The As-Is Value of a property is an estimate of the current market value of the property as of the specific date of the appraisal. The appraisal considers the physical property as it currently exists and the current zoning for the property. It excludes any potential use of the property outside its current physical condition, use, and zoning. For example, it does not consider a property’s value after any likely rehabbing or refurbishing work. Instead, the After Repair Value (ARV) appraisal determines that.
As-Is Value also does not consider any potential repurposing of the property. An example is demolishing the existing structure and building offices or retail property. This is often called the highest and best use analysis, which considers the use that would yield the property’s maximum value. This analysis typically reviews what’s legally permissible, such as rezoning, physically possible, and financially feasible.
The importance of As-Is Value to investors is that it sets the baseline for determining the potential gross margin for fixing and flipping projects. The more accurate the appraisal of As-Is Value, the more likely the rest of the financial analysis of the project will be an accurate prediction of the project’s profitability.