Can my house be appraised in the middle of a renovation project?

Can my house be appraised in the middle of a renovation project?

appraising during a renovation projectDuring one of my recent assignments I was speaking with the homeowner to set up the appointment. Whenever I do this I like to ask questions about their house including whether it has had any recent updates or renovations. It turned out that they were in the process of completing a renovation on a bathroom. They didn’t understand how I could do an appraisal with the home in this type of condition. Since other home owners may also be in the same situation, and may be asking the same question, I thought I would take time today and explain how a house can be appraised in the middle of a renovation project.

“As Is” or Subject To”

An appraisal can be made either “as is” or “subject to” depending on the requirements of the bank or mortgage company that the appraisal is being prepared for.

“As Is”

An “as is” appraisal is just what it says. It provides a value estimate of the property considering the property just as it was seen on the date of inspection. With this type of appraisal it is very important for the appraiser to note all condition items that will have an effect on it’s value. If a bath is being renovated and not usable then this will obviously lower it’s value because it has one less bath.

It is helpful for the appraiser to know the cost to put the bathroom back in usable condition because the bank usually asks for this “cost to cure” and it also helps the appraiser analyze the cost vs. contributory value of the bath. Since most of the infrastructure of the bath is already in place the cost to finish out the bath is obviously less than the the value the additional bath will add to the overall value of the home.

Because the appraisal is being made in “as-is” condition the appraiser may use comps that reflect the current number of baths in the home as well as those that have the number of bathrooms the home will have after the renovation is complete. This is part of what appraisers call “bracketing” and is used to provide a more accurate opinion of value. In this situation, as I stated above, a home with one less bath would probably understate the value of the home being appraised because it does not have the plumbing infrastructure I mentioned, however this could be accounted for in the final value reconciliation.

“Subject To”

As you might expect, the “subject to” appraisal values the home considering the bath renovation as if it were already complete. It is important for the appraiser to know exactly what the bath will look like when finished so a set of drawings or plans,a list of specifications, and the cost of construction is needed. While the cost of the renovations is not a reliable indicator of the value the bath will add it should give the appraiser an idea of the quality of construction and materials being used.

This type of appraisal can provide some very good information about whether the bath renovation is a good investment because it will compare the renovation cost to the added value. So if it will cost $10,000 for the renovation but the value added is only $5,000 then that would not be a good return on investment. Most people in this situation will weigh the personal enjoyment they will receive against the cost and usually decide to go forward. What they should keep in mind is that if they decide to sell in the near future, they will not get that money back by asking more for their house than the market will support. In some instances, in an appreciating market, home prices may be rising enough to recapture that cost but this is not always true.

As you can see, it is not difficult to value a home that is in the middle of a renovation, however the appraiser will need to have additional information about what the improvements will be like when completed, and the appraisal value will only be valid when that renovation is finished.


Have you ever had a “subject to” appraisal and if so did the outcome surprise you? I’d like to hear your story so leave a comment below, and as always thanks for reading.

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  1. Help! We’re in the process of refinancing. We had an appraisal done in May and now have to do it again because we are starting over with another bank. The project is permitted by the city and a structural change to open the space between the kitchen, dining and living room. We have also decided to upgrade the counter tops and backsplash. The appraiser is scheduled to come on Monday, but there will be exposed wood from the walls and the kitchen has all old surfaces removed. When the project is finished in a couple weeks, it will definitely be an upgrade. How will this scenario play out with the appraiser? I have the full report with pictures from May and the approved architecture plans from the city. My intuition is to delay the appraisal, but underwriting wants it done. I haven’t mentioned the project to them yet. Thanks!

    • The appraiser can either appraise it ‘as-is” and take off for any work that is not yet finished or they can do it “subject-to” the work being completed. The bank will need to let the appraiser know how they want it done. If they do it subject to then they will need to go back when it is finished to verify that it was done per plans and specifications. Hope this is helpful.

  2. I have an appraisal on Monday for a redo, and with everything going on with COVID, we have been digging in hard on house projects. Not even thinking about it, we pulled all the radiators out last week to clean and repaint them, and to replace the valves. All the radiators are currently sitting in the garage. Obviously they have to be put back in before winter, but I am concerned that we will come in low on the appraisal.

    • I’m sure the lender will want the appraisal done “as-is” which means the appraiser will consider the home without the radiators hooked up. The good side is that if the appraiser does make an adjustment for this it should not be much. I would discuss it with them. If the lender approves the appraiser may be able to make the appraisal subject to the radiators hooked up but I would let them know what you are doing and why they were removed.

  3. Thanks for the wonderful post, loved it once again, Ill give this a share.

  4. Brok Stephens says

    We’re looking to refinance our 1978 ranch style house. We’re doing a remodel. Walks have been opened up, new kitchen appliances and cabinets. The flooring is done. Only half of the house has had the popcorn ceilings textured so far. The counter tops are plywood though we will be putting in 2 inch mahogany wooden tops, custom made. Trim is off in multiple places as we are going to replace all of it. But, like others we want to refy now because rates are low and it will help pay for the rest of the costs. We want to take out equity and need to have the house appraised at a high enough cost. Do these cosmetic things count against us? Everything is usable otherwise.

    • The current condition of the home will be taken into consideration and will impact the value. The exact amount of the difference is up for debate and depends on where you live, etc. I would have the cost to complete the rest of it available to the appraiser as that will help them in the assignment. The only time it may not affect the value is when you get a subject to appraisal but it doesn’t sound like that is what you are getting.

  5. Hi,
    Currently renovating our 1950’s ranch style home. Windows and doors have been replace and we decided to replace the roof and vinyl side the house. The windows, doors and roof have been replaced. However, we are missing some siding and we are still waiting on permits to get that project underway. We removed our side entrance deck/stairs and will be replacing them in the spring. I would really like to refinance now bc rates are low and it would help fund the remained of our renovations. Do you see an issue with trying to get a refinance appraisal done with the house being as-is?

    • From an appraiser’s perspective there would be no problem with doing an appraisal. It can either be done as is and deduct for the cost of the repairs or do it subject to the repairs being made. What you should do is ask the lender you are using if that is okay with them. They may require it to be complete with no work to be done.

  6. Fran Seitz says

    My husband is remodeling our son’s main floor bathroom on a 1954 ranch home. FYI, there is a 3/4 bath in the basement. We’re just wondering if it’s more important that the shower tile (using existing bathtub) is done during the appraisal or would it be better that the floor tile installation is complete? Asking because it looks like we won’t be able be to get both finished before appraisal. The plumbing for the shower/tub and sink are complete and we have the sink/vanity/faucet/mirror and toilet ready and can be installed by appraisal time.

    • From an appraisal perspective, I don’t think it will matter which one is not complete. The appraiser will deduct for the work to be done in either case and I would think the cost would be about the same.

  7. Currently in the process of refinancing my home, we have the appraisal this week. We have two full bathrooms and awhile back took out the tub and shower insert in the upstairs bathroom and we have built a big shower. My dad is doing the tile work and is about halfway done. Typically does the shower need to be completely finished in order to close on the loan? I’m confident that even with the partial remodel going on that our house will appraise for more than we need it to but curious if that will affect the closing of the loan. Any insight? Thanks!

    • The bank will most likely want the appraisal to be done with the home in “as is” condition. When this is the case there will most likely be a deduction for the condition of the home.

  8. Sandra D Baker says

    I got the cart before the horse. I am up dating my up stairs new flooring kitchen and bathroom. I have already signed a contract with my contractor and have cabinuts picked out. The total amount is 86900 for the remodel. I applied for Home Equity line of credit and finally got approve. But they are wanting a full appraisal and I have almost the whole up stairs empty out and my contractor want to start next week. How will that affect the appraisal?

    • If it’s just a matter of furniture and personal property belongings being gone that should not be an issue. If they have already started construction and torn out part of the house that is an entirely different matter. Unless you are able to get a subject to appraisal they appraiser must appraise the property in its current condition.

      • Sandra D Baker says

        Thank you for your response. I had not started on tearing anything. All the pictures are off the wall and you can tell it is in need of painting and the carpet need to be replaced.

        So here is my question I have signed a contract with my contractor and have plans and a bid that list wat will be done should I let the appersia know this and show him the plans?
        My bank has given me a counter offer on the amount I put down on my loan application with out the appraisaial?

        • The bank may allow you to do a subject-to appraisal to show what it will be worth after improvements. This would be a renovation loan and they may give you draws as the work is done but you will need to ask them if they do this type of loan.

  9. Jeannette Kasemir says

    I’m in the middle of a refinance on a home, not wishing to sell. I have painted a mural on the wall and therefore the baseboards and the molding for the ceiling have not been put in. I am missing one door and a bunch of the trim throughout three parts of the upstairs. Being that I’m in the middle of a painting project does this affect the refinance? This is in the kitchen, living room, hallways, and bathrooms…
    I am putting up crown molding and changing the wood color.

    Also I have replace all carpet for hardwood.
    Upgraded the kitchen from farmhouse to modern.
    Hightech appliances.

    And opened the Floorplan.

    I have removed one large bedroom 17×22′
    To make a walk in closet that opens up to the adjacent bedroom with French doors.

    How does this affect everything?

    • I will start off by saying that the appraiser will probably appraise the home in its current condition. This means that there will probably be a condition adjustment to reflect the items you mentioned, such as the missing baseboards, ceiling molding, missing door, and other trim. The improvements you have already completed will also be factored in and should help the value. This is also true for the change in the floorplan layout. Keep in mind that losing a bedroom may affect the value of your home depending on buyer expectations in your area. I hope this helps.

      • Jeannette Kasemir says

        Thanks, all doors are in and mostly everything is done.

        All that is left is the trim throughout the house…

        I have one room completed with victorian style trim and wescotting. To give the appraiser an idea of why the trim is down and the prep work needed behind it.

        I had to stop the work because my back is out and I can’t lift or push…

        How much would the value of the home drop because of missing trim…

        I might see the value of hiring someone else to finish the project if it is worth the financial difference.

        • It is hard to say exactly how much effect on the final value missing trim would have. The sales in an appraisal provide a range of value and not having trim may contribute to the appraiser reconciling at the low to the middle part of the range as opposed to the top end.

  10. Evan Degenfelder says

    We are in a similar situation as some of the others who have commented. We purchased a 1947 Ranch style home with seller financing (a friend) for five years. The time to refi has come but our restoration of the property isn’t complete. We had an appraisal that decimated us, by our estimation a minimum of $50K under value according to similar properties that have sold in our town. (Oregon) We need the refi to complete one major project still left to do: the kitchen. I’ve read recently about an “As Is” vs “Subject To” appraisal. Would it be a waste of time to put together our plans for changes/improvements to the kitchen along with costs involved and provide it to the next appraiser?

    • Good question, Evan. It depends on how the bank wants it appraised. If they want it done “as is” then the plans and budget won’t be useful. If you get a renovation loan from the bank they may let the future improvements be included. If they do then the information will be helpful. You may want to ask them for this type of loan so that the improvements will be taken into consideration. Usually, on these types of loans, they will have draws where money is dispersed as the work is done rather than all at once. Hope this was helpful.

  11. Deborah A Dale says

    So I realise this thread is a bit older, but my sitis very similar. We are in the middle of renovating but need a loan to finish. We currently have no kitchen and plywood subfloor in much of the house as well as just sheetrock on the walls (not finished yet). We don’t need the full value of the appraisal but at least $35 a square foot to get what we need to finish the reno. Can we get away with just putting in the kitchen or do we need to do walls and floor too?

  12. Brandi Smith says

    We bought a small 1960 ranch style home for $11k. The last appraisal (no clue how long ago that was done) was at 38k. We already started a demo on the property so all the walls have been taken down and some of the joists and subflooring have already been replaced. The house is pretty much gutted. I applied for a home equity loan on the property in order to fund the renovation and they want to have an appraisal done. I valued the property at the the last appraisal value. All of the plumbing and electrical will have to be reninstalled and it needs a new roof. How will they value the property at during the appraisal.

    • There are two ways to look at this. The first is to appraise the home “as is” taking into consideration the condition of the home as it currently is. If they do it this way it may not appraise as high as you need to borrow the money you want. Another way to do the appraisal is to do it”subject to” the renovations being made. This will most likely provide a higher appraisal. It will depend on how the bank wants the appraisal to be done.

  13. I built a covered porch on the front of my house, roof is done but the soffit and decking are not. It has gotten cold and I won’t have it finished until spring. I was hoping to get an appraisal to drop my PMI, I just hit my 20%, paid $140k and similar houses are selling for $170k now. Should I take the chance and go through with the appraisal or suffer the PMI for 6 months until I get it finished? Thanks

    • The appraiser would most likely appraise your home “as is” with the porch in its current condition. If he does then he will probably make an adjustment for the unfinished soffit and decking. This may not matter that much and if so it would not hurt your value too much. It all depends on how much your home has to appraise for in order to drop PMI. If you have a lot of cushion then go for it, however, if you’re close then you may want to wait.

  14. We are scheduled for a refi conventional loan appraisal. Our house was built in the 70s so we have been slowly updating, painting and remodeling. Our downstairs hallway has new walls, all painted and we put down a rug over the linoleum, but we have not put on the new trim and due to the hallway remodel we have no door on one of the will this effect our home’s value? I assume it’s considered cosmetic and won’t effect the loan, just the appraised value.

    • Yes, there are considered more cosmetic, however, they appraiser will probably do the appraisal with the home in “as is” condition. They will probably make a small condition adjustment but I would not think it would affect the value that much.

  15. We need to refinance so we can afford to renovate. Not sure it the current market value, up 25% from the original sale, considers the condition. How difficult will it be to have an appraisal near the market current value if the condition is subject to change? All intended fixes have great added value… It would be good to get a refinance near the original purchase price but, that would only cover a new HVAC system.

    • From my experience in appraising during these situations it seems banks handle this either of two ways. The first is to have an appraisal done with the house in its current condition. It is possible that the amount of money you want to borrow to do the renovations is available with your current equity. Another situation is to do a “subject to” appraisal which will give the value of the home after the proposed improvements are complete. I think it all depends on the amount of equity you have in your home and the programs and policies the lender has. Hope this helps.

      • We bought it with an FHA in 2014 for $123k @ 3.75% plus .85% PMI (for the loan life! Yikes) including closing costs and, according to real estate sites such as Zillow, Redfin and Trulia, is currently valued between $132k and $162k. Looks like it would be easy to come in with more than 20% equity, get some cash and, drop PMI, which is about $135/mo. I assume the $162k estimate would be for optimal condition.

  16. With appraisals for refinance, it is important for the homeowner to be open with the lender about any unfinished renovations prior to the appraisal. This is because some loans cannot fund unless the construction is finished and some homeowners hope to use the money from the refinance to finish the project. Not telling the lender in advance can result in headaches for all parties involved.

  17. On a different note, I think I’d hit my head on the ceiling when getting out of that tub. Is that a converted attic?

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