AXIS Newsletter

As 2024 was winding to a close, many of us were hopeful that we would see a lessening of inflation, a lowering of interest rates, and an economy that was continuing to grow in nearly every direction. I think it is safe to say that things are unfolding quite differently than some of us were expecting...

But disappointment will not feed the bulldog, as the expression goes. 2025 carries with it the promise of change—so let’s fasten our seatbelts and steer into our collective future.

As appraisers, you will be facing a series of changes that will alter how you view assignments and build your reports. By now, you should have read the GSE’s releases on the upcoming UAD redesign. It starts with a shift away from the concept of comparing comparable sales in a neighborhood to measuring markets. Think, data. Next, the standard nomenclature that identifies an assignment by a form number (i.e., 1004, 1073, 1025, etc.) will disappear from your lexicon. The assignment details (scope-of-work) will dictate the data you select, which will then be assembled and auto-filled within the report. Think, software. While this might sound new—and scary—is it so different from how you as appraisers have always addressed your assignments? The data that is collected and analyzed will be represented differently on the form and will adjust to reflect the elements of the property being evaluated. This is what appraisers have been providing forever anyway, hence the name Appraisal Report. Another alteration within the report is that there will be more of an emphasis on data than narrative and comments, but your focus on analysis remains unchanged. Plain English (the actual descriptors) will replace acronyms and abbreviations to help the readers (better) understand your report. How will this be accomplished efficiently? Again, think software.

March brought the requirement from Fannie & Freddie that appraisers update how they address Market Conditions Adjustments. To be fair, this has been a requirement for quite some time… it’s just that everyone (including the GSE’s) has largely ignored the issue until fairly recently. Not anymore. Here is a comment from Jim Jenkins, AXIS Chief Appraiser: “As market trends fluctuate, by month, quarter, or on an annual basis, appraisers must adjust for changing conditions to ensure accurate valuations. Proper analytics can determine both positive and negative market conditions (time adjustments) within the same twelve-month period. It’s also important to remember that no adjustment is an adjustment. This is what the GSE’s are looking at.”

There are several appraisal form providers as well as a number of software companies that offer their solutions related to adjustments and how they help with your analysis. You may have your own favorites, so please share what you use and why you like it.

Your experience is valuable and welcome. Some appraisers have created their own methods to tackle this issue, proving to be invaluable as the appraisal process and requirements evolve over time.

Not every piece of software will work in every market—or in all market conditions. Your expertise, combined with the data you gather and input into the software, is critical. Poor input leads to poor output, and relying on software as an excuse for subpar results is unacceptable. That is part of what makes an appraiser so important. You have what I call AQ... an Adaptability Quotient. True intelligence. As appraisers, your ability to assimilate and analyze the expansive amount of data required for tomorrow’s appraisal reports will (ultimately) increase your efficiency—and reduce your liability—by an order of magnitude. What I don’t think it will do is reduce your fee. New software, updated technology for platform providers, enhanced skill sets, and the ability to efficiently deliver (near) error-free reports almost ensure that fees will increase rather than decline.

But, just like those old Ron Popeil products from the ‘50s & ‘60s (think the Veg-O-Matic and the Pocket Fisherman) with their marketing mantra, “But wait, there’s more!” … there is more change to come for us in the appraisal realm. This spring, the GSE’s took hybrid appraisals out of Pilot and added them to Policy. What does that mean? It means that the GSE’s believe that by joining a property data collection report with a Desktop appraisal—excuse me, a Hybrid Appraisal – they’re addressing modernization in the appraisal field and, just perhaps, replacing a portion of Waivers (loans given with no type of appraisal) with a vehicle that actually addresses a property’s value. It’s also important to note that those Hybrid Appraisals come with redefined certifications that basically remove your onus for someone else’s property data collection report as long as you find the information reliable. This is a sea change from what the GSE’s have previously imputed and qualifies as a semi-big deal.

Before you throw your hands in the air in despair, the good news is that this is not destined to have an immediate impact. With the reduced number of sale transactions and the continued upward pressure on mortgage rates, appraisers are delivering reports in record time. As lenders take their time to establish processes for less commonly sought products, it now presents an opportune moment for appraisers to proactively prepare for the diverse offerings entering the market. Equipping yourself with new tools will position you at the forefront of your industry. At some point when the market rebalances and demand and volume increase, there will be a role for Hybrids, and you can – and should – be prepared to take them on.

One more note for today. With all the change taking place, it bears noting that one fundamental aspect must remain inviolate. I’m talking about Appraisal Independence. As appraisers, you all represent a unique place in the lending process. You are, in some measure, the Guardians at the Gate. Everyone connected to any transaction relies on you to be blind to undue influence, driven only by the data in the market, and above any personal biases that we all may possess to one degree or another. Every decision that is made in the lending process—from lender, to borrower, to AMC, to investor—is reliant on your independence. At AXIS, we respect and will protect you in this regard. It is, in large measure, the most important part of the AXIS Advantage ... and that has never changed.