You just took a sledge hammer to the wall of your tiny kitchen which has been confining you for years!!! AHH! The feeling of liberation! Your kitchen expansion project is underway! Wait a second…you need some cash to finish the project, so you decide to refinance. But does the project need to be complete before the bank will lend the money?

Unfortunately, I can’t answer for the bank. However, I can let you know some appraisal terms that come into play. “as-is” value and “subject to” value.

What do “as-is” and “subject-to” values mean?

• “As-is” value – An estimate of the market value of a home in its current condition, use, and zoning.

• “Subject to” value – This is what the value will be whenever certain conditions are met. It is determined by taking into consideration the proposed improvements.

If the as-is value (broken wall and all!) is acceptable to the bank, they may lend! However, there is one caveat…The appraisal report must identify and describe physical deficiencies that could affect a property’s safety, soundness, or structural integrity. If the appraiser has identified any of these deficiencies, the property must be appraised “subject to” completion of the specific repairs or alterations.

Two major take aways: 1) how much has your home value dipped considering your property in its current stage of renovation and 2) does the current stage of renovation represent a health and safety risk!