• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

2-4 family in Chicago

CVal

Thread Starter
Freshman Member
Joined
Jan 17, 2017
Professional Status
Certified General Appraiser
State
Illinois
Hello,

I've got an illegal, garden level unit leased. I've seen this handled a couple of ways. Some are calling it finished basement and excluding it from gba, room count and income and I can understand why. I'm leaning toward including it in gba and room count and income, as its pretty typical to see landlords renting these in this market. Two of my sales sold this way. You can address the risk of losing the income, making a line item adjustment in the grid and maybe discuss the issue when deriving a grm. I would just like to hear some other opinions. Thanks. On a related issue, would most lenders crap their pants if the illegal box is checked?
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
If it is not a legal use, the basement unit does not meet the test of H&BU RE: legal.

The basement unit may well have value, but, I would not be including rent from an illegal use in the Income Approach.

We have to report the use being made of a property. Your reporting will include the fact that the basement area is rented but such is not permissible--I take it that you have possession or have seen the Zoning Certification, yes?

Right now I await an owner obtaining a Zoning Cert on what he purports to be a legal 4-unit as I am not about to appraise one of these Chicago nightmares lacking the Cert that tells what--exactly--is legally permissible.
 

Lee in L.A.

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Hope that's not my friends building in Bucktown. :leeann2:
 

CVal

Thread Starter
Freshman Member
Joined
Jan 17, 2017
Professional Status
Certified General Appraiser
State
Illinois
If it is not a legal use, the basement unit does not meet the test of H&BU RE: legal.

The basement unit may well have value, but, I would not be including rent from an illegal use in the Income Approach.

We have to report the use being made of a property. Your reporting will include the fact that the basement area is rented but such is not permissible--I take it that you have possession or have seen the Zoning Certification, yes?

Right now I await an owner obtaining a Zoning Cert on what he purports to be a legal 4-unit as I am not about to appraise one of these Chicago nightmares lacking the Cert that tells what--exactly--is legally permissible.
Thanks Lee. Owner admits that he does not have the zoning cert. The basement unit is leased to a tenant but it is not legal. I know they could lose the income, but one of my sales had a leased garden unit and its not uncommon for the area. Thus, I was thinking of including the income.
 

KHS445

Member
Joined
Aug 20, 2011
Professional Status
Appraiser Trainee
State
Michigan
Frankly I would consider including multiple valuations and let the client decide how they want to proceed. First would be to consider the sales and income approaches using the subject's HBU (including legally permissible). Making sure to clearly state this valuation is based on what is legally permissible. I would then include the income and sales approach to value for the property based on its present use and configuration. Again clearly stating that these values are based on the present use and configuration, which are not legally permitted.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Thanks Lee. Owner admits that he does not have the zoning cert. The basement unit is leased to a tenant but it is not legal. I know they could lose the income, but one of my sales had a leased garden unit and its not uncommon for the area. Thus, I was thinking of including the income.
I much understand what is common, but, I would not include an income from something that is not permitted by zoning.
 

CVal

Thread Starter
Freshman Member
Joined
Jan 17, 2017
Professional Status
Certified General Appraiser
State
Illinois
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks