Apr 25, 2017 - 03:23 AM
The Agencies’ appraisal regulations require an appraiser to analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non-market lease terms, and tract developments with unsold units. For such transactions, an appraisal must include the market value of the property, which should reflect the property’s actual physical condition, use, and zoning designation (referred to as the "as is" value of the property), as of the effective date of the appraisal. Therefore, if the highest and best use of the property is for development to a different use, the cost of demolition and site preparation should be considered in the analysis. (Bold added for emphasis)
Because USPAP requires compliance with all applicable assignment conditions, appraisers performing assignments of this type must follow these guidelines. For more information, see Appendix C of the Interagency Appraisal and Evaluation Guidelines.