Newz: UAD Quality Ratings,
Appraising with Inventory Shortages and Surpluses
December 5, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA AD: When a Property Owner Wants to Do the Appraiser’s Job
- Understanding UAD Quality Ratings (Updated for UAD 3.6 and the New URAR)
- Gothic-Inspired ‘Fairytale Castle’ in Miami’s Exclusive Coconut Grove Michigan Hits the Market for $24 Million
- Navigating the Challenges of Inventory Shortages and Surpluses in Real Estate: Insights from a Chief Appraiser at a National AMC By Jim Jenkins, Chief Appraiser
- What Is a Scatter Chart Analysis in Appraisal?
- 53% of U.S. homes lost value in the past year, the most since 2012 – Zillow
- MBA: Mortgage applications decreased 1.4 percent from one week earlier
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Understanding UAD Quality Ratings (Updated for UAD 3.6 and the New URAR)
Excerpts: Quality ratings are one of the most familiar parts of UAD, but the way appraisers report them has changed under UAD 3.6 and the new dynamic Uniform Residential Appraisal Report (URAR). While the Q1–Q6 scale remains in place, the way you apply, support, and reconcile quality is more structured and data-driven than in the legacy forms.
What “Quality” Means in UAD 3.6
In UAD 3.6, quality represents the materials, craftsmanship, and construction standards of a dwelling. The familiar Q1 through Q6 framework still applies, but the workflow is different:
Quality is no longer a single, form-level checkbox.
You now provide quality ratings in multiple places:
- Exterior Quality Rating (Dwelling Exterior section)
- Interior Quality Rating (Unit Interior section)
- Kitchen and Bathroom Detail tables
- Overall Quality (reconciled in Section 15)
- The “overall” rating is informed by the component-level data you report in these earlier sections.
Other topics include:
- What Does UAD Stand For?
- What Are the Quality of Construction Ratings?
- Breaking Down the UAD Quality Ratings (Q1–Q6)
- How Quality Is Applied in the New URAR
- Tips for Applying Quality Ratings Credibly
Final Thoughts
Quality ratings remain an important part of UAD, but the approach is more precise now. UAD 3.6 pushes appraisers to rely on observable details rather than broad descriptions or market norms. When you follow the definitions, support your ratings with the structured data, and reconcile logically, the quality rating becomes a clear and defensible part of your analysis.
To read more, Click Here
My comments: Comprehensive and well written. Worth reading.
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Gothic-Inspired ‘Fairytale Castle’ in Miami’s Exclusive Coconut Grove Michigan Hits the Market for $24 Million
Excerpts: 5 bedrooms, 3.5 baths, 7,529 sq.ft. 59.3 acres, Built in 1998
“There are secret storage spaces built into the stone walls throughout the house, and secret passageways as well,” Berg notes.
One such passageway includes a spiral staircase in the tower with access to a hidden kids’ playroom.
Tucked away on nearly 60 acres of hardwood forest in rural Michigan sits a remarkable residence that looks like something out of a fairy-tale fantasy—or a medieval epic.
From the outside, the majestic property in Allegan, MI, which is now on the market for $2.15 million, looks like a 15th-century Gothic castle, complete with towers, turrets, and spires.
But don’t be fooled by its historical appearance because inside, an ultramodern mecca awaits, offering all the comforts a homeowner could want in the present day, albeit wrapped in a very foreboding package.
The property was built as an accurate homage to the castles of old, with listing agent Noel Berg, of HomeRealty Grand Haven, revealing that the original owner traveled across Europe to seek inspiration from real-life medieval architecture to design his dream abode.
“The original owner was a contractor and built the house,” says Berg. “He traveled all over Europe to get ideas of castles he liked and had this one designed to his exact specifications.”
From the moment you arrive, you know this isn’t just another American wannabe castle, but something crafted after the real deal.
The proof is in the very bones of the home: Over 400 tons of solid Eden limestone, hand-finished stucco accents, tumbled-brick window trim, and cedar details combine to create a fortress-like exterior with standout craftsmanship.
A turret anchors the structure, complete with a true spiral staircase connecting floors, and throughout the home, the original builder created a set of secret spaces.
“There are secret storage spaces built into the stone walls throughout the house, and secret passageways as well,” Berg notes.
One such passageway includes a spiral staircase in the tower with access to a hidden kids’ playroom.
To read more, Click Here
To see the listing with an aerial view, virtual tour and 92
Photos, Click Here
My comments: I would really like to get a “live” tour of this house. Very unique. Most of the other similar properties were adaptation of existing homes or New built, but not like this one!
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Navigating the Challenges of Inventory Shortages and Surpluses in Real Estate: Insights from a Chief Appraiser at a National AMC By Jim Jenkins, Chief Appraiser
Excerpts: In our profession, understanding how to navigate inventory fluctuations, whether shortages or surpluses, is crucial for your success. The real estate market is an ever changing landscape shaped by supply, demand, interest rates, and economic confidence. Each scenario impacts the appraisal process differently and requires careful judgment, market knowledge, and adaptability.
Inventory Shortage: The Tight Market Dilemma
When housing inventory is low, demand often exceeds supply. This condition typically results in rising home prices, multiple-offer scenarios, and shortened marketing times. While this can be a boon for sellers, it presents several challenges for appraisers:
Topic titles – how to handle the topics
- Limited Comparable Sales
- Escalating Prices and Contract Pressure
- Rapid Market Changes
- Inventory Surplus: A Buyer’s Market with Its Own Risks
- Declining Values
- Increased Concessions and Incentives
- Overabundance of Comparables
- The Importance of Time Adjustments
How GSEs Shape Appraisal Practice
Government-sponsored enterprises such as Fannie Mae and Freddie Mac have clear expectations for how appraisers handle changing market conditions. They require analysis of trends in the market, as well as appropriate time adjustments when values are rising or falling.
Appraisers may also use House Price Index data from the Federal Housing Finance Agency when local data is limited, provided they explain the reasoning and connect it to actual market activity.
Adjustments, data sources, and methodologies must all be clearly documented so that the report withstands scrutiny.
Adaptability is Key
To read more, Click Here
My comments: Well written and comprehensive. The beginning of the article says it was written for new appraisers. But there is good info and reminders for all residential appraisers working in today’s changing markets.
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Year end tax planning for appraisers. You can still save on your 2025 taxes!
In the December issue of Appraisal Today. Available now. Plus a tax deduction if paid by credit card 12/31/25 at midnight!
Excerpts: When your business is slow, saving on taxes is almost more important than when you are busy. Every Dollar Counts!!
Your most significant tax decision now is based on if you expect your 2026
total taxable income (personal and business) will be going up, stable, or down.
If you expect your 2026 income to be higher than 2025, consider deferring
purchases, donations, etc. as you will need them more in 2026.
If you expect no change in income for 2026, or are not sure, you can do
some year-end deductible purchases and pay January bills in December, which I am doing.
For your donation to be considered tax deductible when you file, it must
have been made by the end of that corresponding tax year. For example, you have until midnight Dec. 31, 2025, to make donations you want to claim on your 2025 tax return, which gets filed by April 15, 2026.
Credit card payments for business or charitable donations made by
December 31 are deductible. Then pay it off when you receive your credit card statement. I do this every year for charitable donations.
The future of Social Security is uncertain now. I include information to help you decide when to start taking Social Security. I have always said wait until you are 70 for maximum benefits, which I did. My benefits are $4,479 per month for 2025 (prior to deductions).
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What Is a Scatter Chart Analysis in Appraisal?
When you’re building and defending sales comparison adjustments, a simple visual can be very helpful. Scatter charts are one of the most effective ways to see whether a suspected relationship in your market actually exists, how strong it is, and where it breaks down.
Used well, they help you move beyond “rules of thumb” and ground your appraisal adjustments in observable market behavior.
Scatter charts are the fastest way to calculate and document adjusted pairs. If you’ve ever wrestled with paired sales in thin or noisy markets, scatter charts can be your best early signal: Do buyers in this neighborhood really pay more for extra GLA? Is that second full bath worth what you think it is? Is price growth steady month-to-month, or just headline noise?
Below, we’ll break down what scatter chart analysis is, how to set it up, how to interpret results, and how to use those insights to support your adjustments.
Three Common Scatter Chart Use Cases and How to do the Scatter Charts
GLA vs. Adjusted Sale Price: Analyzing Size Contribution
Sale Date vs. Adjusted Sale Price: Time Adjustments with Less Guesswork
Bathroom Count vs. Adjusted Sale Price: Stepwise Contribution
To read more, Click Here
My comments: Well written. Very good analysis, with details, for scatter charts.
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Metros with the largest share of homes that lost value over the year are concentrated across the West and South.
53% of U.S. homes lost value in the past year, the most since 2012 – Zillow
Excerpts: But losses since the last sale of homes are rare — owners aren’t selling for a loss
Most homes have declined in value from their peak, with an average drawdown of 9.7%.
Just 4.1% of homes have lost value since their last sale, a smaller share than before the pandemic.
Home values are up a median of 67% since last sale nationwide.
“Homeowners may feel rattled when they see their Zestimate drop, and it’s more common in today’s cooler market environment than in recent years. But relatively few are selling at a loss,” said Treh Manhertz, senior economic researcher at Zillow. “Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we’re seeing now is a normalization, not a crash.”
Still, home value declines can be scary. For most homeowners, their house is their largest asset, and equity built over time is a major part of their long-term saving and retirement plans.
Part of financial planning for many includes tracking the value of their home by regularly checking their Zestimate. Seeing that Zestimate hit a peak and then decline can be worrisome.
To read more, Click Here
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Comments on Zillow news release by Ryan Lundquist
November 25, 2025 By Ryan Lundquist
Half the homes in the country lost value since last year. This is a big headline from Zillow, and I want to unpack that today before the holiday officially comes. I think it’s important in real estate to understand what people are saying about the market.
ZILLOW’S SENSATIONAL HEADLINE – scroll down the page to this headline to read Ryan’s Zillow comments.
Zillow published a piece last week stating 53% of homes in the United States lost value over the past year, and it’s gone viral online. What really caught my eye was the locations with the most losses.
Check out Sacramento ranking third on the list with 88% of homes said to have lost value – only behind Denver and Austin. I’m not surprised to see Sacramento make the cut since I’ve been talking about softer prices for many months now. But it’s also easy to get sensational with this headline because it sounds worse than actual market change.
If you’re in one of these top markets, what do you think of these stats?
By the way, I’m not saying Zillow’s numbers are perfect for Sacramento either, though their numbers have been pretty reasonable so far compared to other metrics I’m watching. I’ll keep reporting on many different metrics to help us have a wide view of the trend. I’m also not a Zestimate fanboy, but it’s interesting to consider what percentage of Zestimates have dropped below last year as shown above.
To read more, Click Here
My comments: I usually don’t include national or regional stats in these email newsletters. Local stats are what you usually need. But, you may get questions about a borrower’s Zestimate. Very good analysis. Worth reading.
I included Ryan Lundquist’s Thanksgiving blog post on this topic so you can read how he explains his local Sacramento market.
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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here.
Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 6:30 – 10:30 AM, Pacific time.
My comments: Rates are going up and down. We are all waiting for rates to drop lower in 2025.
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