The Appraisal Changed Nov. 2: What Valley Buyers and Sellers Need to Know

On November 2, 2026, the appraisal report most of us have looked at for years quietly went away. If your loan is a conventional loan that gets sold to Fannie Mae or Freddie Mac (and most of them are), any new appraisal submitted for it now has to use a new format called UAD 3.6.

Nobody sent you a letter about this. You probably won't see the words "UAD 3.6" anywhere in your paperwork. But it can affect what your appraisal costs, how long it takes, and how much your appraiser needs to know about the house. So here's the plain-English version.

What actually changed

The way a home is valued did not change. An appraiser still looks at the house, pulls comparable sales, and gives the lender an opinion of value. The National Association of Mortgage Brokers says it the same way: the paperwork is changing, the valuation isn't.

What changed is the report. The old forms (if you've ever seen a "1004," that's the one) were replaced by a single, much more detailed report. Appraisers now rate condition and quality separately for the inside and outside of the home, and the data gets down to individual rooms. There's a new section for disaster-mitigation features and a new section for energy features like solar, where the appraiser has to say whether each feature helps, hurts, or doesn't change value and marketability (Fannie Mae, December 2025). Photo requirements are spelled out item by item, and a report missing a required photo is considered incomplete.

There's also a transition period. Some lenders got a one-time exception from Fannie Mae and Freddie Mac that lets them keep using the old format into 2027, with the new format required for everyone on May 20, 2027. So depending on your lender, your appraisal might be the old style or the new one. That's normal for the next few months.

FHA has announced it's moving to the new format too. VA and USDA hadn't published dates as of late October. If you're paying cash, this mandate doesn't apply to you, though you can still choose to order an appraisal.

Why I'm paying attention to it (and why you should too)

Two reasons: cost and time.

Michael Farrell, president of the National Association of Mortgage Brokers, told Mortgage Professional America in October that his own company was quoted $555 for an old-format appraisal and $850 for the new one. He blamed the gap on a simple shortage, too few appraisers ready to take new-format orders, and said he expects a 3 to 5 day delay in getting orders finalized during the transition. Another appraisal management company, Clear Capital, reported a much smaller average increase of about $65 in comparable markets (National Mortgage Professional, October 8). So the honest answer is that it depends on your lender and who they use. I'd rather you budget a little high and be pleasantly surprised.

You may have read that the new system will eventually speed things up and lower costs. Maybe. The standardized data is designed to make reviews easier over time. But I haven't seen anyone official promise lower closing costs, so I'm not going to promise it either.

The part that hasn't changed: what happens when the appraisal comes in low

This is the conversation I want to have with you before we ever write an offer, not after the appraisal shows up.

Your contract price and the appraised value are two different numbers. The contract price is what you and the seller agreed to. The appraised value is what the lender's appraiser thinks the house is worth. The lender lends based on the lower of the two.

When the appraisal comes in under the contract price, somebody has to cover the difference. Usually it's some mix of these: the buyer brings more cash, the seller lowers the price, the two meet in the middle, or the deal ends.

Here's how that works on the standard Arizona REALTORS® purchase contract (the February 2026 version):

Section 2l (lines 107 to 110) makes the sale contingent on an appraisal acceptable to the lender for at least the purchase price. If it comes in low, the buyer has five days after notice of the appraised value to cancel and get their earnest money back. If the buyer doesn't cancel in those five days, the appraisal contingency is waived.
Those five days run from the original appraisal. Asking the appraiser to reconsider doesn't pause the clock, according to the Arizona REALTORS® legal hotline. If we need more time, we have to ask the seller for a written extension, and the seller doesn't have to say yes.
Section 2m (lines 111 to 114) says who pays for the appraisal. That fee is non-refundable, and any updated appraisal the lender wants before closing is on the buyer.
If a buyer waives the appraisal contingency and then can't get the loan because of a low value, the seller keeps the earnest money (lines 320 to 321).

Five days goes fast. Especially over a weekend.

I'll be honest: I've had low appraisals come in on my listings, even after handing the appraiser a really thorough appraisal support package before they ever walked through the door. It happens. What we do next depends on the loan. On a VA loan, the appraiser has to tell us before the value is final if it looks like it's going to come in under the price (VA calls it "Tidewater"), and we get two business days to send in more sales data. On other loans, it means building a case after the fact: local, model-match comps, what this house has that the comps didn't, and why the list price holds up. Sometimes it works and the value moves. Sometimes it doesn't, and we're negotiating in the 11th hour of the transaction.

Thinking of buying?

Offering more doesn't mean the lender will lend more. In a multiple-offer situation it's tempting to go up and up, and sometimes that's the right call, but only if you know where your cash ceiling is. Before we write an aggressive offer, I want us to have actually talked through what happens if the house appraises $10,000 or $20,000 under, and whether you'd have the cash to cover that gap or would need to walk.

If you're considering an appraisal gap or "shortfall" clause (Arizona REALTORS® has standard language for this, where you agree to cover a gap up to a set amount), let's pick a number you can actually write a check for. Not a number that sounds good on paper.

Ask your lender two questions early: which appraisal format are they ordering, and what's the fee? Then add a cushion.

And give yourself time. Farrell suggested contracts longer than 30 days during this transition. I agree. A rushed close date plus a delayed appraisal is how good deals end up in a panic.

Thinking of selling?

The highest offer isn't always the strongest offer. An offer $15,000 over list with a thin down payment and no plan for an appraisal gap can be weaker than a lower offer from a buyer with real cash reserves. When offers come in, I look at the price, sure, but also the loan type, the down payment, whether the buyer can cover a gap, and what they've agreed to if the value comes in short. I'll walk you through all of it side by side so you can see it.

Your house also has to be "explained" better now. Michelle Czekalski Bradley, a certified appraiser and USPAP instructor, told Pennsylvania REALTORS® in March that under the new format, if the seller doesn't have the information, the appraiser has to guess, because those data fields are mandatory. I don't want an appraiser guessing about your house.

Start pulling this together now, even before we list:

What you updated and when (kitchen, baths, flooring, windows), with rough costs if you have them
Roof age and any permits or invoices
HVAC install year, water heater, pool equipment
Permits for additions, patio enclosures, or garage conversions
Solar paperwork, and whether the system is owned, leased, or a power purchase agreement (solar now has its own spot in the report, and I deal with solar lease transfers all the time, so I know how much that paperwork matters)
Any known issues, where they are, and what's been done about them

Expect the appraiser to stay longer, take more photos, and ask more questions than you're used to. That's the new form, not a red flag about your house.

What I owe you, whichever side I'm on

In Arizona, a licensed agent owes their client a fiduciary duty, has to protect and promote the client's interests, and has to deal fairly with everyone else in the deal. An agent also has to disclose in writing anything they know that materially affects the price being paid (Arizona Administrative Code R4-28-1101, ADRE). Here's what that looks like for appraisals specifically.

If I'm your buyer's agent, I'll explain the appraisal contingency and the five-day window before you sign anything. I'll talk through gap risk before you make a big offer or waive anything. I'll check with your lender on the format, the fee, and the timeline, and I'll build a realistic closing date around it. When the appraisal comes back, I'll track that five-day deadline in writing so it never sneaks up on you. If the value comes in low and we think the appraiser missed something real (a wrong comp, a missed upgrade), I'll help put together a reconsideration request with actual data.

If I'm your listing agent, I'll help you build that upgrade and paperwork file before we go live, and I'll turn it into an appraisal support package for the appraiser: your updates, the features that set the house apart, and the local comps that support the price. When the appraiser is scheduled, I'll make sure access is easy and they have what they need. If a value still comes in low, I'll be the one pulling model-match comps and making the case, whether that's through VA's Tidewater window or a reconsideration request on another loan type. When offers come in, I'll show you what each one really means if the appraisal comes in short, not just the top-line number.

On either side, I'm allowed to give the appraiser facts. I'm not allowed to pressure them on value, and I won't. Appraisers have to stay independent, and that protects you too.

What can go right, and what can go wrong

The good news: a more detailed report can actually help a well-documented home. If you put real money into a kitchen or a roof, the new format has more room to show it. Clean data should also make lender reviews smoother as everyone gets used to the system.

The not-so-good news, at least for the next few months: higher fees in some cases, slower turn times while appraisers catch up, the occasional format mix-up between lenders, and a five-day window that doesn't wait for anybody. In a market where values have softened in parts of the Valley, Fannie Mae also expects appraisers to adjust downward when the data shows prices have dropped. That's another reason to price right and offer smart.

None of this is a reason to panic. It's a reason to talk early.

I'd rather explain something twice than have you worry once. If you're thinking about buying or selling this winter and want to walk through what an appraisal could look like on a specific house, let's sit down and look at it together. Where you want to live and how you want to live is still the whole point. The paperwork just got longer.

Talk soon,
DeDe

I'm not an attorney or a lender. This is general information, not legal or financial advice. Your contract, your loan program, and your lender's policies control your specific situation. This is not meant to solicit people who have signed documents with another REALTOR®.

Sources

DeDe Forwood, REALTOR® | HomeSmart

Helping buyers and sellers navigate the Valley of the Sun with honesty, patience, and zero manufactured urgency.

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DeDe Forwood is a REALTOR® with HomeSmart, and this content follows the Fair Housing Act and the REALTOR® Code of Ethics. Nothing in this guide should be read as, or used for, steering based on race, color, religion, sex, national origin, familial status, or disability. Equal Housing Opportunity.

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The Appraisal Report Changed on November 2. Here's What It Means If You're Buying or Selling in the Valley.