What is ANSI Standard Z765-2021 and how does it apply to Real Estate Appraisals?

As of April 1, 2022, Fannie Mae requires appraisers to follow ANSI Z765‑2021 (AKA “ANSI standard”) as the standard for most residential appraisals.

If you have looked at a recent appraisal and noticed that the square footage is different from an older appraisal or listing, there is a reason. In many cases, the difference comes from this national measurement standard, ANSI Z765‑2021.

What is ANSI Standard?

ANSI Standard is a nationally recognized standard that explains:

• How a home must be measured
• Which areas can be counted as living space
• How area calculation of total square footage, also known as Gross Living Area or GLA, is calculated

This standard changed how homes are measured and how living space is reported, bringing consistency to real estate appraisals across the country.

The Goal is to Standardize Gross Living Area

Appraisers must now follow one consistent set of rules. This could affect your home’s reported square footage.

• A new appraisal may not match older appraisals, MLS listings, or tax records
• This does not mean the home changed, only that the measuring rules did

The goal is fairness, accuracy, and consistency across all appraisals.

How Measurements Are Taken Under the Standard

ANSI Z765‑2021 sets clear rules for how measurements are handled, including:

• Exterior wall dimensions are rounded to the nearest inch or tenth of a foot
• Area calculation is rounded to the nearest whole square foot
• Measurements follow a uniform, repeatable process nationwide

This helps ensure that two appraisers measuring the same home should arrive at very similar results.

What Counts as Gross Living Area

Not all finished space automatically counts as living area under the standard. Several factors now matter, including:

• Ceiling height
• Sloped or angled ceilings
• Whether any portion of a level is below ground

Important points:

• If any part of a floor level is below grade, meaning below ground level, the entire level must be reported as basement area and cannot be included in GLA
• This rule often affects bi-level and split-level homes.

What Types of Homes This Applies To

ANSI Z765‑2021 applies to:

• Single family homes
• Townhomes and rowhouses
• Manufactured homes
• Detached dwellings

For condominiums and co-ops:

• The standard is followed unless the unit is in an apartment style or multifamily building
• In those cases, measurements are taken from the interior perimeter, which has long been the accepted method

What About 2- to 4-unit Properties?

Although the standard was written primarily for single family homes, Fannie Mae also requires it to be followed for certain 2- to-4-unit properties, including:

• Detached units
• Side by side units that share a single wall, such as townhouses or rowhouses

How Garages Are Handled

Garages are not considered living space, even when they are attached to the home. Under ANSI standard:

• Attached and partially attached garages are excluded from GLA
• Measurements stop at the interior wall where the garage meets the living area
• This is because if there were no garage, that side of the wall would be the end of an exterior wall.

Benefits of ANSI Z765‑2021

Although the changes can be confusing at first, this standard provides important benefits:

• More consistent square footage reporting
• Fewer discrepancies between appraisals
• Clearer explanations of what is and is not living space
• Stronger, more defensible appraisal reports

While not mandated by HUD nor VA, both allow use of ANSI Z765-2021 measurement standard in their appraisal reports.

Learn more from Fannie Mae

Fannie Mae provides detailed guidance and answers to common questions about measuring homes under this standard. You can view their measurement guidelines here:

https://singlefamily.fanniemae.com/media/30266/display

Need help understanding your appraisal?

If your home’s square footage looks different than expected, we’re here to help. Contact us today to:

• Understand how ANSI Z765‑2021 standard applies to your home
• Get clear, straightforward answers without the technical confusion

At Quality Title & Abstract Agency and The Jordan Real Estate Group, we stay ahead of the curve so you don’t have to. Whether you’re closing a deal or assessing a property’s value, our team is here to support your success.

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FOR THE LENDING COMMUNITY

As of January 26, 2026, the implementation of UAD 3.6 is now officially within its ‘Broad Production’ phase where lenders may submit appraisal reports to the production environment of Government Sponsored Enterprises (GSE’s) without obtaining a GSE approval. While such a transformation may appear to be formidable, The Jordan Real Estate Group is available to provide support while this transformation continues to assist with any uncertainties that you may have. Here are some links that you may find helpful as this transformation commences:

Fannie Mae/Freddie Mac references:

• Frequently Asked Questions for the Uniform Appraisal Dataset (UAD) 3.6 initiative
• UAD and Forms Redesign Timeline: Calendar for the adoption of the UAD 3.6 initiative
• Lender Readiness Kit: Assists industry partners to prepare for adoption of the UAD 3.6 initiative
• Industry Guide to new URAR: A short course to educate the industry on the UAD 3.6 initiative
• UAD Lender Preparedness Webinar: A recorded session to help lenders understand and prepare for the UAD 3.6 changes
• Uniform Appraisal Dataset FAQs for Servicers: Prepares servicers for the transition to UAD 3.6

FOR THE RESIDENTIAL REAL ESTATE APPRAISAL COMMUNITY

As the goal of UAD 3.6 is to standardize the industry dataset for any residential property type to be submitted through the joint-Government Sponsored Enterprise (GSE) Uniform Collateral Data Portal® (UCDP®), the revised UAD single data-driven Uniform Residential Appraisal Report (URAR) will replace many legacy appraisal forms that the appraisal community is familiar with, including:

• Uniform Residential Appraisal Report (1004 / 70)
• Uniform Residential Appraisal Report (Desktop) (1004 Desktop / 70D) 
• Uniform Residential Appraisal Report (Hybrid) (1004 Hybrid / 70H)
• Individual Condominium Unit Appraisal Report (1073 / 465)
• Individual Condominium Unit Appraisal Report (Desktop) (1073 Desktop / 465D)
• Individual Condominium Unit Appraisal Report (Hybrid) (1073 Hybrid / 465H)
• Exterior-Only Inspection Individual Condominium Unit Appraisal Report (1075 / 466)
• Exterior-Only Inspection Residential Appraisal Report (2055 / 2055)
• Manufactured Home Appraisal Report (1004C / 70B)
• Individual Cooperative Interest Appraisal Report (2090)
• Exterior-Only Individual Cooperative Interest Appraisal Report (2095)
• Small Residential Income Property Appraisal Report (1025 / 72)
• Appraisal Update and/or Completion Report (1004D / 442)
• Single Family Comparable Rent Schedule (1007 / 1000)

As of November 2, 2026, implementation of UAD 3.6 is mandated. At that time submissions of appraisals via UAD 2.6 will cease completely whereby all appraisers must adhere to the new format of communicating appraisals. Although the conversion to UAD 3.6 may well appear challenging, the appraisal community’s next step should be from awareness of UAD 3.6 and into a readiness plan for implementation. The Jordan Real Estate Group is here to assist appraisers as this initiative commences, and to assist with any queries of concern. The following links provide relevant information as the conversion to UAD 3.6 commences:

Fannie Mae/Freddie Mac references:

• Frequently Asked Questions for the Uniform Appraisal Dataset (UAD) 3.6 initiative
• UAD and Forms Redesign Timeline: Calendar for the adoption of the UAD 3.6 initiative

Fannie Mae/Freddie Mac reference documents:

• Functioning without Form Numbers: Mapping Legacy Forms to the Redesigned URAR
• Inspection and Reporting Tips: Highlights notable differences between UAD 3.6 and UAD 2.6
• Condition and Quality Rating Definitions
• Uniform Appraisal Dataset (UAD) Specification: Sample Scenario Appraisals (large document)
  This document depicts several samples of appraisal property types displayed in the UAD 3.6 format. The scenarios include the following property types: 2- to 4- Unit (2 sample scenarios); Condominium (2 sample scenarios); Co-op (1 sample scenario); Manufactured Home (2 sample scenarios); Single Family (5 sample scenarios); Appraisal Update (1 sample scenario); and Completion Report (2 sample scenarios).

Educational links – Fannie Mae/Freddie Mac references:

• Industry Guide to new URAR: A short course to educate the industry on the UAD 3.6 initiative
• Uniform Appraisal Dataset (UAD) Lender Preparedness Webinar: Addresses UAD 3.6 (prerecorded)

Educational links – Industry references:

The major software providers also have information available pertaining to the UAD 3.6 initiative; it is recommended that you confer with your software provider or visit the company’s website for additional materials. Here are some industry providers with links to videos or pages for each:

• Alamode (Total): Click here to view the 1/28/2026 video related to Launch Edition announcement. It walks through how the software works as far as being dynamic based on selections you make as you enter data.
• ACI (Appraisers Choice)
• Appraise-It Pro (SFREP)
• Bradford Technologies (ClickFORMS)
• Aivre: Provider that is AI focused

Educational links – Educational providers:

• Appraisal Institute
• Appraiser eLearning
• McKissock Learning

Educational opportunities on UAD 3.6 are available in person, via livestream, or via self-paced online.

The post UAD 3.6 Has Arrived appeared first on The Jordan Real Estate Group.

Functional obsolescence is not necessarily about a building being old. It refers to whether the property meets the expectations and needs of today’s buyers or tenants. Even a relatively new property can experience functional obsolescence if its design or features no longer align with current trends or standards.

There are two main categories of functional obsolescence: curable and incurable.

Curable Functional Obsolescence 

Curable obsolescence involves issues that can be resolved or improved with a reasonable investment. These are typically cosmetic or design-related deficiencies that can significantly enhance the property’s marketability and value. 

Common Examples Include: 

• Outdated kitchens or bathrooms that can be remodeled. 
• Inadequate lighting that can be improved with modern fixtures. 
• Old HVAC or electrical systems that can be upgraded to meet current codes and energy efficiency standards. 
• A temporary wall that as erected to make two small bedrooms out of one large bedroom.  

Incurable Functional Obsolescence 

In contrast, incurable obsolescence refers to shortcomings that are either too expensive or physically impractical to correct. These limitations often stem from structural design choices or external factors that can’t be easily changed. 

Common Examples Include: 

• An undesirable floor plan that would require extensive reconstruction to be fixed. 
• Insufficient parking for a commercial property which limits its usability. 
• Railroad style rooms. 
• A single bathroom off the kitchen when all bedrooms are on the second floor. 
• A captive bedroom. 

Recognizing the impact of functional obsolescence is crucial for anyone involved in real estate, whether you’re buying, selling, or investing. For buyers, it can highlight potential renovation opportunities or red flags. For sellers, it helps set realistic expectations about market value and necessary improvements. And for investors, it’s a key factor in assessing long-term profitability. 

If you have questions about how functional obsolescence can affect a property, don’t hesitate to reach out to our team at The Jordan Real Estate Group. We’re here to provide the insights and support you need to navigate your real estate transactions with confidence and clarity. 

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