The Basics

• The old forms (1004, 1073, 1025) are replaced by one dynamic report.
• It’s required for new appraisals submitted on or after Nov 2. Lenders granted a one-time exception can keep using the old format through May 19, 2027.
• Expect longer appraisal visits and turn times this fall. Build some cushion into November and December deadlines.
• Meanwhile, more loans skip the appraisal entirely. Waivers now reach 90% LTV on purchase loans.

How renovations get reported

• Room by room. Every kitchen and bath gets its own update status, time frame, and condition.
• Stricter condition ratings. C1 now means never occupied and completed within the last 12 months. C2 means new or remodeled to the studs within 36 months. A cosmetic flip sitting on an old roof and furnace isn’t a C2.
• Inside and outside rated separately. A great interior can’t mask a tired exterior anymore.
• Big systems get their own fields. Roof age and major exterior components are reported individually.
• Square footage gets more precise. We report area by level, above and below grade, and record ceiling heights. Low-ceiling basement space can be classified as”nonstandard.” In Denver, with all our finished basements, this one matters.

• Defects get their own fields. Problems are logged where they’re found, each with a recommended action like repair or inspection. Expect more “subject to repair” appraisals.

Unpermitted and undocumented work

Appraisers aren’t becoming permit inspectors. What changes is visibility.

Cosmetic work. Denver doesn’t require permits for painting, tiling, floor coverings, countertops, or cabinets. So nobody expects a permit. The gap is dates. Without records,the appraiser estimates from what they see, and photos, receipts, and an approximate year of the fix. For work 15+ years old, the date barely matters. Today’s condition does.

System work that looks cosmetic. In Denver, new or relocated plumbing or electrical fixtures need a permit, but the finished kitchen looks the same either way. Appraisers rate what they see, and sloppy work gets caught in the defect fields.

Additions, basement bedrooms, and ADUs. This is where it bites. Fannie requires appraisers to comment on the quality and appearance of an unpermitted addition and its impact, if any, on value. Don’t assume that space counts the same as permitted square footage. Bad work can do worse: if any part of the home rates Q6, the whole home does, and any safety or structural issue has to be fixed before the loan can be sold to Fannie.ADUs now get their own section, including whether they’re legally rentable. That matters because Fannie now lets rent from one ADU count toward up to 30% of a buyer’squalifying income.

What to do

Sellers, gather this before the appraisal:

• Date and scope for each kitchen and bath update, with photos or receipts
• Roof, HVAC, and water heater replacement dates
• Permits for any added or converted space
• Open repair items, fixed or disclosed

Got unpermitted living space? Decide before listing: legalize it, or price as if it counts for less. Otherwise, the appraisal gap shows up mid-deal.

Buyers, ask your lender which appraisal format they’re ordering, leave room on the appraisal deadline, and pull permit history on anything that looks added or converted.

Bottom line? Renovations aren’t worth less. They just can’t hide in the fine print anymore.

Sources

• Fannie Mae and Freddie Mac: UAD 3.6 policy exception announcement (Sept 30, 2026)
• Fannie Mae: Selling Guide Announcement SEL-2025-04 (UAD 3.6 and retired forms)
• Fannie Mae: Appraiser Update, December 2025 (condition and quality ratings)
• Freddie Mac: UAD inspection and reporting tips
• Freddie Mac: UAD ANSI reporting requirements
• Fannie Mae Selling Guide B4-1.3-05: Improvements section
• Fannie Mae Selling Guide B4-1.3-06: Condition and quality
• Fannie Mae: Selling Guide Announcement SEL-2025-08 (ADU rental income)
• FHFA: Appraisal waiver expansion
• NAR: Appraisal ready for UAD 3.6
• City and County of Denver: Homeowner permits
• City and County of Denver: Residential interior remodel