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Appraisals – 'As Is' VS. 'Subject To'

Article 1 in a 3-part Series
By Stacy Kennedy
EWI Mastery Instructor and Field Trainer

What is the role of the Appraiser on our power team?

The appraiser is the team member who helps us to know the value of the property.

There are two types of appraisals we, as investors, are interested in: The ‘As Is’Appraisal and the ‘Subject To’ Appraisal.

“As Is” Appraisal
This appraisal estimates the value of the property in its current condition. Most buyers are homeowners purchasing their personal home, therefore this is the most common type of appraisal.

“Subject To” Appraisal
A “subject to” appraisal estimates the value of the property contingent upon certain repairs being completed.

For example, let’s say that we’re considering purchasing a property needing rehab. Its current value is $50,000. If we rehab the property, raising it to a higher standard, the value will be increased to $80,000. The “subject to” appraisal would include the new value along with a scope of work (the detailed list of items to completed to bring the property up to an “after rehab” state).

The appraisal of $80,000 is subject to (or contingent upon) the specific repairs being completed.

As appraisers go, most do only "as is" appraisals. The appraisers who do "subject to" appraisals are few and far between. I don't expect to open a phone book and be able to find someone who does this kind of service.

So, how do we find this kind of power team member? Ask around!!! There are a few places I'd suggest starting: the local investor club, investor-friendly realtors and hard money lenders. Between the three of those sources, you have a high likelihood of finding your newest power team member!

In the next article we’ll discuss when we, as investors, would choose one appraisal over the other and when we’d opt to get both…stay tuned!