3-hour CE course for Arizona real estate agents
What every agent needs to knowAppraisal 101
Ryan Campbell, SRAChief Appraiser & Owner, OnPoint Appraisals (since 2007)
Phoenix Chapter President, Appraisal Institute
ryan@onpointappraisals.com
UAD 3.6: the biggest change to residential appraisals since 2005
Fannie Mae and Freddie Mac have redesigned the Uniform Residential Appraisal Report (URAR).
Key industry milestones: August 6, 2026, September–October 2026, and November 2, 2026.
What changes
- The 1004, 1073, and five other legacy forms are retired.
- One dynamic URAR replaces all legacy residential report types.
- More granular data: room-level conditions and energy efficiency.
- Mandatory for all Fannie Mae and Freddie Mac submissions on November 2, 2026.
- Appraiser software must support UAD 3.6, so turn times may increase during the transition.
The basics
Wait… what does that actually mean?
Market value vs. market price
These get used interchangeably, but they answer different questions.
Market value
What should it sell for?
The most probable price a property should bring in a competitive and open market.
Not one transaction. An analysis of the market: comp sales (3+ properties) → market analysis → opinion of value. Estimated through analysis. This is where the appraiser comes in.
Market price
What did it sell for?
The actual price agreed upon by a specific buyer and seller in a specific transaction.
One transaction. One property, one buyer and seller, one agreed price (e.g., $465,000 sold). Known after the transaction.
Contributory value
What actually moves the needle on price.
- Size
- Above-grade finished area Formerly GLA / gross living area. Term retired under UAD 3.6.
- Below-grade finished area Formerly “basement.” Term retired under UAD 3.6.
- Location (site value)
- Quality of construction / upgrades (kitchen, flooring, bathrooms)
- Bedroom and bathroom counts
- Pool: contributory value requires market support, not assumption.
Marketability
Related to contributory value, but not the same. It generally moves days on market, not price.
- Condition
- Floor plan
- Grade level of finishes
- Paint
- Repairs
- Landscape amenities
- Nearby adverse factors (railroad tracks, airports)
- Positive factors (park, common area, etc.)
- Pool*
A fresh coat of “Sage Whisper” may help it sell faster. It’s still the same square footage.
Comparable selection advice
Recency, support, and competition, in that order.
- Recent sales: 1–2 sales within 90 days of the effective date. Ideally a 30-day sale is available.
- Support the contract price: 1–2 additional sales that support the contract price or provide a similarity comparison.
- Active or pending listing: 1 listing or pending. Listings reflect the concept of substitution; they cap value.
Best approach for agents: find 1–2 very similar sales and one very similar competing listing. Limit comps beyond 1 mile or 6 months to 1–2, and only if necessary for similarity.
Comparable selection & consideration
Bracketing, amenities, and what not to do.
- Support the contract price. Have at least 1–2 sales that support it, ideally more than one.
- Bracket amenities. Comps with AND without similar amenities are necessary. Do not make across-the-board adjustments.
- Special sale types. Cash, iBuyer, estate, and distress sales require consideration. Use conditionally and weight them less in reconciliation.
“I just adjusted every comp by $60,000 for the pool. Easy!” is exactly the move to avoid.
The nerdy stuff
Now we do math.
Supporting appraisal adjustments
There’s more than one recognized way to support an adjustment.
- Data analysis techniques e.g., paired data and group data analysis
- Statistical analysis e.g., graphic and scenario analysis
- Cost-related adjustments e.g., cost to cure, depreciated cost, market extraction
- Capitalization of income differences
- Trend analysis
- Relative comparison analysis
- Ranking analysis
- Personal interviews
Source: The Appraisal of Real Estate, 14th Edition, Chapter 19.
You don’t need to memorize these. Just know that “the appraiser’s opinion” is backed by a stack of specific, checkable methods.
Paired sales analysis
One pair is a data point. A group of pairs is a pattern.
Try it: using the sales below, what are the adjustments for size and view? Isolate one variable at a time: find two sales identical except for the one characteristic you’re testing.
Swipe the table sideways to see every column.
| Sale | Sale price | Date | Above-grade SF | Age | View |
|---|---|---|---|---|---|
| 1 | $950,000 | Current | 2,000 | 10 | No |
| 2 | $1,020,000 | Current | 2,000 | 10 | Yes |
| 3 | $1,125,000 | Current | 2,500 | 10 | Yes |
Show the solution
Size adjustment: $105,000 ($210/SF). Pair sales 2 and 3: same view, only size differs. $1,125,000 − $1,020,000 = $105,000 for a 500 SF difference.
View adjustment: $70,000. Pair sales 1 and 2: same size, same age, only view differs. $1,020,000 − $950,000 = $70,000.
Cost as a starting point
Cost of the amenity ≠ value.
Pool cost → less depreciation → contributory value. Age, condition, and remaining useful life all determine how much of the original cost still shows up in the price today.
The takeaway: this is the conversation to have before a seller assumes their $75,000 pool adds $75,000 to the price.
Pool example: Scottsdale paired sale
Find two nearly identical sales differing by one feature. The price difference is your evidence.
Two 4-bed, 2-bath, 2,400 SF homes, one without a pool and one with. The $45,000 pool difference is one clean data point of market evidence.
Pool example: grouped data across three cities
Real ARMLS closed single-family sales, close of escrow 09/01/2025–09/01/2026.
Swipe the table sideways to see every column.
| City | Avg sold, no pool | Avg sold, pool | Pool gap | Avg $/SF no pool / pool | Cumulative DOM no pool / pool |
|---|---|---|---|---|---|
| Scottsdale | $979,380 | $1,032,091 | $52,711 | $417 / $432 | 78 / 72 |
| Gilbert | $625,357 | $671,495 | $46,138 | $261 / $276 | 73 / 64 |
| Surprise | $443,077 | $467,099 | $24,022 | $219 / $231 | 98 / 69 |
Search ranges: Scottsdale 2,000–3,000 SF, $750K–$1.35M; Gilbert 2,000–3,000 SF, $500K–$900K; Surprise 1,600–2,600 SF, $350K–$650K. Average size was nearly identical within each city. Source: ARMLS, report prepared by Ryan Campbell 09/22/2026. All information should be verified by the recipient and is not guaranteed as accurate by ARMLS.
Notice the pattern: the pool gap shrinks as the price point drops, and pool homes sold faster in all three cities.
Scottsdale pool adjustment: market data meets the grid
Comp 3 is the only sale without a pool, so it’s the only one that gets a pool adjustment.
Swipe the table sideways to see every column.
| Feature | Subject | Comp 1 | Comp 2 | Comp 3 |
|---|---|---|---|---|
| Sale price | — | $1,040,000 | $1,025,000 | $985,000 |
| Living area (SF) | 2,400 | 2,410 | 2,390 | 2,400 |
| Bed / bath | 4 / 2 | 4 / 2 | 4 / 2 | 4 / 2 |
| Pool | Yes | Yes | Yes | No |
| Pool adjustment | — | 0 | 0 | +$50,000 |
| Adjusted sale price | — | $1,040,000 | $1,025,000 | $1,035,000 |
After +$50,000, Comp 3 adjusts to $1,035,000, right between Comps 1 and 2. The pool line closes the gap; no other line moves.
Comp figures are illustrative for teaching.
Finalizing the adjustment
No single method carries the whole conclusion. The appraiser reconciles all of them.
The real-world stuff
Because houses are never simple.
Price per square foot: gross vs. net
Gross $/SF tells you the market. Net GLA tells you the adjustment.
Gross $/SF
Sale price ÷ GLA. Blends in everything: land, location, quality, amenities, garage, lot size. Useful as a sanity check, not as an adjustment.
Net GLA adjustment
The grid line item. The adjustment for square footage alone, isolated from the other value drivers already accounted for in the grid.
Mark Ratterman methodology
Net GLA adjustment ≈ one-third of gross $/SF. Example: $225/SF gross (neighborhood average, rounded) ÷ 3 = $75/SF net. A reasonableness check, not a formula to apply blindly.
Swipe the table sideways to see every column.
| Feature | Subject | Comp 1 | Comp 2 | Comp 3 |
|---|---|---|---|---|
| Sale price | — | $670,000 | $650,000 | $590,000 |
| Sale date | — | Apr 2026 | Mar 2026 | Jan 2026 |
| GLA (SF) | 2,850 | 2,780 | 2,910 | 2,750 |
| Gross $/SF | — | $241.01 | $223.37 | $214.55 |
| Lot adjustment | — | +$5,000 | −$5,000 | +$2,500 |
| GLA adj. ($75/SF) | — | +$5,250 | −$4,500 | +$7,500 |
| Pool adjustment | — | 0 | 0 | +$50,000 |
| Total net adjustment | — | +$10,250 | −$9,500 | +$60,000 |
| Adjusted sale price | — | $680,250 | $640,500 | $650,000 |
GLA math: Comp 1 (2,850 − 2,780) × $75 = +$5,250. Comp 2 (2,850 − 2,910) × $75 = −$4,500. Comp 3 (2,850 − 2,750) × $75 = +$7,500. Conclusion: $75/SF is a reasonable net rate. It is supported by the market data, and the adjusted sale prices ($640,500 to $680,250) bracket the subject.
Solar systems: owned, financed & leased
The panels may look the same. The ownership doesn’t.
Leased
- Considered personal property.
- Does not warrant a line-item adjustment. The value is in the use, not the exchange.
- Buyers often must assume the lease agreement.
Paid off doesn’t mean owned. A paid-off lease can still be a lease. Request the solar agreement and any transfer documentation.
Owned / financed
- Value is based on market reaction, not simply what was paid for it.
- If a loan exists, the value doesn’t automatically come with it.
Listing a home with solar? Get these three things: system size (kW / production capacity), year installed (age matters), and original system cost (useful context, but not the same thing as value).
VA & FHA/HUD standards
The 3 S’s: safety, soundness, security.
Safety
- Green pool (applies to conventional loans too)
- Security bar safety release
- Plumbing fixtures / water pressure
Soundness
- Expansive soil
- Foundation cracks
- Significant drywall cracks
Security
- Functional exterior doors and locks
- Security features / emergency egress
- Electrical hazards
Effective Realtor-to-appraiser communication
Confirm the sale price. Provide the full contract.
- Contracts: make sure the appraiser has the correct sale price, contract, and all addendums.
- Improvements: a list of improvements that includes the cost and the year each was made.
- Comparables: suggest comps if you’d like, but please limit to 3–4 sales.
The sample improvements list in class itemized a 2023 remodel ($144,609) plus other recent upgrades (A/C, garage door openers, security door, pool waterline tile) for a grand total of $157,609. Each line shows cost, description, and year.
Reconsideration of value (ROV)
A reconsideration only works if one of these three conditions is met.
- Subject property: there is a factual error or omission about the subject that, when corrected, would affect the appraiser’s opinion of value.
- Comparable sale: there is a factual error or omission about a comp used in the report that, when corrected, would affect the opinion of value.
- Recent sales: there are recent comparable sales not considered in the report. Recent means closed within 90 days prior to the date of inspection.
The “so what?”
Let’s put it all together.
Maricopa County market snapshot
Not to scare you. To prepare you.
The market is sending signals. Rates are still elevated, sales volume has pulled back, days on market are climbing, and new construction with zero down plus builder incentives increases the risk of negative equity.
- Seller concessions: additional loan pressure
- Current rates: still elevated
- Construction: slowing
- 0% down: risky choice
- Sales volume: lower volume, higher DOM
Key terms
Quick reference for today’s vocabulary.
- Market value
- The most probable price a property should bring in a competitive and open market. An analysis, not a single transaction.
- Market price
- The actual price agreed upon by a specific buyer and seller in a specific transaction.
- Contributory value
- What a feature adds to overall value as measured by the market, not what it cost.
- Marketability
- How readily a property sells. Tends to affect days on market more than price.
- Above-grade finished area
- Finished living space at or above ground level. UAD 3.6 term replacing GLA (gross living area).
- Below-grade finished area
- Finished space below ground level. UAD 3.6 term replacing “basement.”
- UAD 3.6 / URAR
- The redesigned Uniform Residential Appraisal Report and dataset. One dynamic report replaces the 1004, 1073, and other legacy forms.
- Concept of substitution
- A buyer won’t pay more than the cost of an equally desirable substitute, which is why active and pending listings cap value.
- Bracketing
- Using comps both above and below the subject for a feature (e.g., with and without a pool) so the subject falls within the range.
- Paired sales (paired data) analysis
- Comparing two sales that are alike except for one feature. The price difference indicates that feature’s value.
- Group data analysis
- Comparing averages across many sales with and without a feature to confirm what paired sales show.
- Depreciated cost
- What an item cost new, less loss in value from age, wear, and remaining useful life.
- Reconciliation
- Weighing several indications (cost, paired sales, group data, market reaction) to reach one supported conclusion.
- Gross price per square foot
- Sale price ÷ GLA. Blends every value driver together; a sanity check, not an adjustment.
- Net GLA adjustment
- The grid adjustment for square footage alone, after other features are adjusted separately.
- Ratterman method
- A reasonableness check that a net GLA adjustment is roughly one-third of the neighborhood’s gross $/SF.
- The 3 S’s
- VA and FHA/HUD minimum property standards: safety, soundness, and security.
- Reconsideration of value (ROV)
- A formal request for the appraiser to review a factual error or omission, or recent sales not considered.
Q&A notes
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