ADU included in main dwelling

[gorillakimchi]

Check zoning and local building dept. Not owner. Is it legal per zoning. Zoning determination is also part of HBU (legally permitted)

Ok, I will check tomorrow but for sure it's legal since I live in California. SFR + 1 ADU won't be a problem

 

[J Grant]

If I respond that lower level is ADU, then I think I have to make a whole new report (taking new 6 comp photos, value, etc.) Also, there are no comps like subject in that market area. 1 comp has an extra kitchen in a guest house, but it's a detached guest house, so I don't think I can use it to support value & marketability as the reviewer requested.

You can absolutely use this home with a detached guest house as a comp With an ADU - as you are learning, it is lack of direct access to main dwelling which makes it an ADU - just explain in the comp it is detached - of course if you make the first floor an ADU the living area of whole will be reduced, so hopefully you have a comp of similar size to the new sf of main dwelling.

 

[Tom D]

i think most adu units would have an interior door to the main house, since it's usually a family member living there. my only thought is that it may have been done to rent out, you didn't mention who is in it. sometimes home owners try to get tricky to avoid zoning issue of having a tenant. of course they declare that rental money, i'm sure not.
i'm sure you are very happy now to have a smaller GLA house. but i think that 1 smaller GLA comp & the garage adu comp would solve the issue.

 

[J Grant]

i think most adu units would have an interior door to the main house, since it's usually a family member living there. my only thought is that it may have been done to rent out, you didn't mention who is in it. sometimes home owners try to get tricky to avoid zoning issue of having a tenant. of course they declare that rental money, i'm sure not.
i'm sure you are very happy now to have a smaller GLA house. but i think that 1 smaller GLA comp & the garage adu comp would solve the issue.

If there is an interior door into the main house, it is not an ADU ! (an ADU has no int access to main dwelling ) who lives there or if it is vacant is not the determination

It might be called a mother in law suite per the set up, if it has an int door.
An area can not simultaneously be an ADU and not an ADU - It is one or the other. If an ADU, we do not count it in living area ( even if tax assesor card or RE agents count it in living area ). Explain that MLS or tax recrods show the ADU as living area but that due to lack of access into main dwelling for appraisal it is considered an ADU.

 

[Sadie]

If there is an interior door into the main house, it is not an ADU ! (an ADU has no int access to main dwelling ) who lives there or if it is vacant is not the determination

It might be called a mother in law suite per the set up, if it has an int door.
An area can not simultaneously be an ADU and not an ADU - It is one or the other. If an ADU, we do not count it in living area ( even if tax assesor card or RE agents count it in living area ). Explain that MLS or tax recrods show the ADU as living area but that due to lack of access into main dwelling for appraisal it is considered an ADU.

Actually, its what local code requires for an ADU. Here, if there is an exterior type door separating the main house and the unit, if can be a legal ADU and legal to rent out to a non family member. There are lots of ADU's here, both attached and detached. Again, review your local code.

 

[Terrel L. Shields]

Do you really think there's no way to handle it?

No shortcuts.
Go to the muni office and see if it has permits. Cross your fingers it does. Then you likely will need one or all new comps including one with an ADU. From that sale you can determine the SF contributory value of the ADU (speculative as it might be- you "support" adjustments, not prove them.) Then redo the numbers, and do that explanatory task of saying if it affects the marketability (in other words did the ADU comp sale take a lot longer or not) etc.

 

[Terrel L. Shields]

most adu units would have an interior door to the main house, since it's usually a family member

Often they are small separate buildings too.

If there is an interior door into the main house, it is not an ADU

I don't think that is correct. FNMA doesn't say that. The defining issue is can the ADU be sold separate from the main house. And if it cannot it is an ADU. I think Tom is right, in that it's original utility was likely for a family member. After that family member moves or dies, then they may repurpose the property for an office, or a rental.

 

[J Grant]

Often they are small separate buildings too.

I don't think that is correct. FNMA doesn't say that. The defining issue is can the ADU be sold separate from the main house. And if it cannot it is an ADU. I think Tom is right, in that it's original utility was likely for a family member. After that family member moves or dies, then they may repurpose the property for an office, or a rental.
View attachment 56002

NO it is not contingent can ADU sold separate from main house !! Normally that is not the case. ADU means no entry direct egress from it into main dwelling and ADU has a kitchen (cooking facility ) and bath, and can either be attached or detached to main dwelling. THE END of it as a physical characteristic.

After determine that, then it is if the ADU had a permit pulled for construction . ( or was part of original construction/permit ). Then ask whether an ADU is legally allowed per zoning in area.

Fannie will lend on not permitted ( no permit pulled or found ) additions. I can understand that.
Incredibly ( to me ) Fannie will even lend on not legal additions - in certain cases. I think that is insane but I recall seeing it in their guidebook - somewhere ..

 

[spittman]

I'm currently working as a trainee & always thought ADU is a detached unit, but ...

... If I respond that lower level is ADU, then I think I have to make a whole new report (taking new 6 comp photos, value, etc.)

You don't have to answer this but I'm just curious as to why your mentor signed off on this or how did he/she mentor you through this process???

I'd say you don't have to necessarily redo the whole report. It's possible you can just make a few changes. The first time I came across this situation I included the ADU in the total square footage as well as all the comparable sales. When I got the revision request from the AMC, the head appraiser actually walked me through the process of separating. Can you believe that??!! An AMC actually did something to help me with the appraisal! Anyways, by the time we got done, my appraisal was still within 1% of what I originally valued it at. The way he explained it to me was that even though you have to make adjustments for the main GLA, the adu can still have contributory value just for being an adu. Sometimes the adjustments cancel each other out. In my market, even though, homeowner's do not always get permits for adu's, additions, or conversions, the market still perceives value in such things. It becomes evident when looking at other similar properties in the neighborhood.

So I am pulling for you OP, that all you have to do is just make a few changes to the report that have little affect on what your opinion of value originally was. And next time something like this comes up, please ask your mentor for advice first before coming to a forum where members know nothing about your market.

 

[Overimprovement]

I'm currently working as a trainee & always thought ADU is a detached unit, but today I figured that I was wrong after I researched forums for few hours.

Subject property : 3 stories. Spanish style over 3 millions. Total 3533 SF. lower level(493 SF) is not a basement(above grade) but doesn't have access from inside. Recently remodeled and equipped with small but full kitchen, office, living and bedroom.

I should've noticed this could be a problem when there's no access from inside the dwelling. However, due to lack of my experience & knowledge, I didn't even think that this area could be considered as ADU.

Conditions that I received from a reviewer

(1) Please confirm if the lower level functions as an ADU.
(2) According to the sketch, this area meets the functions of sleeping, sanitation, cooking, and living. If this area is an ADU, the appraiser to confirm if it is legally permissible.
(3) Please provide a SOLD Comp with similar ADU to support value and marketability. Thank you.

If I respond that lower level is ADU, then I think I have to make a whole new report (taking new 6 comp photos, value, etc.) Also, there are no comps like subject in that market area. 1 comp has an extra kitchen in a guest house, but it's a detached guest house, so I don't think I can use it to support value & marketability as the reviewer requested.

Please advise the best way to respond regarding reviewer's condition. Or do I have to work all over again & make a new report? (Oh no...)

You don't mention a bathroom, I assume this has one, else this thread will take on a new direction as it would not be an ADU.
Yes, you can use a detached ADU. It is the functionality and market acceptance, not the location, which matters.
Local codes may prohibit an attached ADU, so yes, that needs investigated too. Now that said, IF there used to be access to that area from the interior, or it could be easily put back (say by taking down one piece of sheetrock on both ends of a hidden staircase), then that changes things too. Simply having a basement with a kitchen, bathroom, and extra bedroom does not make an ADU. I have seen the stairwells blocked (but easily recovered). Just another piece of the puzzle to solve. It is uncommon (in my market at least) to have a finished area like that with no entry from the main dwelling, unless its intent from the beginning was being a duplex.

Are there separate utilities/driveway? Does it LOOK like a 2 unit dwelling? Would someone walking around the building think it was one or two units?

Are you a trainee? Or do you otherwise have a supervisor/mentor? They could assist in HABU analysis, which typically is done early on in the process. Pretty involved to get much assistance on a forum with that. One cannot value a property without knowing its HABU. Zoning, market needs, surrounding uses all come into play. Because once you determine WHAT to call this space, then it has to be valued, which is where HABU is your good friend. If its an illegal addition for instance, with no chance of variance or grandfathering, that obviously impacts value significantly. Problem with that is you then inadvertently become the zoning police and you may or may not want to do that to the borrower. Because if its illegal, it would have to be removed. But only if zoning knows about it. I usually only give an area or street name when I get answers to those types of questions. I don't get paid by the city to be their enforcement officers.

Good luck.