Tag Archive for: UAD

The New URAR: Finally, Uniform

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Since I started in this profession, we’ve been filling out something called the “Uniform Residential Appraisal Report.” URAR. A tidy acronym, an orderly idea. The problem, of course, is that it wasn’t uniform. Not by a long shot.

There was a form for a single-family house. Another for a condo. Another for a two- to four-unit property. Yet another for a manufactured home. You could practically fill a filing cabinet with the different “uniform” forms. Each one with its own quirks, limitations, and yes, checkboxes. Lots of checkboxes.

The first URAR came into the world in 1986, when Fannie Mae and Freddie Mac decided it might be nice if appraisers stopped sending in reports written on the backs of napkins or, worse, dictated into a tape recorder and transcribed by the typist down the hall.

By the mid-1990s, the form had become the backbone of mortgage lending. Every residential loan needed one. The problem was that “residential” meant a lot of things. It meant one house on one lot, sure. But it also meant a condo in Miami Beach, a duplex in Des Moines, or a manufactured home sitting proudly on a quarter-acre halfway between Humboldt and Gadsden.

Each property type came with its own form. Each form came with its own rules. Each rule came with its own set of misunderstandings.

So, what was “uniform” about it? Not much. If you were appraising only single-family homes in subdivisions, you might get away with only using the URAR. But step outside the tidy framework of cookie-cutter houses, and you’d need another form, an addendum, or some cobbled-together franken-design mess to tell the story. I have passed on condo appraisals in the past just to avoid dealing with the condo form.

The new URAR adapts to our needs. If the property has two units, the report expands. If it’s a condo, different sections appear. If it’s a manufactured home, the right data fields show up automatically. You no longer have to select from a menu of forms; the report builds itself around the property you’re analyzing.

It’s flexible, but structured. It’s detailed, but readable.

For the first time, lenders, regulators, and appraisers are all looking at the same thing. Not a PDF that tells a story one way for the reader and another for the database, but a unified, structured document that preserves the narrative and the data in one place.

For too long, we’ve treated appraisal as a stack of paperwork. The new URAR reframes it as a flow of data and analysis. The appraiser’s job is not to fill in blanks; it’s to interpret reality and record it in a way that others can trust, read, and reuse.

For too long, we’ve treated appraisal as a stack of paperwork. The new URAR reframes it as a flow of data and analysis. The appraiser’s job is not to fill in blanks; it’s to interpret reality and record it in a way that others can trust, read, and reuse.

Because a single-family home in Denver and a fourplex in Detroit don’t look alike, but they share the same fundamentals: location, condition, quality, and market forces. The new framework recognizes that and organizes it accordingly.

The story is still ours to tell, but the structure lets that story travel farther.

If, like me, you’ve been doing this a while, you might be tired of hearing about “big changes.” Every few years, someone promises revolution and delivers another PDF.

This one’s different.

The URAR redesign isn’t about forms, it’s about how we communicate. The goal isn’t to make the job harder; it’s to make the work more meaningful. The new report gives us room to explain, to narrate, to analyze. The structured data captures what’s measurable. The commentary captures what’s human. It’s a marriage of logic and judgment, of code and craft. Lenders get cleaner data. Regulators get consistency. Reviewers get clarity. Borrowers get transparency.

But the real winners might be the appraisers who adapt early. Because this isn’t just a technical update. It’s the new language and grammar of valuation. And those who learn to speak it fluently will find themselves more valuable than ever.

When you strip away the noise, the new URAR is about credibility. It says: here’s what the property is, here’s how I know, and here’s the data to back it up.

That’s what investors want. That’s what lenders need. And that’s what we’ve always tried to deliver, but with a mishmash of forms and addenda, and a mind-numbing complexity in presentation.

So yes, the new URAR finally earns its name. After all these years, “uniform” means something.

One report. One language. One process for every residential property type.

It’s the same notion we started with in 1986, but this time, we’ve got the technology and the discipline to make it work.

And maybe, if we get it right, the next generation of appraisers won’t have to explain what “uniform” was supposed to mean in the first place.

 

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The New UAD and What It Means for Appraisers

A Q&A with AeL Partner Hal Humphreys about the New UAD Redesign and Changes in the Industry

If you’re reading this, you probably know by now that appraisers are bracing for a sea change in how they build appraisal reports. But in case you’ve missed it, here’s a news flash: the 1004 form is going away, and appraisal reports as we know them will soon change forever. 

Why is this happening? The simple answer is that big organizations like Fannie Mae and Freddie Mac are leading a shift away from rote form-filling and toward an appraisal process that’ll be more focused on understanding and analyzing data. 

AeL partner and Appraisal Buzzcast host Hal Humphreys is a veteran appraiser and instructor who’s been paying attention to the industry chatter on social media and in CE classrooms and conferences nationwide. He’s gotten an earful from appraisers who are apprehensive about the industry’s future. Our new employee Heidi sat down with Hal via Zoom to ask what kind of resistance he’s seeing among fellow appraisers to the coming changes, what the implications of these changes are for the industry, and how appraisers can adapt their expertise to thrive as analysts in a quickly evolving valuation market.

This interview has been edited for length and clarity.

 

Appraiser eLearning: With the GSEs phasing out the 1004 form, what are the implications for appraisers? 

Hal Humphreys: I’d characterize the shift as colossal. It’s a whole new sport. With this new UAD rollout, appraisers will have to show their work in lending reports, requiring proficiency in analytics — a departure from their previous practice. This could involve methodologies like paired sales analysis or using statistical software. 

I believe it’s crucial for appraisers to enhance their data analytics skills and their ability to articulate statistical analysis. Ultimately, these skills are essential for drawing precise conclusions from sampled data.

AeL: What challenges do you anticipate appraisers might encounter as they transition from standardized form-based appraisal practices to a more nuanced analytical approach?

Hal: Having just returned from the ACTS Conference in Colorado, I noticed the appraisers that show up to conferences are the appraisers getting their heads around this shift. The data analytics stuff is not gonna be difficult for them because they’re already trying to do it. 

Some appraisers are still under the misconception that the new UAD is just another version of the 1004 form. The thing is: it’s not a form, and it’s not just learning how to do a new thing. It’s going to be a 6- or 8-month learning curve to get their head around how this works.

AeL: Can you elaborate on the importance of analytical skills in the future of real estate appraisals?

Hal: The basic math appraisers are expected to do is not terribly difficult — I don’t think anyone is expecting appraisers to do multiple linear regression analyses. What they want is for appraisers to look at a piece of property and determine if the market is increasing and to have support for the increased adjustment to the sales. I believe it’s going to be a matter of better understanding how to use factual verified data. It has to be verified. USPAP uses the word “must” a grand total of three times, always in the same context. Every time it says, “An appraiser must collect, verify, and analyze all information necessary for credible assignment results.” We must gather the information, we must verify it, and we must analyze it. 

There are a number of ways appraisers can use data analytics to extract adjustments from market information: They can use a depreciated cost analysis to identify specific adjustments for different items such as a deck versus a concrete patio, one fireplace versus two fireplaces, etc. Scott Cullen teaches how to do that at Appraiser eLearning, and has a software product called Solomon Adjustment Calculator that relies heavily on the depreciated cost.  

I’ve spoken with folks at different GSEs, and they’ve identified plus or minus 35 tools to help appraisers with data analytics. But the appraiser has to understand the basic theory and math behind the tool they’re using, and they’re responsible for what the software kicks out.

This data-driven approach opens up a whole world of appraisal work appraisers could do without fear and trepidation. If I were an appraiser solely focused on lending work, and then the market began to slow down, embracing data analytics and statistical analysis could revolutionize my practice. 

AeL: Do you foresee potential resistance or reluctance within the appraisal community to adopt these new changes? And if so, how might that resistance be addressed?

Hal: Yes, I do. But we are going to be switching to the new UAD. We do not have a choice. And it’s a perfect opportunity to learn how to integrate some of these tools. I’ve heard that some of the software providers will be providing an interface to build a report that then goes to the UAD. They’re all working on various tools to either integrate directly into their product or have an API handshake. 

During a recent conference, there was some resistance to the tune of: “USPAP doesn’t require me to show my work. Why are you asking me to show my work?” The answer came from the chief appraiser for the VA, who said something like: “You’ve done the work. You’re saying it’s in your work file, then show your work. It doesn’t take any more time.” 

What to say to appraisers who have concerns? We simply have to roll up our sleeves and adapt because change is inevitable. Appraisal work, especially in the lending sector, is undergoing shifts to meet the requirements of entities like Fannie Mae and Freddie Mac. And it’s worth noting that there’s a vast landscape of appraisal opportunities beyond lending, many of which demand even more rigorous documentation and explanation of methodologies. Rather than viewing these changes as obstacles, they could be opportunities to enhance the professionalism and credibility of our field. 

AeL: What do appraisers stand to gain from beefing up their analytical skills and embracing a more data-driven approach to valuation?

Hal: This data-driven approach opens up a whole world of appraisal work appraisers could do without fear and trepidation. If I were an appraiser solely focused on lending work, and then the market began to slow down, embracing data analytics and statistical analysis could revolutionize my practice. 

By integrating these skills into your reports, you transition from merely meeting minimum requirements to becoming a more proficient appraiser. This data-driven approach not only enhances lender work but also opens doors to diverse appraisal opportunities, such as divorce or litigation cases. Currently, the only people taking divorce or litigation assignments are the ones already comfortable showing their work and using data analytics to validate their conclusions. Understanding data analytics equips you to handle a broader range of assignments with confidence, even during market slowdowns. While the adjustment may be challenging for some initially, it ultimately leads to significant professional growth and expanded opportunities.  —Heidi Reuter

 

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