The Biggest Appraisal Change in 15 Years: What Every Realtor Needs to Know About UAD 3.6

Most Realtors have never heard of UAD 3.6—but it may be the biggest change to residential appraisal reporting in the last 15 years.

In this episode of Dishin' Dirt, Gary Pickren breaks down what UAD 3.6 is, why Fannie Mae and Freddie Mac are completely redesigning the appraisal reporting process, and what it means for Realtors, buyers, sellers, lenders, and appraisers.

More importantly, Gary explains what agents need to do right now to better prepare listings, communicate value, and stay ahead of a rapidly changing real estate industry.

You'll learn:

✅ What UAD 3.6 actually is

✅ Why appraisal forms are being replaced

✅ How appraisal reporting is moving from forms to data

✅ Whether UAD 3.6 will affect home values

✅ How AI and technology are changing the appraisal industry

✅ The biggest mistakes Realtors will make regarding UAD 3.6

✅ How to create better appraisal packages

✅ Why documenting upgrades and property features matters more than ever

✅ How South Carolina Realtors can use these changes to better serve their clients

Chapters

00:00 Introduction to UAD 3.6 and its industry significance
01:51 Historical context: Appraisal reporting since 2008
03:45 The shift from forms to data in real estate
05:36 How AI and technology are transforming appraisals
07:25 What changes with UAD 3.6: Standardized data collection
09:21 Implications for appraisers and real estate agents
11:38 Will UAD 3.6 affect home values?
13:30 Common myths about UAD 3.6 and industry misconceptions
15:22 Practical steps for real estate agents to adapt
17:16 How to read and interpret appraisal reports
19:30 Preparing clients and documentation for appraisal success
21:25 Predictions for the future of appraisal technology
23:16 Key takeaways and industry outlook

Whether you're a Realtor, broker, lender, appraiser, closing attorney, investor, or simply interested in the future of real estate, this episode will help you understand one of the most significant industry changes currently underway.

🔔 Subscribe for more real estate law, brokerage, and industry updates.

📍 Hosted by Gary Pickren

📍 Blair Cato

📍 Dishin' Dirt Podcast

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Gary

* Gary serves on the South Carolina Real Estate Commission as a Commissioner. The opinions expressed herein are his opinions and are not necessarily the opinions of the SC Real Estate Commission. This podcast is not to be considered legal advice. Please consult an attorney in your area.    

Transcript

SPEAKER_01 0:00

Today we're going to talk about something that has the potential to affect nearly every finance, residential, real estate transaction in America over the next several years. And the crazy thing is that most real estate agents haven't heard a thing about it, don't know anything at all about what we're talking about. In fact, I didn't know anything about this either until Greg, who's a loyal listener in our Greenville market, reached out to me in an email and said, hey, this is something that agents don't know about. They need to know about. Can you do a podcast on it? He was right. So now I've learned some things about this that I'm going to share with you because you need to know more about this. And what we're talking about is the UAD 3.6 and how it relates to appraisals. Now, a lot of you are already thinking to yourself, this is a week I don't have to listen to Dish and Dirt because I don't care at all about appraisals. And if I had to watch Paint Dry or listen to a 30-minute podcast on appraisals, I'm probably going to take watching paint dry. And I can't say that I blame you because appraisals do seem to be rather boring. But I need you to stay with me because this is not a story about appraisals or appraisals forms. No, what this is, is this is a story about how this real estate industry is changing and where it's headed. Because this continues to be a story about data. It continues to be a story about technology. It continues to be a story about artificial intelligence. We've talked about that for months upon months about how the data is the real value in real estate and how brokerages are fighting to get control of the data. You've got the platforms who have the data. You have the brokerages who want to get that data back. And it's a big war between the Zillows, the compasses, and the anywheres of the world trying to control who owns this data. This is along that same line. What we're going to talk about is how homes will be analyzed, how they'll be valued, and how they're going to be underwritten here in the future. What we're going to discuss today is the UAD 3.6, what it is, why it's important to you, why Fannie Mae and Freddie Mack are changing appraisal reporting. What problems are they even trying to solve by doing this? How's this going to affect appraisers? Are we even going to have appraisers in the years to come, or is AI just going to take over? We're also going to talk about whether this will change home values. Will this make values go up? Because we're going to get more detailed in how we report. What realtors need to know about this and how they can better serve their clients. What are the five things that realtors are probably going to get wrong when it comes to the UAD 3.6? And where is the future evaluation headed? We're going to cover all of this and a whole lot more on this episode of Dish and Dirt.

SPEAKER_00 2:18

This is Dish and Dirt with Gary Pickering, South Carolina's only podcast dedicated to the real estate agent craft. And now the host of Dish and Dirt, Gary Picker.

SPEAKER_01 2:29

And Greens, and welcome back, everyone, to another episode of Dish and Dirt. I'm your often opinionated but really wrong host, Gary Pickerin, coming to you from the beautiful downtown Columbia, South Carolina offices of Blair Cato, Pickering, Castellan, this the third week of June 2026. Let's start this week's show with why realtors should care at all about appraisals. Before we even talk about UAD 3.6, we have to talk about appraisals. So let me ask you a question. How many of you had a transaction where everything's going perfectly fine until the appraisal comes in? The inspections were fine, the title work was all clear, the financing's moving along, they've got good credit, they've got good income, everything looks great on this, everybody's happy. And then the appraisal arrives and it comes in low, or there's a repair condition, or there's revisions that the lender wants to the appraisal. And then maybe all of a sudden this transaction, which was all buttoned up and ready to close, is now all back into negotiations. We're starting all over again. For many agents, the appraisal is one of the least understood parts of the real estate transaction, but unfortunately, it's probably one of the most important parts of the transaction. So as professionals, we need to know more about the appraisal process so that we can better serve our clients. We spend months helping buyers and sellers understand value, whether they're listing the property or they're trying to find a house for themselves. Then the appraisal comes in, and in a matter of 30 minutes, your entire deal is blown up and it dramatically affects the transaction. So whether we like it or not, these appraisals matter and they matter bigly. So now what we have is the appraisal industry is undergoing one of the largest reporting changes that we've seen in over a decade. And that's why everybody has to care because it does affect what's going to happen in your real estate transactions moving forward. To understand UAD 3.6, I need to give you a little history about appraisals. Following the mortgage crisis of 2008-2009, regulators, lenders, Fannie Mae, Freddie Mack, they all realize something. And they realized something was really wrong in our appraisal reporting system. There was very much a problem with inconsistency in the reporting. And so one appraiser might describe a property one way, while another appraiser could describe the same property completely different. There wasn't enough standardization. So in 2011, the uniform appraisal data set was introduced. And this is where many of these terms that you probably hear today come from, whether it's condition ratings, C1 through C6, quality ratings, Q1 through Q6, your standard abbreviation, your standard terminology, your standard reporting requirements. The goal was very simple back then. It was to make appraisal reporting more consistent. And for the last 15 years, that's what we've basically had is more consistent reporting. But technology has changed dramatically. Artificial intelligence has changed dramatically. Data analytics has changed dramatically. Our entire industry is changing before our eyes. I've never seen an industry change so much as this one has in the last year. And a lot of y'all have embraced the change and you're understanding the change and you're introducing that change into your systems. Some, unfortunately, are still fighting it. I actually spoke to a group of agents in Sumter not too long ago, and the agent was really mad at me when I was talking about the change of compensation. And he literally said, we should go back to how the system was. I said, not only has that ship sailed, it hit the rock of Gibraltar and it sank. It's not coming back. So we have two choices. We embrace the change, we embrace the AI, we understand it, we use it to better serve our clients, we continue to thrive and exist. Or we fight the change, refuse to accept AI, refuse to accept these changes, try to stay in the old world, and we quickly go out of business. It's that cut and dry. There is no in-between. Either you embrace it and you survive and you thrive, or you fight it and you go away. So now what we're looking at is an appraisal industry that wants more standardized forms. And they want standardized data. It's really all about the data. And that's what the UAD 3.6 is really all about. The problem they're trying to solve is imagine if you have three appraisers looking at the same house. One writes updated kitchen, the second one writes renovated kitchen, and the third one writes remodeled kitchen. Are we talking about the same thing? Maybe we are. Maybe somebody looks at that and says updated, renovated, remodeled all means the same thing. I understand what they're talking about. But there's people amongst us who think that means three completely different things. What is an updated kitchen? Could it be just paint? What's a renovated kitchen? It could be, well, they did paint and they put in new appliances. A remodeled kitchen could mean they ripped the entire thing out and started from new. So everybody has different opinions as to what that means. So nobody truly knows. And that's the problem for the lender. When the lender doesn't know what we're talking about, how do they properly evaluate the risk possibilities? Now let's imagine if you have three listing agents and they describe a property as one says it's like new, one says it's move in ready, one says it's recently updated. Again, those descriptions can mean wildly different things, or they can mean the exact same thing. Humans understand context. Computers right now do not. And computers hate ambiguity. So until AI can figure out human context, we're always going to need the human to be involved. Lenders are increasingly relying on this technology to evaluate their risk. They need help in that matter. They want to compare properties across entire markets. They want to identify trends. They want to evaluate collateral risk. They want to automate a lot of the quality control. And that becomes very difficult when much of the information that exists is in narrative comments. And those comments are widely different. So the solution is to collect more structured data. They need the data to be structured in a manner that the computer can understand and make evaluations. Instead of relying on free form descriptions, they want to create standardized fields that can be measured, can be compared, and analyzed across all markets. And that's exactly what the UAD 3.6 does. So this is a big shift from forms to data. And that's probably the most important concept that I want to get across in today's episode. For decades, what we've been talking about were appraisal forms, whether it be the Form 1004, the Form 1073, or the Form 2055. These forms themselves were the product. The actual paper product was the product. But now under UAD 3.6, the industry is moving away from the form and they're moving toward the data. So I need you to think about that for a moment here. The appraisal is becoming a database. And we've talked about how the listing is not the product anymore. The data from the listing is the product. And here we go again. The appraisal is not the product. It's the data contained within the appraisal. They're starting to try to compile all that data, and that's what they want. They want all of the data and they want that data in a uniform manner. The report simply becomes the output of the data. The data becomes the asset. This entire industry here in real estate is all about the data. Whether it's your listing, your clients, or the appraisal, it's the data. The data is the asset. And this is a massive shift. This is similar to what's happened in medicine earlier. Remember, we used to have doctors who had paper records. Well, they couldn't use those paper records. Now everything is an electronic record so they can have the data and understand trends. Information still exists, it's just organized differently. Appraisals are heading in that same direction. So what actually changes? There's one huge misconception about the UAD 3.6. And many people believe that it's going to change how appraisers determine value. It does not. Appraisers still analyze comparable sales. They are still going to reconcile value. They still apply their own professional judgment. And in the personal professional judgment aspect of this, that's going to keep them employed. The traditional approach to value will remain the same. And that's very important. But what is going to change is the information that is being collected. For example, appraisers are going to report more detailed information when it relates to energy efficiency, whether there are solar systems, whether we have broadband access, do we have accessory dwelling units known as also as ADUs? Do we have disaster mitigation features? Is there kitchen renovations, bathroom renovations? Are there interior characteristics we need to know about? Exterior characteristics that need to know about. One of the probably the most important changes is the separation of conditions and quality reporting. Historically, a house receives one overall condition rating. Now, how this is going to work is there'll be an interior and an exterior evaluation if necessary. So think about a house that might have been built in 1988. Great year, year I graduated Dormant High School. It could have the original exterior. It may even have the original roof. It may have the original windows. But inside this house could be completely renovated, a brand new kitchen, luxury bathrooms, new flooring. Property's basically been redone inside. Now the property can be described much more accurately with an exterior rating and an interior rating. Will this affect the value of the homes? And this is the question that every realtor is asking. Will this change values? And the answer is probably not for the most part. The valuation process itself isn't changing. The sales comparison approach isn't changing. Market behavior isn't changing, and certainly buyers aren't changing, and neither are the sellers. But what's changing is the quality of the information. So if there's better information, that might help improve some of the values. But if I want you to think of it this way, think about a measuring tape. A measuring tape that isn't changing, it's simply getting more detailed pictures of what we are trying to measure. Could some of the homes be described more accurately? Absolutely. And if they are described more accurately, could that affect value? Possibly, yes. Could certain features receive greater visibility which could affect value? Absolutely. I think it gives you an opportunity to prove value better than in the past. But UAD 3.6 is primarily a reporting change, not a valuation change. And I use the word allegedly. Now there's five things that I think realtors are going to probably get wrong about the UAD 3.6. So let's have a little fun and talk about those things. Every major industry change always creates myths, whether it was the Sitzer Burnett case or it's just UAD 3.6. And here are the five things that I think that realtors are probably going to get wrong in this. Number one, that they're automatically going to think this changes home value. So the answer to that is no, it probably will not. It changes reporting. It doesn't rewrite the laws of supply and demand. And I've always found that very interesting about appraisals. People think that appraisals are an exact science. And it's actually an inexact science. The house is only really worth what someone's willing to pay. So if I'm willing to pay X for a house, I always find it humorous that an appraiser will come in and say, well, the house isn't worth that. Well, it was worth that to me. But the reason we have to have appraisals is because we have way too many fraudsters in this system. And appraisals are designed to stop that. And I assume that this will help stop this even more because we'll have more exact information being provided to the lender so they can make that risk mitigation decision. Remember, I mentioned builders back a couple of weeks ago inflating sales prices of houses by doing cash closings and adding cash rebates back to the transaction. That's artificially increasing the value of the house for the appraisal purpose. This is the kind of stuff that's why we have to have independent appraisers. We have to have human eyes on the appraisals. Number two, appraisers are not getting replaced. I don't believe that's happening. Technology is changing, data is improving, but professional judgment is going to be remaining essential in this transaction. A computer can identify transaction patterns, but the appraiser can explain those patterns and what those mean. So the AI cannot do that yet. Number three, the only thing changing is the form. Actually, the form is probably the least important part. It's the data structure that is the real story. Number four, this will only affect lenders that will have no effect on me. That's wrong. Anything that affects finance transactions affects real estate agents. And anything that affects underwriting affects real estate agents. Anything that affects appraisals affects real estate agents. Number five, I don't really need to learn this. Well, maybe not right now, but you're going to because most agents who understand valuation trends will have a competitive advantage over those who don't. This goes back to knowing your job. The more you know about your job and things that are even around the periphery of your job, whether it's lending rules, whether it's appraisals, those are the things that help you better serve your clients. When you do a better job serving your client, more clients will want to use you. It's that simple. Now let's talk about the future of appraisals and where all this is headed. I believe that UAD 3.6 is not the destination. I think it's just simply the foundation. The real estate industry is crazy about data. It's everything is becoming data driven. We've already seen automated valuation models, we've seen desktop appraisals, we've seen hybrid appraisals, we've seen appraisal waivers, artificial intelligence being used, predictive analytics. In fact, if you even have a mortgage on your house in the last four or five years, you've probably gotten an email saying this is what your house is worth today, this is how much equity you have, and this is what you could do refinancing. All that's driven by artificial intelligence is all driven by predictive analytics. The mortgage industry wants more of this data. They want better data. And when they have more data and better data, it leads to better decisions for underwriting, but it also leads to better marketing opportunities. And that's exactly where the UAD 3.6 is designed to provide is that better data so they can make better decisions. Will the appraiser still exist in the next 20 years? I believe they will, because I think their role is just simply evolving. It's gonna be less about entering information and more about analyzing that information, less about describing the properties and more about interpreting that market behavior. Well, what do we need realtors to do right now? It's a real practical thing. Really, what we need to do is first stop using vague descriptions. Instead of saying updated kitchen, you should be specific. Say kitchen remodeled in 2024 with custom cabin trees, quartz countertops, tile backsplash, new appliances. As a buyer looking through the MLS, I'm more likely to look at your property versus you simply saying updated kitchen. For me, updated kitchen simply means you painted it. That's all it means to me. You may replace some pools or some things of that nature, but I'm not thinking new backsplash, quarter countertops, cabinets, and things of that nature. So being more specific is going to work better for you in marketing, but it's also gonna help you with the appraisal. Secondly, create detailed upgrade lists. When you meet with your client, have a form that talks about all the upgrades they've made during their ownership. Track the dates, the costs, the contractors, the permits, the materials, the specific improvements. All of that stuff can be handed to an appraiser so they can help understand value and why this house is worth more than the house down the street. Third, prepare an appraisal package. Include uh comparable sales, any upgrade lists, your floor plans, your surveys, your neighborhood information, anything that helps you explain the value. You have got to be diligent on being able to explain value to the appraisers. Number four, document energy and resiliency features. This is very important here in South Carolina. If you've got a fortified roof, a hurricane-resistant windows, wind mitigation improvements, flood mitigation improvements, any solar panel installations, any features of that nature are going to become more important as we move forward with this new appraisal process. Fifth, know your property better than anyone else. The best agents don't simply market homes, they understand homes, they understand value. The future belongs to the agents who understand property characteristics at the deepest level and can explain and defend valuation. Now let's take this a step further. The UAD 3.6, as I said, really isn't about appraisal forms. It's about exposing a much bigger issue in our industry. A lot of agents know how to market homes, but fewer of them know how to document and defend value. You have got to learn how to document and defend your value. So, number one, I want you to stop thinking like a marketer and start thinking like an appraiser. Most of your listing presentations focus on beautiful photos, staging, market plans, open houses, all that crap. All good stuff. But appraisers don't value homes based on these pretty pictures. They value the homes based on the characteristics. So I need you to ask yourself: if I have to prove that this house is worth $25,000 more than the house that's very similar to this down the street, what evidence can I provide to the appraiser to approve that? So most agents, in my opinion, simply aren't prepared to answer that question. The best listing agents, however, know what when the roof was replaced, what type of windows were installed, whether the HVAC is high energy efficiency, what permits were pulled, what renovations were completed, how much was spent on those renovations, because all of this information will matter in this data-prazed era. Number two, create a property resume. I think every property should really have a property resume. It's not just about the seller disclosure, but a property resume talks about the roof age, the HVAC age, the water heater, all the appliance ages, any renovations that were done in full detail, solar information, utility savings, any insurance mitigation features you may have added, survey, floor plans, all of this stuff matters because when the appraiser arrives, hand them this copy. Most appraisers appreciate receiving organized information. It makes their jobs easier. Doesn't mean they're going to agree with your valuation, but it helps them better understand things in the property they may not know about, absent you telling them about them. Number three, let's start tracking improvements long before you listen. This is a great way to serve your clients, a great way to reach out to them. Most agents only learn about the updates when they get the listings. And that's probably a little bit too late. When you're farming a neighborhood or you're staying in touch with your past clients and serving your past clients, ask them every year, tell me about your improvements. I want to update your file. It gives you a reason to reach out. Keep the notes on that. So years later, when you do get the listing, you're already armed with that information saying, I remember you made this improvement to the house in this year, and I remember you redid the bathroom here, and I remember you added the deck. And so you have all that information to help them with valuation. Stop letting sellers say everything's been upgraded. In fact, you should never say everything's been updated or upgraded ever because this drives appraisers crazy. Everything has not been updated. It just hasn't. You haven't, you know, have you replaced the roof, the plumbing, the electrical, the foundation, the insulation, the HVAC? These things matter. So you have to be very careful and say really what's done. We painted and put in granite countertops, isn't the entire house has been updated. Exactly what has been updated, when you have specificity, that creates credibility with the appraiser. Number five, I want you to understand what adds value and what doesn't add value. And that's one of the hardest conversations that you have to have with your sellers. Just because they spent $50,000 does not mean that they added $50,000 worth of value to their house. Agents have got to get a lot better at explaining cost does not equal value. For example, a $100,000 swimming pool probably doesn't add $100,000 worth of value. $70,000 outdoor kitchen or a custom theater room isn't going to add to dollar for dollar value. Those improvements may return some value, but it's not going to be dollar for dollar. Meanwhile, if you look at functional square footage, additional bathrooms, additional bedrooms, modernizing kitchens, improving the floor plan, that has a greater chance of returning dollar for dollar value. But we need to understand the distinction here to help us manage the seller's expectation. Number six, become the local expert on insurance and resiliency. It's especially important in South Carolina. I think one of the most overlooked opportunities for listing agents is the insurance and resiliency issues. For example, can you explain what a fortified roof designation is? Wind mitigation features, impact resistant windows, elevation certificates, flood mitigation improvements. Most agents don't know the first thing about that. I don't really know the first thing about it. Buyers increasingly care about insurance costs, particularly along the coast. A lot of people moving from Florida back up to South Carolina because of the cost of insurance. It's just getting outrageous. These things help on the insurance aspect. And appraisers will increasingly capture these characteristics, and the agent who understands resiliency features will become more valuable, particularly on the lake, particularly in the coastal areas. Know your ADUs. Accessory dwelling units are becoming more common. Many agents still don't understand them. You have to understand whether they were legally done, whether the permits were obtained, whether they contribute to the GLA, how appraisers are going to treat them. A detached department can dramatically affect marketability and value. So don't assume the appraiser is going to figure this all out on their own. Be prepared to explain it to them. Number eight, learn how to read an appraisal. This is probably one of your biggest opportunities. Most agents never even read an appraisal report. They only read the valuation conclusion. And that's a huge mistake. The best agents understand the comparable sections, the adjustments, the condition ratings, the quality ratings, the market analysis. And when appraisal issues arise, those agents can have intelligent conversations with lenders and appraisals and not just complain and say, hey, I need you to get the value up. The average agent can't do that. The agent that can argue these things intelligently will have a better chance of adjusting appraisals. Number nine, prepare sellers for reality. The UAD 3.6 will not magically make every house work more. Some sellers will hear, oh, appraisals are collecting more data and they're going to assume great, they'll finally see that my house is worth more money. Maybe they will, maybe they won't. But you've got to set these realistic expectations. The purpose of the UAD is better reporting, not just higher values. Number 10, the best listing agents of the future will look more like a consultant. I've been saying this for years. This is the biggest takeaway you might take from the podcast today. Ten years ago, a listing agent's advantage was about putting a sign in the yard, taking photos, putting the MLS, controlling the information. Today that's not enough. This next generation of top agents are going to be data experts. That's simple. You have to become a data expert. You have to be a market interpreter, and you're going to have to be a valuation consultant. You have to learn these things. If you're not willing to learn these things, you're not going to be in this business much longer. Data is king. An agent who can sit down and explain why a property is worth what it's worth based on the data, how appraisers think, how lenders evaluate risk, what improvements are creating value, and which ones don't, they're going to win more listings and create happier sellers. It makes you sound more intelligent when you sit down with somebody versus the other agent, all they talk about is marketing. You have to talk about marketing, but you also need to be able to have intelligent conversations with your seller over these particular items. That's really the hidden lesson about UAD 3.6. It's not just changing appraisal reporting, it's highlighting which agents truly understand property value, property valuation, and which agents only understand how to do marketing. So let's bring this home. South Carolina presents a unique valuation challenge for us. Our coastal markets face insurance concerns. Resiliency improvements dramatically impact insurance rates. Flood concerns matter. Storm protection matters. In our urban markets, we're increasingly seeing more ADUs. Our suburban markets contain homes with updated interiors but aging exteriors. So many of the additional data points that are going to be captured by UAD 3.6 is a perfect fit with the realities of South Carolina real estate. And I believe the agents who understand those property characteristics and communicate them effectively will have a significant advantage. So I'm going to finish today with four predictions. Number one, my first prediction is kind of no duh, appraisal reports become increasingly data-driven. Probably the easiest prediction I've ever made in my life. I don't think anybody can argue that data will drive it all. Prediction number two, lenders will rely heavily on automated review systems. We're already seeing that today. Prediction number three, agents who document improvements will gain an advantage over those who don't. And number four, this is only the beginning of the AI revolution, the AI-driven valuation and the AI underwriting. UAD 3.6 is not the end story here today. It is the first chapter of the next generation of appraisal reporting. So that's my four predictions. I think they're probably the four easiest predictions I've ever had to make in my life. In closing, if you remember only one thing from today, I need you to remember this. UAD 3.6 does not fundamentally change how homes are valued. It changes how information about those homes is collected, how it's organized, how it's communicated, and how it's analyzed. The appraisal industry is moving from forms to data, just like the rest of the industry. As real estate professionals, our job is to understand where the industry is headed before it gets there, to be able to explain that to our clients, because the professional who understands change are usually the professionals who benefit from the change. Those who fight the change are left behind. That's all the time we have for today. I appreciate y'all joining me for Dish and Dirt. If you found this episode valuable, please let other real estate agents know all about it. If you're watching us on YouTube, please click that subscribe button right up there and give us a thumbs up. Hope you all have a wonderful weekend. We'll see you again next week for another episode of Dish and Dirt. Y'all take care.