The difference between “As-Is” and “Subject To” home appraisal is fairly simple.  With an “As-Is” home appraisal, the appraiser is using the current condition of the home to help determine its appraised value.  

In a “Subject To” home appraisal, the appraiser is including future improvements to the home to help determine its value.  So, which approach is the right one?  Well, it depends on the situation.  Let’s explore each option a little further.

When To Use an “As-Is” home appraisal

If you’re purchasing an investment property with no intention of doing any improvements, then an “as-is” home appraisal would be the way to go.  An “as-is” home appraisal would also be appropriate if you’ve purchased a property and competed your improvements.  

If you’ve done improvements to the property, it is recommended that you meet the appraiser at the property, so you can explain all the improvements that have been made.  Don’t expect them to wiggle down into your crawl space and notice you’ve put in new duct work.

When To Use a “Subject To” home appraisal

The only time a “subject to” home appraisal makes sense is if you’re intending to do improvements to a property at some point in the near future.  

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Some banks may allow appraisers to do a “subject to” home appraisal if you are at the tail end of renovation and trust you enough that you’ll complete the work.  They will likely also order what’s called a “Certificate of Completion” which is basically the appraiser returning to the property once all improvements are finished to verify the work has been done.  

As a side note, I think it’s better to do your improvements, and then order an “as-is” home appraisal, if possible. I think there’s something to be said about the appraiser seeing the improvements vs. just trying to picture the improvements from a punch list.  

On another side note, don’t order your own home appraisal.  Most banks will only consider appraisals they’ve ordered themselves.  I have found that some banks will also accept a bank ordered home appraisal from another bank as long as it’s not more than a year old.  Of course, you’ll want to ask these questions to the banks you consider working with.  

Check out my post “To What Extent Should You Renovate An Investment Property?”

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