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1004 conversion 1025

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farrisrd

farrisrd

Freshman Member
Joined
Jun 1, 2019
Professional Status
Certified Residential Appraiser
State
California
Context:

Built in 2017
Custom 1944 sf home in the coastal region of Carlsbad CA.

373 sf ADU (legal and permitted) and attached to the main structure with interior access from the main structure.
The ADU has a full kitchen, full bathroom, separate meters and separate entrance, with it's own mailing address (not shown in public records).
No bedroom.
Zoning: R-3 (multi family and SFR)

Per owner, the ADU was designed to possibly rent out in the future. This home and ADU are not rented.

The lender ordered a 1004 and now wants to convert to a 1025. This home is owner occupied and the ADU is used as a guest suite for family.
My gut feeling is that this is a home with an attached guest unit and does not qualify as a multifamily property. This area is made up of newer single family homes, condominiums, and multi family homes all with the same zoning. I am asking what other appraisers think of this situation as I do 99.9% of single family appraisal work and this doesn't sit well with me.
 
In my NSHO, an ADU is a ADU and not a duplex. I would just tell them to reassign and if you delivered the report already, tell them no. Now, pay me. The report complies with the engagement letter. Any post-report request is a NEW ASSIGNMENT.
 
Yeah they want to increase the fee. It just doesn't seem like it qualifies as a 2 unit project when it is owner occupied and the ADU is a accessed from the interior as well a separate entrance.
 
Does the legal use show SFR?
If so there is your answer.
Sounds like SFR to me.
It has interior access you say, sounds like GLA actually.
 
It is the appraisers job to choose the form. Tell them what form you will do the appraisal on and if they don't like it then tell them to take a hike.
 
Identify the most probable buyer for the subject property.

Most times when lenders try to do this flip a dip on form type it has something to do with either a loan limit issue or they need to use the income from both units to qualify the borrower. I'm assuming, in this case, it has to do with a loan limit issue.

The property sounds like an SFR with ADU, not a small residential income property.
 
It's not about "conversion" /witch the form, it is about what kind of property it is ( the form used matches the property, not the other way around ).

As others said, must determine what kind of property it is per zoning, HBU, physical characteristics etc. Sometimes lenders or clients get it wrong, appraiser has to hold their ground and it might mean loss of assignment if can not educate the client
 
farrisrd said:
Context:

Zoning: R-3 (multi family and SFR) Per owner, the ADU was designed to possibly rent out in the future. This home and ADU are not rented.
Click to expand...

well, there you go. permitted multi family, owner admits that's why he did it. h&b probable 2 unit. never see a real 2 unit owner occupied with family members? but then it depends on the comps. since it's always 50/50 on this blog on every discussion, i go with 2 family unless there are no comps. then i give it back,
or since you said it has 2 addresses you can appraiser house single family, semi-det. wasn't that a recent thread here?
 
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