Premier Member Editorial: The Pivot to Precision–How Appraisals Will Change in 2026

Kenon Chen, EVP of strategy and growth for Clear Capital, embodies the company’s mission of building confidence in real estate decisions to strengthen communities and improve lives. In his current role, Chen sits at the intersection of Clear Capital’s executive, product, marketing, and sales teams. 

Shifting regulations, rapid technological breakthroughs and increasing expectations from consumers, lenders and capital markets have pushed the appraisal industry to a crucial pivot point with the arrival of 2026. Indeed, many consider this a watershed year marked by key regulatory transitions and challenges, but also a time of tremendous opportunity.

Contemporary valuation methods increasingly implement technology, standardized data and professional expertise that reinforce risk-based decision-making across the loan lifecycle. From desktop appraisals and waivers to full traditional reports, these resources enable a variety of valuation solutions that ensure the appropriate degree of analysis is applied to the right transaction. That leads to improved transparency for Government-Sponsored Enterprises and investors, decreased cycle and friction times for lenders and appraisal management companies alike and produces better consumer outcomes overall.

Successfully aligning technical innovation with trusted valuation practices can bolster confidence, efficiency and consistency throughout the housing finance system. But challenges lie in the way of achieving these objectives.

Redefining the Rules

The mortgage industry is facing ongoing challenges, including issues of cost, profitability and affordability, which are juxtaposed against regulatory drivers demanding better data and higher quality analysis. This year signifies the most impactful structural changes the appraisal ecosystem has experienced in decades, with the introduction of both the UAD 3.6 standard and the redesigned Uniform Residential Appraisal Report.

This undertaking exchanges a piecemeal array of outdated, static forms with one data-driven system that automatically adjusts to all property types and valuation tactics, from desktop and traditional to hybrid or exterior-only. These modifications are expected to significantly alter how property data is structured, collected, and validated, how valuation outputs are analyzed, transmitted, and reused, and how risk is measured and managed across the housing finance system. Acclimating to these changes will require an embrace of technology, from mobile apps to AI-driven underwriting approaches.

With the GSEs now offering a number of different appraisal options per loan (including appraisal waivers, inspection based waivers and desktop, hybrid and traditional appraisals), the complexity of implementing efficient workflow has increased for lenders. However, the overall percentage of GSE loans that had an appraisal decreased by 11% year over year, due to the rise of waiver utilization. The data would suggest that more technologically advanced lenders are taking full advantage of the increased options for reducing appraisal costs.

Navigating the Modernization and Talent Squeeze

Valuation professionals currently face plenty of other headwinds, too, particularly operational and demographic difficulties. Increased demand for speed, certainty and automation in home equity, non-qualifying mortgages and investor-centric lending has fast-tracked the adoption of data-driven and automated valuation tools. And intensified scrutiny within the conforming loan sector – driven by the previously noted government and GSE directives – is hastening the switch toward valuation methods that rely more heavily on standardized data and rigorous audit trails.

Yet, as the market’s need for speed and profitability rises further, the number of active residential appraisers continues to shrink at an alarming rate. In 2016, there were an estimated 53,000 valuation professionals in America, but that number has shrunk to 38,000 as of mid-2025; active practitioners are expected to fall below 30,000 by 2029 if this trend continues.

Equally concerning is that there’s been an estimated 30% decrease in normal sales volume over the last three years, which makes identifying credible comparable sales data more challenging.

Balancing High-Tech With Human Touch

On a positive note, tech tools are making appraisers’ jobs easier. Machine learning, deep learning and computer vision have advanced significantly to a point where they meaningfully enhance valuation accuracy, consistency and throughput. Lenders are using property condition and rental income analytics, nationally standardized datasets and other data-driven valuation products to decrease regional variability, increase comparability across markets and satisfy intensifying investor and borrower demand with a speed and certainty that was previously impossible.

Also, 3D image capture, digital floorplans, mobile workflows and other resources are upgrading the accuracy and consistency of property data across the country. These standardization efforts reduce work redundancy and ambiguity, enabling more effective risk-based valuation decisions across loan portfolios.

Still, professional judgment remains the system’s essential anchor, especially when it comes to addressing structural bias, identifying hyperlocal value drivers and neighborhood nuances that algorithms often overlook, and providing the local market credibility and independent oversight needed.

New Framework, Renewed Trust

Buckle up, because the one-size-fits-all valuation model our industry has long followed is going away, being replaced by a risk-based framework that aligns valuation tools with transaction complexity. Appraisal waivers, automated valuation models, desktop and hybrid appraisals, and traditional reports will each play a role in this new paradigm, providing flexibility that empowers lenders and GSEs to employ the right level of scrutiny while preserving soundness and safety.

Ultimately, while innovations and industry transformations in 2026 will lead to new opportunities and objectives for industry players, the primary goal remains the same: making the consumer experience better. It’s encouraging to know that, when data quality, coordination, and risk alignment improve, consumers benefit. Reducing uncertainty and delays results in quicker, more predictable valuation outcomes as well as greater trust and a higher likelihood of expectations being met.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)