ADU & GLA

[SierraMV]

I'm working on an assignment with a separate living area that is contiguous with the rest of the dwelling. The new owners plan on using this for their older teens. The bank has stated that I must separate this out into a separate ADU and give in contributory value. However, it is a large area, and the decreased GLA would not be indicative of what/why the sellers are actually purchasing the property, it would also significantly skew the comps, by needing to use comps with much smaller GLA. All public records have the entire living area included in the GLA and comparable sales with similar ADU's are not sectioned out either. I'm a little stumped, do I not call it an ADU and just use it as guest quarters? TIA

 

[Dublin ohio]

I'm working on an assignment with a separate living area that is contiguous with the rest of the dwelling. The new owners plan on using this for their older teens. The bank has stated that I must separate this out into a separate ADU and give in contributory value. However, it is a large area, and the decreased GLA would not be indicative of what/why the sellers are actually purchasing the property, it would also significantly skew the comps, by needing to use comps with much smaller GLA. All public records have the entire living area included in the GLA and comparable sales with similar ADU's are not sectioned out either. I'm a little stumped, do I not call it an ADU and just use it as guest quarters? TIA

Does it have it's own entrance, is it accessible from the rest of the home, is it Fannie/Freddie, how big is the "adu" compared to the total area?

 

[Terrel L. Shields]

how big is the "adu" compared to the total area?

An ADU should be smaller than the GLA. If the ADU cannot be locked out of the GLA then it isn't an ADU, it is just 2 living area which probably represents some sort of over-improvement (Functional obsolescence).

 

[Dublin ohio]

An ADU should be smaller than the GLA. If the ADU cannot be locked out of the GLA then it isn't an ADU, it is just 2 living area which probably represents some sort of over-improvement (Functional obsolescence).

The OP leaves us "hanging" with their description. What does "separate" living area mean. Does it have a kitchen, separate ingress/egress, is it subordinate in size to the main living area, is it for Fannie/Freddie

 

[J Grant]

I'm working on an assignment with a separate living area that is contiguous with the rest of the dwelling. The new owners plan on using this for their older teens. The bank has stated that I must separate this out into a separate ADU and give in contributory value. However, it is a large area, and the decreased GLA would not be indicative of what/why the sellers are actually purchasing the property, it would also significantly skew the comps, by needing to use comps with much smaller GLA. All public records have the entire living area included in the GLA and comparable sales with similar ADU's are not sectioned out either. I'm a little stumped, do I not call it an ADU and just use it as guest quarters? TIA

If a part of the dwelling has no interior access into the rest of the dwelling and only has exterior access, then per ANSI and lender guidelines, it is counted separately in sf and given value set on a line item. Regardless of what the new owners want or what it does to value. Or whether ir makes a sale price or not.

You can mix your comps and if the subject GLA is smaller without this added segment, then the comps GLA won' be that much smaller - and you can always use one or two comps without an aDU.

Do not get tempted to fudge things by calling it a guest house, which is just a label. Whatever you call it, if the only egress is exterior, it is not part of the total GLA living sf.

That said, I do not value ADUs or guest houses by SF - they get a line item adjustment, and with the cost to build so high now, that adjustment has gone up considerably in many cases.

 

[SierraMV]

Does it have it's own entrance, is it accessible from the rest of the home, is it Fannie/Freddie, how big is the "adu" compared to the total area?

It has its own entrance and is accessible to the rest of the home. There is a door in the kitchen that leads to "adu". The ADU is 1,075sf, which would leave the main dwelling at 1,743sf.

 

[SierraMV]

If a part of the dwelling has no interior access into the rest of the dwelling and only has exterior access, then per ANSI and lender guidelines, it is counted separately in sf and given value set on a line item. Regardless of what the new owners want or what it does to value. Or whether ir makes a sale price or not.

You can mix your comps and if the subject GLA is smaller without this added segment, then the comps GLA won' be that much smaller - and you can always use one or two comps without an aDU.

Do not get tempted to fudge things by calling it a guest house, which is just a label. Whatever you call it, if the only egress is exterior, it is not part of the total GLA living sf.

That said, I do not value ADUs or guest houses by SF - they get a line item adjustment, and with the cost to build so high now, that adjustment has gone up considerably in many cases.

It is accessible from the inside of the 'main' dwelling. There is an interior door between the main area and other living area 'ADU'

 

[Dublin ohio]

There is a door in the kitchen that leads to "adu"

So can the door to the adu from the kitchen be locked from the ADU side or is it a pass thru door. Does the ADU have it's own kitchen

 

[J Grant]

It is accessible from the inside of the 'main' dwelling. There is an interior door between the main area and other living area 'ADU'

If there is an interior door connecting the two areas, then it is not an ADU. It is a living area that might have a second kitchen. IDK if the bank is correct in what they are telling you, or why. Idk what sketch or information you gave them to help them conclude that. They also could be wrong, and then you have to hold your ground if that is the case.

BTW, as far as I am aware, Fannie will finance houses that have a second kitchen. A change from their old guidelines, But every lender is different and might have ther own rules about what they will and will not lend on.

Of course, I have not seen the property so can only advise off of the post intel-

 

[SierraMV]

The OP leaves us "hanging" with their description. What does "separate" living area mean. Does it have a kitchen, separate ingress/egress, is it subordinate in size to the main living area, is it for Fannie/Freddie

Sorry, it is for Fannie/Freddie. There is a kitchen, full bathroom and living area. The ADU is 1,075sf and the main dwelling is 1,743sf. There is an interior door between the two areas that can be shut. It also has access from the outside.