Hey fellow appraisers, John Anderson here.
Today, let's zoom in on one of the most critical parts of our work: the Sales Comparison Approach section in the new URAR format. This isn't just a cosmetic update; the structure and data requirements are evolving.
From Narrative to Data Points: The Core Change
The biggest theme with UAD 3.6 is the emphasis on discrete, standardized data points over lengthy narratives. The new URAR Sales Comparison Approach reflects this directly. While commentary is still essential for explaining adjustments and rationale, the underlying structure relies more heavily on specific fields and standardized inputs.
Think back to the legacy forms. We often used addenda or broad text fields to explain nuances. The redesigned URAR aims to capture much of this information within structured data fields directly in the grid and associated sections. This change is designed to improve consistency and make the data more readily usable for analysis by the GSEs and lenders.
Key Data Fields and Presentation Shifts
Looking at the UAD Specification documents (like Appendix D-1 for examples and E-1 for the style guide), we can see how this plays out:
- Detailed Property Characteristics: The grid itself is becoming more granular. Instead of relying solely on overall condition ratings, specific features, quality levels (like Q1-Q6), and condition ratings (like C1-C6) for various components (exterior, interior) are captured more explicitly for both the subject and comparables. This requires precise data collection during the inspection.
- Standardized Adjustments: Adjustments for differences between the subject and comparables are still paramount, but the way they are presented and potentially categorized might shift towards more standardized fields where possible, reducing reliance on purely narrative explanations for common adjustments. The goal is clearer, more consistent support for the values applied.
- Concessions and Financing: Data points for sales concessions and financing terms are clearly delineated, requiring specific input rather than just a narrative description.
- Quality and Condition Reconciliation: The report now includes distinct sections for reconciling the Overall Quality and Condition ratings, linking them directly to the observations made throughout the report, including the sales comparison section.
- "Additional Properties Analyzed Not Used": This information, often previously buried in an addendum, now has a dedicated, structured section within the Sales Comparison Approach (as seen in the SF1 example Appendix D-1). This provides transparency about the properties considered but ultimately excluded, along with the reasoning (e.g., inferior/superior quality, different location, larger size).
Workflow Implications
What does this mean for our day-to-day?
- Data Collection Rigor: More than ever, meticulous data collection during the property observation is crucial. Capturing specific details about quality, condition, features, and deficiencies in a structured way is key to populating the new URAR accurately.
- Understanding the Fields: Familiarity with the precise definitions and allowable values for the new and revised data fields in the UAD 3.6 specification is essential. Resources like the GSE websites and the UAD specifications themselves are vital study materials.
- Adjustment Support: While narrative is reduced, the support for adjustments remains critical. Appraisers need to ensure their workfile adequately backs up the discrete data points and adjustment values entered into the report.
- Technology Adaptation: Software plays a huge role here. Appraisal software vendors are updating their platforms to accommodate the new dynamic URAR format and UAD 3.6 data requirements. Tools designed for efficient, structured data collection, like those leveraging mobile tech and LiDAR scanning (like the Valuemate app), can significantly streamline capturing the granular details needed for sections like the Sales Comparison grid and associated exhibits.
Preparing for the Change
The transition requires proactive learning. Don't wait for the mandate.
- Review GSE Resources: Dive into the UAD/UPD pages on the Fannie Mae and Freddie Mac websites. Pay close attention to the specification documents, timelines, FAQs, and sample reports like Appendix D-1.
- Engage with Software Vendors: Understand how your appraisal software provider is implementing the changes. Participate in any available training or beta testing.
- Practice: Use the sample scenarios and data points provided by the GSEs to practice how you would complete the new Sales Comparison Approach section for different property types.
The redesigned Sales Comparison Approach in the new URAR, driven by UAD 3.6, represents a move towards greater precision and standardization. By understanding the specific data requirements and structural changes now, we can ensure a smoother transition and continue to provide credible, well-supported appraisal reports in this evolving landscape.
