Statewide Revaluation Underway—Here’s What Appraisers Need to Know
In this issue:
- Delaware Reassessment: What it means for appraisers
- California Senate Bill 774: Enacts review of mandatory licensing
- NDAA Act Passes: Includes ROAD to Housing Act
- Fannie Mae Updates: Rental income policy to allow ADU income to be considered as part of qualifying income
Insights
Delaware’s Big Reset: What a Once-in-a-Generation Reassessment Means for Appraisers
For the first time in more than four decades, Delaware is rewriting the property tax map.
Across New Castle, Kent, and Sussex counties, assessors are revaluing every parcel of real property—nearly half a million parcels statewide—in what amounts to the largest reassessment project in the state’s history. The work, conducted by Tyler Technologies under a $27.8 million contract, is the result of a court-ordered mandate to bring fairness and accuracy back to the state’s long-dormant tax rolls.
The last time Delaware completed a comprehensive reassessment, Ronald Reagan was president, and the appraisal industry still ran largely on paper and clipboards. Some counties hadn’t updated values since the 1970s. The long gap created growing inequities between property classes and regions—the kind of distortion that makes reassessment both necessary and disruptive.
Now, new notices are beginning to roll out, and property owners are bracing for change. But for appraisers, this is more than an administrative event—it’s a professional opportunity.
The Scope and the Stakes
The numbers alone are impressive: 482,097 properties across the state will receive new valuations tied to a July 1, 2024, market date. Sussex County alone has over 200,000 parcels being reviewed. After decades of drift, the valuation differences between old assessed values and today’s market reality can be enormous—especially in rapidly appreciating coastal, industrial, and mixed-use areas.
And unlike the past, Delaware’s new House Bill 62 ensures this won’t be a one-time correction. Going forward, each county must conduct a reassessment every five years. That shift puts Delaware in line with national practice and effectively establishes a recurrent cycle of appeal activity that could provide ongoing work for valuation professionals.
Appeals as an Appraisal Arena
Every reassessment brings disagreement, and disagreement brings demand for valuation expertise. Property owners have a limited window to appeal new assessments they believe overstate market value.
Each county has created a two-step process: an informal review period with assessors or their contractors, followed by a formal hearing before the county Board of Assessment Review. Those dissatisfied with the outcome can then take their case to Delaware Superior Court.
In each phase, appraisers can play a decisive role. They’re needed to:
- Prepare market-supported analyses that test whether a new assessment reflects real market behavior.
- Develop income capitalization or cost approach opinions for commercial and industrial properties where mass appraisal models can falter.
- Provide expert testimony during hearings or court challenges.
For many in the profession, this reassessment will be the first time Delaware’s boards and courts see modern valuation analysis applied at such a scale.
A Tale of Three States
Delaware’s overhaul also highlights how differently states approach the same fundamental task of keeping property assessments fair.
In Pennsylvania, there is no statewide reassessment schedule at all, and some counties go decades without a reset. That unpredictability has turned the appeals process into a steady source of appraisal work. Appraisers there routinely help property owners navigate valuation disputes using the state’s Common Level Ratio (CLR) system, which attempts to reconcile old assessments with current market conditions.
In California, assessments operate under an entirely different framework. Proposition 13 freezes taxable value at acquisition, allowing changes only when ownership transfers or new construction occurs. Yet appraisers there remain busy with base-year appeals and Proposition 8 “decline-in-value” cases, especially during market downturns when property values dip below assessed levels.
By comparison, Delaware is entering a middle ground: a traditional market-value system that’s finally being brought up to date, and one that will now turn over on a predictable five-year rhythm.
The Opportunity Ahead
For appraisers, Delaware’s reassessment is both a challenge and an invitation.
The challenge lies in scale: half a million parcels, an entire state adjusting to new values, and a tight timeline for appeals. But the invitation is in the expertise appraisers bring—grounding the conversation in real, defendable market evidence at a moment when both taxpayers and government need clarity.
The shift also signals a larger national trend. States and counties that once allowed assessments to stagnate are moving toward regular review cycles. As they do, the demand for qualified valuation professionals—not just to complete appraisals, but to interpret, critique, and defend them—is expanding.
Delaware’s once-in-a-generation reassessment is more than a local tax story. It’s a reminder that whenever property values are recalibrated, the appraisal profession stands at the center, ensuring fairness and giving market reality a credible voice.
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Rescheduled Webinar: Appraiser Liability Trends — Litigation Risks for Commercial and Residential Appraisers
New Date: Thursday, October 23, 2025
Time: 11:00 a.m. – 12:00 p.m. CT
The Appraisal Institute is proud to present this webinar in partnership with Liability Insurance Administrators (LIA)—the only Errors & Omissions (E&O) program endorsed by the Appraisal Institute since 1991, and the largest program in the U.S. dedicated to appraisal professionals.
In addition to E&O, AI members now have access to LIA’s endorsed General Liability and Cyber Liability Insurance products, offering comprehensive protection for today’s evolving risks.
Presenter: Steven Bauer, Attorney, Gaglione, Dolan & Kaplan
Join us for this session as an experienced outside counsel spotlights the latest litigation trends and liability risks impacting both residential and commercial appraisers. Attendees will walk away with:
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- Best practices for mitigating exposure in a shifting legal landscape
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Advocacy Updates
Senate Passes NDAA with “ROAD to Housing Act” Included
Last week, the US Senate passed its version of the Fiscal Year 2026 National Defense Authorization Act (NDAA) by a bipartisan vote of 77–20. Before final passage, a “Manager’s Amendment” was adopted that included the Renewing Opportunity to the American Dream (ROAD) to Housing Act, a broad housing package aimed at expanding and preserving housing supply, improving affordability and access, and strengthening oversight of federal housing programs.
Among its provisions are the Appraisal Modernization Act and the Appraisal Industry Improvement Act.
The Appraisal Modernization Act would establish a standardized process for Reconsideration of Value, giving consumers a clear and consistent pathway to request a second look at their appraisal when concerns arise. The provision is designed to reduce confusion, improve communication, and help resolve most valuation concerns at the loan level—before they escalate into regulatory complaints or litigation.
The Appraisal Industry Improvement Act includes several key provisions:
- Allows licensed appraisers to once again perform FHA appraisals after passing an exam.
- Permits the Appraisal Subcommittee (ASC) to adjust AMC registry fees.
- Adds trainee appraisers to the ASC Registry at no cost.
- Expands ASC oversight to include the VA, HUD, and USDA’s Rural Housing Service.
- Authorizes the ASC to award grants to nonprofit organizations, such as the Appraisal Institute, and higher education institutions to support appraiser workforce development, including scholarships, education, and career pipeline initiatives.
Since the House has also passed its own version of the NDAA, without the ROAD to Housing language, lawmakers will need to reconcile the two bills. House Financial Services Committee Republicans have expressed strong opposition to including the housing package in the defense bill, preferring to advance separate proposals focused on zoning reform and manufactured housing. As a result, the ROAD to Housing Act’s fate remains uncertain heading into end-of-year negotiations.
California Law Extends Appraiser Oversight, Launches Study on Mandatory Licensing
On October 13, California Governor Gavin Newsom signed Senate Bill 774 into law, extending the Bureau of Real Estate Appraisers (BREA) through January 1, 2030, to ensure continued state oversight of licensed and certified appraisers. The legislation also enacts major reforms to California’s Appraiser Recovery Account and directs BREA to evaluate the feasibility of mandatory licensing for all appraisal activity in the state.
Under SB 774, BREA’s existing Recovery Account regulations are repealed and replaced with detailed statutory procedures covering eligibility, applications, investigations, and payment of claims. The bill caps payments at $50,000 per transaction and $250,000 per licensee, and mandates automatic suspension of an appraiser’s license when Recovery Account payments are made based on clear and convincing evidence of fraud, misrepresentation, or deceit. BREA must also publish Recovery Account information on its website and submit annual reports to the Legislature beginning in 2027.
The new law further requires BREA to conduct a comprehensive study on the feasibility of mandatory licensing for all real estate appraisal work in California, with findings and recommendations due to the Legislature by December 31, 2028. The study must identify the types of appraisal assignments currently exempt from licensure, the estimated number of individuals performing those services, and comparable regulatory frameworks in other states. It must also include recommendations for implementation, potential exemptions, legislative changes, and a proposed timeline. BREA will hold at least two public meetings to gather stakeholder input prior to finalizing the report.
The Appraisal Institute will continue to monitor implementation of the new Recovery Account provisions and BREA’s forthcoming study on mandatory licensing.
Fannie Mae Expands Use of ADU Rental Income in Loan Qualification
Fannie Mae has updated its rental income policy to allow income generated from an Accessory Dwelling Unit (ADU) to be considered as part of a borrower’s qualifying income, marking a notable shift in how these secondary units may influence loan eligibility and underwriting decisions.
Under the new policy, ADU rental income can be included provided all of the following conditions are met: 1) the property must be a one-unit, principal residence, limited to purchase and limited cash-out refinance transactions; 2) Rental income may be derived from only one ADU, even if the property includes multiple units; and 3) the amount of ADU rental income used for qualification cannot exceed 30% of the borrower’s total qualifying income.
All other Fannie Mae Selling Guide requirements for rental income documentation remain in effect. The change will be reflected in Desktop Underwriter® (DU®) version 12.1 during the first quarter of 2026, though lenders may implement the new standard immediately for loans eligible for manual underwriting.
While this policy update may expand borrower access to financing properties with ADUs, appraisers should remain alert to potential risks of double counting, both in income and valuation analysis.
Because the rental income from the ADU may now contribute to borrower qualification, appraisers must take care to avoid overlap between the contributory value of the ADU as part of the property’s overall market value. For example, if an ADU’s income stream is capitalized or otherwise reflected in an income-based indication of value, the same rental contribution should not also be implicitly captured in the sales comparison adjustments. Conversely, when relying primarily on comparable sales, appraisers should verify whether market participants are already reflecting the ADU’s income potential in sale prices, particularly in markets where ADUs are common and actively rented.
As financing flexibilities evolve, understanding how lenders and secondary market participants treat ADU income will be increasingly important in supporting credible appraisal opinions.
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