UAD 3.6 URAR: Decoding New Quality & Condition Rating Requirements

As the appraisal industry continues to adapt to the Uniform Appraisal Dataset (UAD) 3.6 initiative, appraisers need to understand how core assessment principles are integrated into the new dynamic Uniform Residential Appraisal Report (URAR). One fundamental area undergoing a structural shift in presentation is the evaluation and reporting of property Quality and Condition. This post will dissect how the familiar Q&C ratings are applied and reconciled within the redesigned URAR framework, based on the latest specifications and examples provided by the GSEs.

Separate Ratings for Exterior and Interior

A key change in the UAD 3.6 URAR is the distinct separation and reporting of Quality and Condition ratings for the dwelling's exterior and interior components. While appraisers have always assessed these aspects, the new format mandates specific, separate ratings using the standard Q1-Q6 (Quality) and C1-C6 (Condition) scales for each.

• Exterior Quality and Condition: Found within the "Dwelling Exterior" section, these ratings reflect the assessment of the structure's external components (walls, roof, foundation, windows, etc.). The example URAR in Appendix D-1 shows these ratings clearly presented.
• Interior Quality and Condition: Located in the "Unit Interior" section, these ratings pertain to the assessment of the internal features and finishes (flooring, walls, kitchen, baths, etc.).

This separation requires appraisers to explicitly state their conclusions for both aspects, providing greater granularity than sometimes seen in legacy forms.

Overall Ratings and Reconciliation

Beyond the separate exterior and interior assessments, the redesigned URAR requires appraisers to determine an Overall Quality and Overall Condition rating for the property as improved. These overall ratings are presented prominently, often within a dedicated "Overall Quality and Condition" section, as shown in the UAD Specification Appendix E-1 (Report Style Guide Supplement).

Critically, this section also includes the Reconciliation of Overall Quality and Condition. This commentary is essential. It's where the appraiser explains how the individual exterior and interior ratings were considered and synthesized into the final overall ratings. If the exterior and interior ratings differ significantly, this reconciliation becomes even more important to justify the final overall conclusion.

The example report (Appendix D-1) provides straightforward reconciliation commentary: "The Overall Quality and Condition matches the Interior Quality and Condition, as well as the Exterior Quality and Condition, since the exterior and interior are both of the same age." In more complex scenarios, appraisers would need to elaborate further.

Condition Ratings: "As Is" vs. "Subject to Repair"

The Condition rating (C1-C6) is also directly linked to the appraisal's condition basis. The example report demonstrates this clearly:

• An "As Is Overall Condition Rating" (C5 in the example) reflects the property's state on the effective date, including any defects.
• If repairs are required, a hypothetical "Overall Condition" rating (C4 in the example) is provided, representing the condition after the specified repairs are completed. This aligns with the "Subject to Repair" Market Value Condition often indicated in the report's Summary.

Apparent defects influencing these condition ratings are itemized, detailing their location, description, impact on soundness/structural integrity, recommended action, and estimated cost to repair.

Supporting Data Moves to Structured Fields

While the Q&C ratings themselves remain subjective assessments based on the appraiser's expertise, the support for these ratings within the UAD 3.6 URAR relies more heavily on structured data. Detailed observations about the quality and condition of specific components (like roofing materials, window types, flooring, kitchen countertops, etc.) are captured in dedicated fields within the Exterior and Interior feature tables. This structured approach aims to provide clearer, more consistent data backing the appraiser's final Q&C conclusions, reducing reliance on lengthy narratives buried in addenda.

Conclusion

The treatment of Quality and Condition ratings in the UAD 3.6 URAR emphasizes clarity, granularity, and justification. By requiring separate Exterior and Interior ratings, demanding an Overall assessment, and mandating a reconciliation narrative, the new format pushes appraisers to be more explicit in their analysis. Understanding this structure—the separation, the overall consolidation, the reconciliation requirement, and the link to structured supporting data—is crucial for accurately completing the redesigned URAR and meeting GSE expectations in this evolving landscape.