Rural property with "guest house" not adu.

[Debra]

Greetings,

I'm working on FHA property. We went to this very Rural property and to my surprise there were men living in detached buildings. One man had a bed and window air in an 8 x 10 shed which I'm just counting as shed. The homeowner's dad is living in another detached building that the homeowners said they converted from a shed. It's about the size of a detached 2 car garage or detached workshop in this area. It has a small kitchen/living area, small bedroom, small bathroom. It has one window air and no permanent heat. The client put it on hold for a while but then asked me to complete the report (maybe call it a guest house) to not count it as adu but maybe compare it to similar properties that have adu with no heat. I looked for comparable sales within 3 years and 10 miles. There are no sales with an adu or guest house. 3 of the 6 comparable sales within 10 miles do have detached wired workshops that are about the size of the subject's "guest house". Would you grid them on the same line and compare this and explain as the "guest house" could be used as a workshop. Or. would you just state that the "guest house" is an overimprovemet for the area and not given any value for the purpose of the FHA refinance report? or? I didn't know about the "guest house" till I arrived at the property and it's not on the tax/crs card. Please be nice. Tia for help.

 

[Tom D]

Never mlsname a use for a lender. And yes, different items can have different functional uses. Does an adu have to have permanet heat source, i haven't read that it does. Kitchen and bath, an adu or guest house, got me. Being detached gives you the option of just a minimal adjustment. The thought is not to have HUD not like what you did, lt can be painful. But you do need to describe it, and have photos.

Some here will tell you to call your local HUD office, which seems a good thought. And someine rural may have an answer here to.

 

[Zoe]

Since it has plumbing, it would have to have a heat source. On the other hand, many detached workshops have a small bath. It would not matter what you call it. The building would need a permanent heat source because of kitchen and bathroom plumbing.

Maybe in some areas if temperature never gets below freezing? The temp needs to stay at or above 50 degrees I think from a permanent heat source. If it is 70 degrees year around, probably doesn't matter. A window unit that heats and cools would do it or just a permanently attached electric heater.

 

[J Grant]

IDK if this is the "right" answer, but it is my answer- how I would handle this problem.

IMO, without a permanent heat source, the detached building is not habitable. Tennessee temperatures can freeze in the winter. Therefore, it is not a functional ADU or guest house. I would call it a flex-use detached building - that someone put a bedroom and kitchen in (not permitted?) Then I would use at least 2 sales with similar detached buildings, such as the workshops , as comps for a contributory value of the detached building.

You can not simply "give it no value" because it likely has some contributory value .

You need to take control of the assignment and tell the client how you are handling the issue and why. The client's order to you to find comps with an ADU with no heat source was ridiculous. Sometimes we are at odds with our client and have to take a stand -because in the end it is our name on the appraisal.

 

[Surf Cat]

In my opinion, you have to convey the distinction in your report between "what is" and "what is not", an ADU and a guest house.

The primary distinction is that an ADU is a legal, self-contained residence with a full kitchen and bathroom designed for long-term independent living or rental. Whereas a guest house, is an accessory structure intended for short-term, non-paying visitors and typically lacks a full kitchen (often restricted to a kitchenette). Hence, the name "guest" house.

Of course, you have to determine the legal status and zoning of what is and what is not allowed.

Go strictly by the book. There are no gray areas. It's not "sort of, kind of" an Adu or the guest house "could" be an Adu.... it is what it is.

3 or the 6 comparable sales within 10 miles do have detached wired workshops that are about the size of the subject's "guest house".

There you go, boom, you're done. Grid one or two of those and finish the report. Don't beat yourself up and pound your head on the desk trying to fit a square peg in a round hole.

 

[Terrel L. Shields]

the detached building is not habitable.

Unfortunately, they are habitable whether they meet someone's code or not. It does not mean they cannot be financed, but the financing is not going to be secondary market most likely. My brother once financed a small place deep in the woods that was a "2 pen" log cabin where the floor was packed with dried red clay. No subfloor at all and was lit by kerosene lantern. All built by the owner.

Over the years I've appraised a lot of oddballs. But trying to shoehorn what is there into an FHA appraisal? I don't think so and simply calling something an ADU is no better than calling kittens born in the oven "biscuits".

I have appraised at least 2 dairy barns that were made into living quarters. I've valued a hog farrowing house conversion when a father let his daughter and her husband move into his house on a farm, 2 chicken house coops into a house. Another was a former gas station made into a house that was rented out. All were on tracts with a regular house and none were financed conventional conforming loans. Any number of shops and barns have living quarters. And as standalone I've seen country churches and schools made into housing.

 

[Zoe]

In my opinion, you have to convey the distinction in your report between "what is" and "what is not", an ADU and a guest house.

The primary distinction is that an ADU is a legal, self-contained residence with a full kitchen and bathroom designed for long-term independent living or rental. Whereas a guest house, is an accessory structure intended for short-term, non-paying visitors and typically lacks a full kitchen (often restricted to a kitchenette). Hence, the name "guest" house.

Of course, you have to determine the legal status and zoning of what is and what is not allowed.

Go strictly by the book. There are no gray areas. It's not "sort of, kind of" an Adu or the guest house "could" be an Adu.... it is what it is.

There you go, boom, you're done. Grid one or two of those and finish the report. Don't beat yourself up and pound your head on the desk trying to fit a square peg in a round hole.

It is likely worth more than a workshop without a kitchen and bath. You could put workshop on a grid line and adjust upwards for kitchen and bath. I would have no problem calling it an ADU or a guest house.

On the same grid line you can adjust upwards for kitchen and bath. Heat source is only thing that could be a problem. The shed has window unit and the building with kitchen and bath has no permanent heat source. Easy fix.

When somebody visits, they could stay in that place if they wanted to. It could be teenager hang out or man cave. If they can afford a window unit in the shed, they can afford a window unit in the guest house. It could be a she shed. It could be a studio office.

 

[Terrel L. Shields]

"what is" and "what is not", an ADU and a guest house.

In the past, migrant pickers often lived in barrack-like structures called "migrant guest houses" in border country, cowboys lived in bunk houses or line camps. In my area, strawberry pickers lived in "Barracks". In fact, many locally were actually "temporary" barracks built at Ft. Chaffee or Camp Crowder (MO), sold after WWII and I know two such buildings in my career. One made into a bar in Jay, OK then into apartments (now gone) and one in Gentry, AR that is a small apartment of 4 units. The last one I knew was in Goodman, MO and likely has fell in as it was years ago the owner explained he had 40 acres of strawberries into the 1960s.

 

[Zoe]

In the past, migrant pickers often lived in barrack-like structures called "migrant guest houses" in border country, cowboys lived in bunk houses or line camps. In my area, strawberry pickers lived in "Barracks". In fact, many locally were actually "temporary" barracks built at Ft. Chaffee or Camp Crowder (MO), sold after WWII and I know two such buildings in my career. One made into a bar in Jay, OK then into apartments (now gone) and one in Gentry, AR that is a small apartment of 4 units. The last one I knew was in Goodman, MO and likely has fell in as it was years ago the owner explained he had 40 acres of strawberries into the 1960s.

yeah, I wouldn't call it an overimprovement. It is likely legally permissible. You could throw an EA it is legally permissible if it could not be verified.

Many places in Tennessee don't even have building code enforcement office. But somebody had to get sewage hookup to this place and other utilities.

 

[Dublin ohio]

Unfortunately, they are habitable whether they meet someone's code or not

FHA requires a permanent automatic heat source for it to be called habitable.