ADU adjustment. Is this right?

[David S]

Good afternoon!

Recently, I've been seeing more ADUs with flipped houses and wondering about their appraisal value.

A few years ago, 400-500 sq ft ADUs with 1 bed/1 bath were common in CA, and a general contractor mentioned it cost around 80-100K to build.

Recently, I saw a 1000 sq ft, 3 bed/2 bath brand new ADU and the property owner told me that he spent around 300K. The main dwelling is only around 1000 sq ft. Should we still call it an accessory dwelling unit? Lol.

By the way, ADUs are getting bigger and better, so I don't think it's appropriate to compare them with the 400 sq ft ADUs built a few years ago.

When my assignment includes an ADU, I first search for properties with ADUs and check the details. Most of the ADUs I find have 1 bed/1 bath, so I don't know how to adjust for a 3 bed/2 bath ADU.

3 bed/2 bath ADUs over 1000 sq ft might become common in a few years, but they are not typical right now. I know I need to assign more value to a 3 bed/2 bath ADU, but I'm not sure how to proceed.

Can you please advise if you have any suggestions? I can upload photos if you'd like to see that humongous ADU. Lol.

Thank you

Thank you for bringing the topic up!. I am wondering how to do the assignment with ADU too. Right now I just turn it down or say lack of experience. Ideally, we shall find a comp with the ADU. But in my local market, lots of properties with ADU now but very few resale. Which means I couldn't get comp from MLS or I don't know how to search / filter comps with / without ADU. Even worse, some realtor didn't report / input ADU info into MLS. If you find out some way, please shot me a message.
You can't just use $400 or $500 / sq ft to value the ADU directly. They are some legal interest right value there. Like they have separate mailing address, utility account etc. I heard it can sell separately soon, treat it as an condo. Have to use the comp with ADU.

 

[J Grant]

Thank you for bringing the topic up!. I am wondering how to do the assignment with ADU too. Right now I just turn it down or say lack of experience. Ideally, we shall find a comp with the ADU. But in my local market, lots of properties with ADU now but very few resale. Which means I couldn't get comp from MLS or I don't know how to search / filter comps with / without ADU. Even worse, some realtor didn't report / input ADU info into MLS. If you find out some way, please shot me a message.
You can't just use $400 or $500 / sq ft to value the ADU directly. They are some legal interest right value there. Like they have separate mailing address, utility account etc. I heard it can sell separately soon, treat it as an condo. Have to use the comp with ADU.

On my MLS , and MLS tends to have similar formats, the agents do not use the term ADU on a listing. They put an ADU in the" guest house" line of a listing. If you do not understand how to put in different lines on a listing to input for a search, such as guest house or screen patio, etc, call or email your local RE board for help.

Sometimes, if I am short on comps with a guest house/ADU, I will use a sale with a similar value workshop or detached garage /workshop building for comp and search back further in time and in the distance.

 

[Carnivore]

Another wrinkle in this ADU or Multiple ADU's is consideration must also be given to the Income Approach to value. The GSE's don't require income or cost approach to value. So GRM's may be tough to find. USPAP doesn't 'require that either but that depends on your client/intended users.

I think I got that right.

 

[David S]

On my MLS , and MLS tends to have similar formats, the agents do not use the term ADU on a listing. They put an ADU in the" guest house" line of a listing. If you do not understand how to put in different lines on a listing to input for a search, such as guest house or screen patio, etc, call or email your local RE board for help.

Sometimes, if I am short on comps with a guest house/ADU, I will use a sale with a similar value workshop or detached garage /workshop building for comp and search back further in time and in the distance.

The problem is our MLS doesn't have search function for ADU, guest house etc. I called MLS board, they said they mainly service for realtors. They will not change or revise the MLS function just for appraiser use although we paid the fee.

 

[J Grant]

The problem is our MLS doesn't have search function for ADU, guest house etc. I called MLS board, they said they mainly service for realtors. They will not change or revise the MLS function just for appraiser use although we paid the fee.

That's odd since RE agents like to also search by features, such as a guest house, pool, etc., but maybe your MLS just sucks !

 

[Terrel L. Shields]

That's odd since RE agents like to also search by features, such as a guest house, pool, etc., but maybe your MLS just sucks !

Really. I mean I've never been on an MLS where you couldn't simply search by a keyword just as "mother in law" "granny" "ADU" "second" etc.

 

[Dublin ohio]

Really. I mean I've never been on an MLS where you couldn't simply search by a keyword just as "mother in law" "granny" "ADU" "second" etc.

Our MLS doesn't have an ADU field. But the do have an MIL . But other than that I do the keyword search, in law, guest house, second house, etc. Had on I appraised for a purchase. They listed pool house. But when reading the commentary. It turned out it was a fully functional detached ADU next to the pool

 

[Zoe]

Good afternoon!

Recently, I've been seeing more ADUs with flipped houses and wondering about their appraisal value.

A few years ago, 400-500 sq ft ADUs with 1 bed/1 bath were common in CA, and a general contractor mentioned it cost around 80-100K to build.

Recently, I saw a 1000 sq ft, 3 bed/2 bath brand new ADU and the property owner told me that he spent around 300K. The main dwelling is only around 1000 sq ft. Should we still call it an accessory dwelling unit? Lol.

By the way, ADUs are getting bigger and better, so I don't think it's appropriate to compare them with the 400 sq ft ADUs built a few years ago.

When my assignment includes an ADU, I first search for properties with ADUs and check the details. Most of the ADUs I find have 1 bed/1 bath, so I don't know how to adjust for a 3 bed/2 bath ADU.

3 bed/2 bath ADUs over 1000 sq ft might become common in a few years, but they are not typical right now. I know I need to assign more value to a 3 bed/2 bath ADU, but I'm not sure how to proceed.

Can you please advise if you have any suggestions? I can upload photos if you'd like to see that humongous ADU. Lol.

Thank you!

I'm with you. It's okay. You will not be able to extract market reaction other than cost approach.

If it is rented, you another problem.


You also have to be concerned with local code and if it is legally permissible. That is local on subject location. I think I covered your concerns.

 

[Zoe]

I am focusing on Market value as your value definition. I have no idea what value definition you are using. That could totally destroy anything I posted.

The primary reason I say post that is MV definition is only definition that requires H&B use. Be careful.

We have some local jurisdictions that are tough.

 

[Zoe]

Let me throw this at you for fun. Your in sunshine state.

Subject ADU is located beach front with gorgeous view. Excellent quality and condition. Rents for lets say $3000 weekend. 2 night stay. Legally permissible MV definition.

With me?