What Do Appraisers Look For?

Rate the House Before the Appraiser Does

The rating definitions are public. You can read them before anyone walks through your door.

When a loan headed to Fannie Mae or Freddie Mac gets an appraisal, the appraiser rates condition on one scale, C1 to C6. Your house gets a rating. So does every comparable sale. Under the new Uniform Appraisal Dataset, called UAD 3.6, the appraiser rates the interior, the exterior and the whole dwelling. The scale didn't change. The definitions were rewritten.

Fannie Mae requires UAD 3.6 on every new appraisal report submitted on or after November 2, 2026, to the Uniform Collateral Data Portal, the system where lenders send appraisals to Fannie Mae and Freddie Mac, though a lender with a temporary exception from Fannie Mae can keep submitting the older UAD 2.6 reports through May 19, 2027. Here's what the 3.6 definitions say.

C1 is a house built within the past 12 months that nobody has lived in. C2 is like new, built or entirely remodeled within 36 months of the appraisal. C3 is well maintained, with only minimal wear and tear.

C4 shows moderate wear and deferred maintenance that's minor or cosmetic, such as worn floor finishes or a dated kitchen that still works. C5 shows significant wear from inadequate maintenance, though the soundness and structural integrity can still support occupancy. One example is roofing that's significantly worn, cupped or curled, with no apparent active leaks.

C6 is an extreme lack of maintenance that has caused severe damage or defects affecting soundness or structural integrity, in a house that isn't suitable for occupancy. The examples include active roof leaks and a damaged or failing foundation. That's the bottom of the scale.

Two rules matter more than the labels. The rating is absolute: the house is rated on its own merits, not against other properties. And every comparable sale carries its own rating, set as of its sale date. Fannie Mae adds that two houses with the same rating can still need an adjustment.

The appraiser rates what's there to see. On an appraisal that includes an interior and exterior inspection, Fannie Mae requires a complete visual inspection of the accessible areas, and the report has to disclose any area the appraiser couldn't reach. Appraisers aren't responsible for hidden or unapparent conditions. Adverse conditions they do see go in the report, even when they're typical for competing homes.

Our view: a price should come from sold homes in the same condition as yours, not from a formula. So walk the house room by room against these definitions. Write down what you find in each room.

Find the One Defect That Sets the Line

Look for the single item that could pull your whole house down to C6, the lowest rating on the appraiser's scale.

Fannie Mae tells appraisers not to raise or lower the overall rating for one or two minor areas. C6 is the exception. If any portion of the house rates C6, the whole house rates C6. One item is enough. No averaging.

On a loan a lender plans to sell to Fannie Mae, a C6 changes what the lender can do. Loans secured by a C6 house aren't eligible for sale to Fannie Mae. Any defect, damage or deficiency affecting soundness or structural integrity has to be repaired, to a rating of at least C5, before the loan is sold. The appraisal is completed subject to those repairs. Fannie Mae treats houses rated C1 to C5 as eligible in as-is condition. The section of Fannie Mae's Selling Guide for UAD 2.6 reports carries the same eligibility rule for C6.

Freddie Mac draws its line one rating sooner, at C5. Its Seller/Servicer Guide says a house with deficiencies consistent with a C5 or C6 condition rating isn't acceptable collateral for a loan sold to Freddie Mac unless every issue that caused the rating is cured before the loan is delivered to Freddie Mac, with limited exceptions. One item is enough for Freddie Mac too: a deficiency consistent with C5 or C6 in any part of the house puts the whole house at C5 or C6.

FHA has its own rulebook, and it has proposed changes. HUD's request for public comment, published May 29, 2026, says FHA has required homes securing insured mortgages to satisfy certain Minimum Property Requirements, and when an appraisal or inspection finds conditions that keep a home from meeting FHA's property acceptability criteria, the lender must make sure the repairs are completed before the mortgage is eligible for FHA insurance. HUD also writes that a considerable number of FHA appraisals require a condition for property repair or inspection.

On September 22, 2026, FHA posted a draft update to its handbook. It would use the same C1 to C6 ratings, with C4 as the minimum for FHA acceptability: a C5 or C6 would be unacceptable collateral unless the causes are cured before closing, with limited exceptions. FHA asked for comments through November 6, 2026. FHA says the draft isn't official policy and can't be used with any FHA-insured mortgage until it's finalized. It also says its existing policies stay in effect until they're amended.

Get a written repair cost for the one item that would cause the C6, then weigh that cost against what happens if you leave the item alone. If the appraisal flags it, neither Fannie Mae nor Freddie Mac will buy a loan on the house until the repair is done, so a buyer who needs either loan has to wait for the repair.

Our view: a buyer who tours the house measures it against the price and walks when the two disagree. A house with a C6 problem shouldn't be priced as if it didn't have one.

Pick the Buyers Your House Can Reach

Choose the route before you spend a dollar on repairs.

Cash sales are the minority. Realtors' September 2026 survey of their most recent sales put cash sales at 27%, down from 30% a year earlier. A buyer who borrows answers to a lender, and on a Fannie Mae loan and on an FHA loan alike, it's the lender's job to confirm that the house meets the program's property rules.

On an appraisal for a loan headed to Fannie Mae or Freddie Mac, the appraiser rates condition from C1 to C6. At C4 or better, neither Fannie Mae's nor Freddie Mac's condition rule blocks a loan on the house as it stands. At C5, Fannie Mae's rule still doesn't block the loan, but Freddie Mac won't buy a loan on a C5 house until the causes are cured. C6 means severe damage that affects soundness or structural integrity, and neither Fannie Mae nor Freddie Mac will buy a loan on a C6 house until the repair is done. You can make the repair, or you can take an offer that doesn't wait on a buyer's mortgage.

Cash Flow Deals makes two offers, and you choose:

1. Fast Cash Offer: Cash Flow Deals buys the house as-is and closes. No listing. One walk-through by our team.

2. Premium Cash Offer: More money. A pre-approved FHA or conventional buyer we already have buys directly from you. That buyer comes from the pre-approved FHA or conventional buyers we already have, ready to go. You sign with us at the agreed number and let us bring a buyer in our place. During the 15 business days of inspection the home may be listed. A licensed agent brings each buyer. Showings are scheduled ahead and take 10 to 15 minutes. The buyer signs a new contract directly with you. The buyer's lender funds it. Title transfers once. Cash Flow Deals is paid as a separate line item on the closing statement. If a Premium buyer's financing falls through, you can still take our Fast Cash Offer.

3. Inspection: 15 business days of inspection, on either offer.

4. Closing: 45 days or less; the seller helps pick the date.

Our view: putting your house in front of buyers who borrow with FHA and conventional loans is where a higher number comes from.