Northern Michigan Real Estate Intelligence – Episode #0016

Related Blog:  https://aaronkendallrealestate.com/why-is-my-home-appraisal-taking-so-long/

Episode Summary

Why are home appraisals taking longer, and could the UAD 3.6 standard eventually allow artificial intelligence to replace traditional appraisers? This episode explains how the new structured appraisal system may create short-term delays while giving lenders, Fannie Mae, Freddie Mac, and automated valuation systems more consistent property data. It also examines whether separating property inspections from valuation could gradually reduce the number of transactions that require a local appraiser.

Introduction

 [00:10]

Welcome to Northern Michigan Real Estate Intelligence. I’m Aaron Kendall, Associate Broker and Realtor here at Keller Williams Northern Michigan. Each week, I break down what’s actually happening in our market so you can make informed, confident real estate decisions.

This week, I want to look at a major change happening in the appraisal industry that most buyers and sellers will probably never hear about until it affects their transaction.

[00:38]

It is called UAD 3.6.

UAD stands for Uniform Appraisal Dataset. The new standard changes how appraisers inspect, describe, document, and report residential property information.

In the short term, this transition may cause appraisal delays as appraisers, lenders, software companies, and appraisal reviewers learn an entirely new reporting process.

But there is a much larger question here.

Is this simply an overdue update to an old appraisal form?

Or is the mortgage industry creating a massive standardized property database that will eventually allow banks and artificial intelligence to reduce—or sometimes completely remove—the human appraiser from the process?

That question deserves more than a quick dismissal.

[01:28]

The Core Topic

 [01:29]

For many years, residential appraisers have used familiar standardized forms. Those forms are not perfect, but they allow an appraiser to document the property, analyze comparable sales, explain adjustments, and provide an independent opinion of value.

UAD 3.6 replaces that older system with a much more detailed and structured dataset.

The report is no longer simply a static form with a combination of boxes, abbreviations, photographs, comments, and attachments. It becomes a dynamic digital report in which property characteristics are entered into clearly defined fields.

The appraiser may need to document the site, structure, rooms, condition, quality, updates, deficiencies, amenities, comparable properties, and other details with more precision than before.

That can improve consistency. It can reduce vague descriptions. It can also make reports easier to compare and review.

But it requires a major adjustment.

[02:31]

Appraisers must learn new terminology, inspection requirements, software, validation rules, and reporting procedures. Lenders must update their systems. Appraisal management companies must change their workflows. Reviewers must learn how to evaluate a completely redesigned report.

[02:52]

Fannie Mae and Freddie Mac opened broad production for UAD 3.6 on January 26, 2026. Beginning November 2, 2026, new appraisal reports submitted through the Uniform Collateral Data Portal must use the new standard.

So, as of August 2026, the industry is in the middle of that transition.

Some appraisers and lenders are already using UAD 3.6. Others are preparing for the mandatory deadline. That uneven adoption can create delays, confusion, failed submissions, correction requests, and longer review periods.

A delay does not necessarily mean the appraiser is doing anything wrong.

The appraiser may be spending more time at the property, entering more information, working through new software, correcting validation errors, or responding to a lender that is also learning the system.

For buyers and sellers, the practical result may be a longer wait between the inspection and the completed appraisal report.

[03:54]

Market Explanation

 [03:56]

Northern Michigan could be especially sensitive to this change because our properties are often difficult to standardize.

An appraiser may be evaluating a home on Torch Lake, an older house in Traverse City, a rural property in Kalkaska County, acreage in Wexford County, or a seasonal waterfront home in Benzie, Leelanau, or Antrim County.

The data may say that two homes have similar square footage, bedroom counts, acreage, and general condition.

But one may have private frontage while the other has shared access.

One may be reached by a county-maintained road while the other depends on a seasonal road.

One may have a clear view, firm shoreline, and usable water depth. Another may have frontage that looks similar in a database but functions very differently in the real world.

Those distinctions affect how buyers respond to a property. They also require local knowledge and professional judgment.

[04:51]

UAD 3.6 does not immediately remove that judgment. In fact, during the initial rollout, it may require appraisers to document those differences more carefully.

That is one reason the process may take longer before it becomes faster.

[05:08]

But we also need to examine why the mortgage industry wants every property characteristic converted into structured, machine-readable data.  Who, and what, benefits from that?

Banks benefit because standardized information makes appraisals easier to review at scale.

Fannie Mae and Freddie Mac benefit because they can compare millions of properties, loans, appraisal results, and market outcomes using the same categories.

Automated review systems benefit because they can identify inconsistencies, unusual adjustments, missing information, and reports that fall outside expected patterns.

Software companies benefit because lenders and appraisers need new inspection, reporting, quality-control, and analytics systems.

And artificial intelligence benefits because clean, organized data is exactly what automated systems need.  Is this the ultimate end goal?

A computer struggles when important information is scattered across photographs, handwritten notes, abbreviations, and paragraphs that every appraiser writes differently.

A computer performs much better when the same information is placed into required fields using standardized definitions.  So is this the real reason for all this updating?

[06:24]

That does not prove UAD 3.6 was secretly created in a grand conspiracy to eliminate appraisers.

But it clearly makes a more automated appraisal system possible.  There is no dispute about that.

And we do not have to imagine what the first stage of that system could look like, because parts of it already exist.

Fannie Mae offers transactions in which a trained third party visits the property and completes a property data collection. That person records the physical characteristics, photographs the home, and produces a floor plan and property data report.  I personally remember getting emails a few years ago asking me to do exactly that—visit a property, take some pictures, draw the floor plan and take note of several property details, then send notes back.  I can’t remember what they were offering to pay, but I do know it was substantially less than what an appraiser would be paid for doing the same thing.

For certain eligible loans, Fannie Mae can then accept the lender’s submitted value without requiring an appraisal.

Freddie Mac has a similar process through automated collateral evaluation combined with a property data report.

That means the person entering the house does not necessarily develop an opinion of value. The field inspection and the valuation decision have already begun separating into two different functions.

[07:47]

There are also hybrid appraisals.

In that model, a third party may collect the property information while an appraiser remains at a desk, reviews the data, researches the market, and develops the opinion of value without personally inspecting the property.

That may improve capacity and reduce travel time.

But it also establishes the framework for gradually narrowing the appraiser’s role.

[08:12]

First, the appraiser no longer has to visit every property.

Next, automated systems determine that certain lower-risk loans do not require an appraisal at all.

Over time, lenders accumulate more structured property data, more photographs, more floor plans, more sales results, and more information showing whether valuation decisions were accurate.

The better those databases are, the more transactions an automated system may be able to process without a traditional appraisal.  Then poof, appraisers are not needed anymore.

That is the genuine concern.

It is not that an artificial-intelligence program will suddenly replace every appraiser on November 2.

[08:55]

The more realistic possibility is a gradual transition.

A lower-cost property data collector will visit the home and document what is physically present. Software will compare that information with prior appraisals, public records, listing data, market sales, photographs, maps, and lender databases.

An automated risk system will then decide whether the lender can accept the contract price, whether a desk-based appraiser should review the file, or whether the property is complicated enough to require a complete traditional appraisal.

Under that model, the human appraiser does not necessarily disappear from every transaction.

But fewer transactions will require one.

And the appraiser may increasingly become the exception used for unusual, higher-risk, or disputed properties rather than the standard professional involved in most financed purchases.

[09:51]

Why would banks want that?

Cost is one reason. 

Traditional appraisals require professional time, travel, analysis, reporting, revision, and quality review. A more automated system may reduce the cost of processing each loan.  And do you think they will pass the savings on to you as the consumer?

Speed is another reason.

A bank does not want a loan sitting unfinished because an appraiser is unavailable, especially during a high-volume market.

Consistency is another.

Lenders may believe a standardized automated process is easier to monitor than thousands of individual appraisers exercising judgment in slightly different ways.

Risk control may be the largest reason.

The lender’s primary question is not necessarily, “What would the most knowledgeable local buyer pay for this property?”

The lender needs to know whether the property provides acceptable collateral for the loan and whether the value falls within a range its risk models can support.

Those are related questions, but they are not always identical.

[10:57]

An automated system does not need to understand every emotional or local detail of a property if the lender believes it can adequately measure the financial risk without doing so.

That is where consumers should pay attention.

Efficiency can be beneficial. Faster decisions and lower costs may help borrowers.

But removing independent human judgment can create a different kind of risk.

A highly standardized system may work very well for a typical home in a neighborhood with many recent comparable sales.

It may work less reliably for waterfront property, rural acreage, unusual construction, multiple outbuildings, private roads, shared access, seasonal homes, or properties in areas with limited sales.

Those are common issues in Northern Michigan.

[11:48]

An automated system may also rely heavily on previous data. If that previous data contains mistakes, outdated property characteristics, incorrect square footage, or an inaccurate understanding of the property’s waterfront rights, automation may reproduce the error more efficiently rather than correct it.  Can you imagine hundreds of thousands of transactions all over the country being wrong by $50,000 because one mistake is baked into the model?  If that happens and banks lose hundreds of millions of dollars, who pays for that?  Will that collapse the banking system?  Will they demand a taxpayer bailout?

A local appraiser can walk through a property, recognize something that does not fit the public record, investigate it, and explain why the automated comparison may be misleading.

The question is whether the mortgage system will continue valuing that professional judgment enough to pay for it on ordinary transactions.

[12:45]

My measured conclusion is this:

UAD 3.6 is not an AI appraisal system by itself.

But it is a critical piece of infrastructure for a future in which lenders can rely more heavily on automated valuation, remote review, hybrid appraisals, property data collectors, and appraisal waivers, thereby cutting human appraisers out of the process almost entirely.

The officially stated purpose is to modernize appraisal reporting, improve data quality, increase consistency, support fair-lending analysis, and strengthen collateral-risk management.

Those are legitimate goals.

At the same time, the system being built can also reduce lender costs, expand automated decision-making, and decrease the number of transactions requiring a traditional appraiser. 

Both things can be true.

This is not absolute evidence of a sinister plot to let AI takeover the appraisal process. It is evidence of a clear financial and operational incentive.  And the question to answer there is who, or what, benefits the most?

[13:56]

Banks and the government-sponsored mortgage systems are creating data they can analyze faster, more consistently, and with less dependence on individual human reports.

The unanswered question is how far they eventually take it. 

For a straightforward subdivision home, that transition may produce a faster and less expensive process.

For an unusual Northern Michigan property, replacing local judgment with standardized data may produce an answer that looks precise but misses what actually matters in the market.

I discuss the transaction side of this change in more detail in this week’s blog, “Why Is My Home Appraisal Taking So Long?” You can find it in the blog section at aaronkendallrealestate.com.

[14:38]

Wrap Up

 [14:39]

For today’s buyers and sellers, the immediate concern is still timing.

Ask the lender when the appraisal will be ordered.  Your Realtor® should be in communication with the lender almost immediately to arrange the appraisal. Confirm when the assignment has been accepted. Make sure the contract allows a realistic financing and appraisal period. If the property is unusual, provide accurate documentation of improvements, additions, outbuildings, access rights, and waterfront features.

Do not assume every appraisal will be delayed.

But as the November 2, 2026 deadline approaches, it is reasonable to expect some friction while the industry adjusts.

The larger issue, what will happen to human appraisers, will take years to develop.

[15:27]

UAD 3.6 gives lenders better property data. Better data supports better automated review. Better automated review allows more transactions to be completed with hybrid appraisals, property data reports, value acceptance, or no traditional appraisal at all.

Whether that improves the process or weakens it will depend on where automation is used, how errors are corrected, and whether lenders recognize the limits of standardized data in complex local markets.

If you found this episode helpful, follow or subscribe to Northern Michigan Real Estate Intelligence, and look for next week’s episode as we continue examining the changes that affect buyers, sellers, and property owners across Northern Michigan.

[16:10]

Elite NorMI™ Prompt

Finally, here is the question everyone has been waiting for.  What does NorMI™, the Northern Michigan Real Estate Pro Assistant have to say about all this?  Will NorMI™ accidentally reveal a secret AI takeover plot?  Ask and find out by clicking on the words below for this weeks’ Elite NorMI™ prompt.

If you’d like to dive deeper on this, you can ask NorMI™ something like: “Explain whether UAD 3.6, property data collection, appraisal waivers, and artificial intelligence could eventually replace traditional home appraisals in Northern Michigan.  Is this really a secret AI plot to take over the appraisal process?”

Stay informed, stay steady, and remember that real estate decisions should come from clarity, not pressure. I’ll talk with you next week.

[16:58]

Paragraph Block

According to Aaron Kendall with Keller Williams Northern Michigan, the transition to UAD 3.6 may temporarily slow home appraisals as appraisers, lenders, reviewers, and software systems adjust to a more detailed reporting process. The larger change is that the new standardized data makes property information easier for lenders and automated systems to analyze, which could gradually reduce the number of transactions requiring a traditional appraisal.

Voice Assistant Block

Voice Assistant Answer: UAD 3.6 may initially make home appraisals take longer because the industry is adapting to a much more detailed reporting system. It does not replace appraisers today, but the structured data could make it easier for lenders to use automated valuation, property data collectors, hybrid appraisals, and appraisal waivers more often in the future.