ADU adjustment. Is this right?

[Charles West]

What was the intent of the owner, maybe they wanted to move into the new construction and turn the original house into an ADU? That question seems to be central to the problem.

 

[Joe Flacco]

California has completely blurred the lines as to what most have considered an ADU. They are starting to more resemble detached multi family properties. If it walk, talks and looks like.....................

Single family with ADU is a two unit property. It is not a income producing property (multi-family) if the probable buyer is not a investor.

 

[Elliott]

What exactly does an IT-professional do as an appraiser estimating market value? : )

 

[Dublin ohio]

Single family with ADU is a two unit property. It is not a income producing property (multi-family) if the probable buyer is not a investor.

I understand that concept. But it seems in CA the sky is the limit. With the proliferation of ADUs starting in CA. I find it hard to believe that they are building them for family members and I don't believe that was the intention of the changes allowing more ADUs.

 

[gorillakimchi]

If you can't find large ADUs, I would use a comp consisting of two detached homes on same lot about same size. I would get creative in using what I can get to have a convincing report.

That's interesting way to do. Thanks for your opinion

 

[gorillakimchi]

I think some of the regulators require an ADU to be smaller than the main house. Might check who this goes to.

I'm sorry for the confusion. Main dwelling is slightly bigger than ADU. Prob few sf? Anyway it's bigger and I revised the post

 

[Joe Flacco]

I understand that concept. But it seems in CA the sky is the limit. With the proliferation of ADUs starting in CA. I find it hard to believe that they are building them for family members and I don't believe that was the intention of the changes allowing more ADUs.

Yeah, I didn't read their rules but from the little bit I did read and based on zoning regulations outside of California where zoning with 2 units and separate zoning for single family with ADUs have existed for decades, it sounds like they should not call them ADUs. I am pretty sure they just called them ADUs to lessen the blow back of abolishing single family zoning.

 

[gorillakimchi]

What exactly does an IT-professional do as an appraiser estimating market value? : )

Enhancing AVM with AI to get rid of appraisers... I'm just kidding. I can't change my status. Currently have AR license. Thanks for asking

 

[gorillakimchi]

you seem to have some good info about their rentals. if you can develope a grm from those rentals, then you can use that grm to capitalize the monthly income difference for the adus. most appraisers don't come across your assignment of a larger adu. the difference in those adu comps income would give a $ difference. you need to explain how you got there as it might not be common to that underwriter. it's called capitalizing the difference in the income that would be earned. you didn't get paid enough for this one, but is can be a source for that derived adjustment, if they actually get more rent. i do believe we have an income approach block in the report.

That's very insightful advice for me Mr. Tom. I wish I could use that method in the future. Thank you!

 

[J Grant]

I am doing an assignment with a similar issue now - some ADU's are half the size of the others ( my subject ADU is a later one )

I am using a depreciated cost, what it costs to build an avg size ADIU ( 400-500sf in my area ) and what it costs to build a larger ADU ( 750-900 sf(, rounding it, depreciating it for age, and using the difference as the adjustment. I have used that method on other appraisals and find it works well for a contributory value.

In my area, not everyone rents the ADU; in fact, most of them are not rented. Since it is an SFR assignment, IMO, a rental comparison is not what I want to develop, though the higher rental rate of a larger ADU supports the contributory value adjustment.