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Appraising "as is" vs "Subject to"

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Steven Spychalski

Junior Member
Joined
Jan 14, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
Hello:

Recently I have been getting assignments to appriase new construction condos. These projects are sold at various stages of completion.

What I would like to know is a good rule of thumb as to when the units should be appriased "as is" and when to appraise "subject to".

Is it once all the finishes are in? Once the appliances are delivered? When the unit is 75%, 80%, 90% completed?

Thanks in advance for the advice!

Steve
 
A

Anonymous

Guest
You shouldn't appraise a property as-is unless it will be sold in the condition that you saw when you inspected it period. If you are concerned about problems with new construction make your appraisal subject to the C.O., that way the C.O. can be presented at settlement and you will not have to reinspect the property.
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
Steven:

As an absolute minimum, there would have to be a Certificate of Occupancy (COO). The extent to which the improvements are complete varies with different government jurisdictions. In this area, that generally means one functioning bath, heating system and a complete kitchen. Of course this would mean the exterior is basically complete. For me, the minimum for a COO is not enough. I require that any item that has some contributory value be in place. I do this because if the lender ends up owning the property, it has to be marketable. I also require that any possible health or safety issues be corrected. I'm willing to overlook some minor finish items.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
A home is complete when it's complete, period. Otherwise, it's subject to. That being said, it's not unusual for appliances and the AC compressor not to be set until the day of closing (risk of theft). I comment about that so that the lender will know. I see no reason to go back to reinspect because the microwave hasn't been set yet. Lender doesn't complain either.

Roger
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Don't forget to check the purchase agreement for any "upgrades" etc. In my area, often homes in new subdivisions have a "base price" but that price changes when the home is complete depending on what the buyer wants. Make sure you have the latest purchase agreement. Like other posters I always require a Certificate of Occupancy issued by local authorities. I require the home to be "100% complete" before issuing a "442" it helps to use the language "100% complete" when dealing with contractors, realtors, etc.

Hope this helps......
 
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