How to Appraise a Partly Built House

Introduction

Not all homes hit the market fully finished. Whether due to financial challenges, builder delays, or changes in ownership, some properties are sold or refinanced while still under construction. In these cases, a standard appraisal won’t cut it—because you’re not just valuing a house; you’re valuing a work-in-progress.

At Cade Appraisals Inc., we frequently assist homeowners, developers, and lenders in Niagara, Hamilton, and across Southern Ontario with professional appraisals for partially built houses. Here’s everything you need to know about how this unique process works, and why getting it right matters.

What Is a Partly Built House?

A partly built house is any residential property where construction has started, but the home is not yet finished or ready for occupancy. Common scenarios include:

• The foundation and framing are complete

• The roof is on, but no insulation or drywall

• Plumbing and electrical rough-ins are installed, but no fixtures

• Finishes like flooring, cabinets, or bathrooms haven’t been completed

Whether the home is 20% built or 90% complete, the appraisal must reflect current progress and market conditions.

Why Would You Appraise an Incomplete Home?

There are several reasons a partly built house might need an appraisal:

• Selling the property as-is

• Refinancing mid-construction

• Construction loan progress reporting

• Estate or divorce settlements

• Power of sale or foreclosure

In each case, the goal is to determine the fair market value “as is”, with a possible secondary value “as if complete.”

Step-by-Step: How Appraisers Value a Partly Built House

1. Assess the Stage of Completion

First, the appraiser inspects the site to determine what’s been completed. Key components include:

• Foundation

• Framing

• Roofing

• HVAC, electrical, and plumbing rough-ins

• Insulation, drywall, flooring

• Interior and exterior finishes

The more complete the structure, the closer the appraiser can get to a traditional valuation.

2. Verify Permits, Plans & Zoning

Appraisers will request and review:

• Site plans and architectural drawings

• Building permits to ensure construction is legal and approved

• Zoning compliance with local bylaws

Unpermitted work or zoning issues can reduce value and make resale or financing more difficult.

3. Estimate Land Value

Using the Direct Comparison Approach, the appraiser will determine the value of the lot itself by comparing it to recent land-only sales in the area.

4. Calculate the Value of Improvements

Appraisers use the Cost Approach to estimate the value of the work completed so far. This includes:

• Material and labor costs

• Depreciation for weather-exposed or aging components

• Any deterioration due to delays or abandonment

Reliable cost sources may include:

• Marshall & Swift/Altus data

• Contractor quotes

• Developer budgets

5. Estimate the Remaining Cost to Complete

To assess marketability, the appraiser estimates how much it will cost a buyer to finish the project. Buyers often subtract this amount from their offer, so it must be factored into market value.

6. Analyze the Local Market

A key part of the appraisal is determining how buyers and lenders view incomplete homes in the area. Appraisers look at:

• Recent sales of similar partly built or distressed properties

• How long those homes sat on the market

• Typical discounts offered for unfinished work

• Demand for investment properties vs. family buyers

7. Use Hypothetical or Extraordinary Assumptions (If Required)

Sometimes, a lender or seller wants to know what the property will be worth once it’s finished. In that case, the appraiser may provide a second value “as if complete,” based on:

• Plans and finish specifications

• Local market conditions for completed homes

• A hypothetical assumption that the home will be finished to code and in good condition

This is clearly labeled in the report to avoid confusion.

Common Risks that Affect Value

Appraisers must factor in risks like:

• Limited financing availability for unfinished homes

• Unknown construction quality or defects

• Permit violations or stop-work orders

• Reduced buyer pool (many buyers prefer move-in ready homes)

• Insurance issues for exposed or unsecured structures

These factors reduce buyer demand, which can directly lower value.

What Clients Should Provide to Help the Process

To ensure an accurate and timely appraisal, have the following ready:

✅ Site plan and floorplans

✅ Building permits

✅ Progress photos

✅ Estimated cost-to-complete

✅ List of finishes or upgrades planned

✅ Budget or contractor quotes (if available)

Final Thoughts

Appraising a partly built home isn’t guesswork—it’s a structured process backed by market data, construction cost analysis, and professional valuation principles.

Whether you’re looking to sell a stalled project, secure financing, or just understand your property’s value, a qualified appraiser can help you make smart decisions—even when the job’s not finished.