I got the opportunity to tag along with my mentor, Tony Lesicka, in a final inspection tour of the property. A final inspection is necessary when an appraiser is hired to value a new construction or renovated property. The client is a bank that requests two appraisals, an “as-is” appraisal and a “as-completed” appraisal. An “as-is” appraisal is valued based off of what the new construction or renovation will look like when done, based off of plans and specifications. The bank wants to know the value of the property and if it is completed and if it was built in regards to those plans and specifications. The second “as-completed” appraisal happens after construction and renovations are complete, and the appraiser goes back and values the property again to report to the bank whether there was an impact on value during construction.
With this specific property we toured, there was an impact on value. The original appraisal, not done by Tony, reported the building to have a 29′ clear height. After construction, the warehouse only reported a 21′ clear height due to its sprinkler systems not having enough pressure to cover the building in the event of a fire. Because the new construction did not comply with the fire code modifications to plans had to be changed, which resulted in a large impact on the value of the warehouse. That value is determined by Tony, and his “as-completed” report on the new value will equate to what the bank’s final dollar amount will be.