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What does “As is” Value Mean?
The value of a property as it exists legally and physically, as of the effective date of value.
“The value of specific ownership rights to an identified parcel of real estate as of the effective date of the appraisal; relates to what physically exists and is legally permissible and excludes all assumptions concerning hypothetical market conditions or possible rezoning.”
–Appraisal Institute, Dictionary of Real Estate Appraisal, 4th edition.
“The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. (Proposed Interagency Appraisal and Evaluation Guidelines, OCC-4810-33-P 20%)”
–Appraisal Institute, Dictionary of Real Estate Appraisal, 5th edition.
What it Means
“As is” value is most commonly combined with Market Value resulting in “As is” Market Value because it contemplates the actual situation of the subject as of the effective date of value.
For instance, in some situations, a property could have several potential uses as a result of its construction, condition, location, or any other number of factors. The Highest and best use, as vacant is not applicable within the “As is” valuation due to the fact that the appraisal only considers the current physical condition, use and zoning. In most situations, the highest and best, as improved, is also less of a factor.
If an income producing property was vacant or not leased to a “stabilized” level of occupancy, “As is” Market Value would deduct for costs to reach stabilized operations. These costs could be items such as leasing commissions, lost rent, tenant improvements or other costs borne by the owner to “lease up” the property.
Refer to our Value Vault resource section for additional appraisal definitions and appraisal related topics.