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Accessory Unit Or Duplex

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Thomas Fiehler

Senior Member
Joined
Jun 2, 2003
Professional Status
Certified General Appraiser
State
Ohio
I have an order to schedule and lender says it is a single family with an accessory unit. It is currently listed in the MLS as a multi-family with comment that it can be converted to single family. Zoning map indicates single family but could be legal non-conforming (haven't checked yet). So what are the differences between the two?
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
So what are the differences between the two?

Interest rates imposed by lender. SFR is preferred over multifamily.

SFR with accessory unit usually has one mailbox, one meter each for water, power, gas whereas multifamily duplex will have 2 each per unit.
 

Thomas Fiehler

Senior Member
Joined
Jun 2, 2003
Professional Status
Certified General Appraiser
State
Ohio
UPDATE: Location is urban and this is an old building. MLS reports that owner pays utilities and the heat/electric is then divided by both tenants and they pay 1/2 each. It is not unusual for owner to pay utilities in this area for the older rentals.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Ah Ha! You just solved the problem yourself. "Tenant".
 

J Grant

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Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Typically, a SFR with accessory unit is configured as what it says it is...the SFR is usually larger than the accessory unit, and the SFR as a stand alone residence is as livable and marketable as a house,a house that has a detached or attached separate entrance unit or building that might or might not be rented.... ( Some ADU are used for family members, home office use, guest house for visitors and are not rented ) The zoning is usually single family with ADU permitted, or grandfathered in for the ADU ( though they can be present in mixed use or multi family zoned areas as well) Usually one street address and utility bill for both properties, but there are exceptions.

Whereas a duplex/two family is usually built as such, or has appeal as such, though an owner may live on one side, often one or both units are rented and they exist to be rental units....and have separate utilities and usually separate addresses. The zoning is multi family or grandfathered use of the duplex /similar.

It is the combination of HBU of the property, market appeal, who is the likely buyer...an investor looking to rent the units, someone looking for a house with a smaller unit for family members with rental use secondary, zoning etc...what kind of property it is t can be a judgement call but it's a judgement call the appraiser should make, not the lender.
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
UPDATE: Location is urban and this is an old building. MLS reports that owner pays utilities and the heat/electric is then divided by both tenants and they pay 1/2 each. It is not unusual for owner to pay utilities in this area for the older rentals.

So, is the HBU SFR or Multifamily?
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
So, is the HBU SFR or Multifamily?
agreed. I think the first place the OP needs to check is zoning. No matter what the agent, owner or lender think it is, zoning will be the first key in HBU - legally permissible.
 

Rob Frazier

Sophomore Member
Joined
Jul 6, 2005
Professional Status
Certified General Appraiser
State
Maryland
1. Apply all FOUR tests of the Highest and Best Use Analysis. 2. That will determine what it is. 3. appraise it accordingly. Forget all of the old wives taies abouit meters, doors, inside access, etc. you will consider those issues under physically possible and financially feasible. Remember FOUR TESTS. that makes is easy to solve and credible to the user.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I'm not sure Highest and Best Use really solves the issue. I do agree we should consider it; however, often the present use, if legally permissible, is the determining factor. An accessory unit, to my understanding, is not generally to be used as income producing.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I'm not sure Highest and Best Use really solves the issue. I do agree we should consider it; however, often the present use, if legally permissible, is the determining factor. An accessory unit, to my understanding, is not generally to be used as income producing.

I think H&BU analysis would resolve the issue.
Who is the likely buyer and what would they do with the property? If what they would do with it is legally permissible (SFR, duplex, or SFR + Accessory unit) then that is the answer.

Remember; if there are competing uses (and different buyers for each of those uses) then the likely buyer (not an individual buyer, but a buyer-type) is the one who will pay more than the others. The likely buyer's use, therefore, is going to be the H&BU because it is the maximally productive and (presumably) legal use of the improvements.
 
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