but if Fannie Mae and Freddie Mac want to speed up the appraisal time, the following steps could be done that are not currently being done:
These three things should get the speed from ordering an appraisal to delivering an appraisal down by 50% and keep the UAD data base accurate as can be. If you are now reading this, you have read a lot of opinions by me and my take on this. As a firm we have and are willing to adapt to technology and provide the best possible appraisal valuations and the most accurate measurements of homes (as this is not an OPINION). Remember, an opinion of value is an opinion. The measurements of the home are facts, we can't rely on a phone app and an Uber driver for the fact. By the way, Uber driver references are just to make a point and refer to anybody that will be measuring a home that is not properly trained to ANSI standards. Here are some links for more information: Desktop Appraisal Fact Sheet
Fannie Mae Article