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The new URAR (UAD 3.6 “DATA RECEPTOR”) claimed to modernize appraisal.  It seems it does not!

In fact, it is not a form.  It is a “dynamic, data-driven report, not a static form.”  This per the FannieMae, Freddie Mac documentation.  It requires “UAD 3.6 software, job aids, and XML, mapping tools.”

What does all this mean?  Modernize what?

It means the appraiser must acquire or create additional software to act as a go-between.  This includes:

  • Raw data, collected or downloaded by the appraiser, or a third party.
  • Results of appraiser judgment, such as:
      1. Identifying the market segment
      2. The subject’s optimal use (HABU)
      3. Selection of similarity comparables
    1. Adjustment amounts and weighting
    2. Explaining differences in shown results
    3. How to be believable instead of reliable

It appears that the new “go-between” for-sale software products do little or none of this judgment stuff.  At least no more than was done in the past.

I heard one provider, touting their product, wrapping up their sales pitch:  “And you make adjustments just like you always have.”  Just like you always have . . .

There is no requirement to document how you pick comps, or identify and analyze the competitive market.  In fact, there was no mention of what goes into the  “data not used” section. Presumably, if you looked at some sales, applied your judgment to decide to “not use” them in the report you are reporting them as not used!  Basically, you are reporting that you did not use the information you analyzed to decide to declare you did not do an analysis when you decided they were “not used” in your opinion. Confusing, huh?

We believe that the appraisal process itself must modernize.  The old convoluted thinking, data hedging, and weasel-word logic has to go.

The old philosophy:  “pick comps, make adjustments” must go.

How do we modernize analyses?  Everything seems to block progress.  Fear and the “five frictions”:  established practice, “approved” education, user expectations, state regulators, and the official Standards.  All these require opinion, not results.  They require a wordy justification of an uncertainty — as a point value.  And “trust me” opinion fails to provide what users and the “public trust” need:  a measure of sureness, risk,  and reliability:  collateral safety, investment results, and judicial fairness.

Public policy modernization must have a clear path to technology (not an admonition to “be good”).  What we suggest here is good for the public, other stakeholders, and the individual practitioner.

So what does modernized appraisal require?  I mean actual competent valuation analysis, not the “modernized UAD data receptor” reporting.

Modernized valuation requires clear answers to each of the six “results of appraiser judgment,” as listed at the front of this paper.  1) market definition; 2) optimal use; 3) similarity quantification; 4) predictive adjustment; 5) measured reliability: and, 6) analytic results — not a “trust me” opinion.

Modernized appraisal requires both the data science, and the proper use of artificial intelligence. Learn Stats, Graphs, and Data Science 1 using Evidence Based Valuation(c) with AI from the Creator of EBV, George Dell.

Join us, learn, and grow — in the CAA (Community of Asset Analysts). We help each other personally and as a profession toward the inevitable future.  Competent analysts, not form-fillers or comp-comparers!