"As Is" and "As Complete"

[George Hatch]

Backing in by cost will always be an indirect approach as compared to actually finding "as is" comparables. However those "as is" comps aren't always available or sufficient in comparability. Sometimes we just have to work with what we've got.

 

[Tom4value]

I didn’t see any comments here address a very important factor for “as is” value; the motivations of the buyer. I have a client that gives me work for transactions of their “flipper” client. Using comps for the “as-repaired” value and then simply subtracting out actual costs for the “as-is” value ignores buyer motivation.

If the buyer is going to use the property as their owner-occupied property, then actual cost to repair is the major influencer in what they are willing to pay. Still, you will have to factor in the, “do I want the headache of dealing with this? If so, I want a discount for my hassle” For that, you will need a comp of a similar condition property bought as owner-occupied to at least derive an adjustment for any other comps you utilized for the “as-repaired” value.

A further concern is if the property is being purchased by an investor. Now, it is not just the “do I want the headache” factor but the profit. Obviously, an owner-occupied buyer will be willing to pay more than a buyer also looking for profit. When choosing comps for my client above, I always make sure that the buyer was an investor and not o.o.. or else my “as-is” value will be erroneously higher. Of course, this has to be explained in the reconciliation.

 

[Zephyr999]

It's a valid approach (begin with end in mind), especially when HBU remains the same.
The adjustment is meant to be Contributory not dollar for dollar plus EI.