How does the Appraiser determine the After Improved value for Section 203(k)?

After Improved Value refers to the value as determined by the Appraiser based on a hypothetical condition that the repairs or alterations have been completed. 

The Appraiser must make the appraisal “subject to the following repairs or alterations on the basis of a hypothetical condition that the repairs or alterations have been completed.”  The Appraiser must review the 203(k) consultant’s work write-up or the contractor’s proposal and cost estimates. The Appraiser must notify the Mortgagee of any health and safety issues in the property that are not addressed in the work write-up or proposal.  When the consultant or contractor has modified the work write-up or proposal, the Appraiser must complete the appraisal based on the final work write-up or the contractor’s final proposal and cost estimates. 

The Appraiser must include the work write-up or proposal as an exhibit to the appraisal report. 

For additional information see Handbook 4000.1 II.D.12.c.ii.  at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh


All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04197