ADU & GLA

[togatour]

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

From your original post you note you are worried about skewing the comps GLA with the subject's because the tax records will show the full GLA for similar comps while you can not include the subject's ADU GLA even though you will make an adjustment for the ADU.

Depending on you MLS search parameters you may be able to identify similar comparable by searching for key words (ADU, IN-LAW, APARTMENT, ECT.). When you identify some of these and can reasonably assume they are a similar ADU, call the listing agent to get an idea of the size of the comparable sales ADU and you can treat it consistently with the subject by estimating the GLA of ADU and backing it out of the tax record GLA if you are sure it is included there. Just dont forget to adjust for it separately like you will do for the subject's GLA.

 

[Tom D]

Fannie has gotten anal about adu, so just read their rules, some of you haven't.
B2-3-04, Special Property Eligibility Considerations (10/04/2023)

B2-3, Property Eligibility

This chapter includes information on property eligibility requirements.

selling-guide.fanniemae.com

You want to see B2-3-04

 

[Webbed Feet]

Given I've not read a single post saying... hey wait a moment, what is the definition of value to be used, what does this market say about highest and best use involving such situations, and where is the APPRAISER's determination of the Scope of Work? Why does this bank think they run the world when it comes to the use of correct appraisal methodologies? You bet, hire an expert and then tell them what to do to fit a round peg in a square hole. I am with Surfcat... I'd decline and move onto other worthwhile assignments. My mantra today is give me a call once you're interested in market value versus trying to make a property fit some loan by asking me to doctor up a report to do it.

 

[Dublin ohio]

Given I've not read a single post saying... hey wait a moment, what is the definition of value to be used, what does this market say about highest and best use involving such situations, and where is the APPRAISER's determination of the Scope of Work? Why does this bank think they run the world when it comes to the use of correct appraisal methodologies? You bet, hire an expert and then tell them what to do to fit a round peg in a square hole. I am with Surfcat... I'd decline and move onto other worthwhile assignments. My mantra today is give me a call once you're interested in market value versus trying to make a property fit some loan by asking me to doctor up a report to do it.

The OP said it was for Fannie. So one would think that Fannie guidelines would apply. But you do you

 

[Terrel L. Shields]

So one would think that Fannie guidelines would apply.

Again, fanniespeak should be required to have a separate ethic document and USPAP not be applicable. So, you end up with FANSPAP.

 

[Webbed Feet]

The OP said it was for Fannie. So one would think that Fannie guidelines would apply. But you do you

That doesn't matter as those are guidelines, not rules. Rules, by lenders and even the secondary mortgage market, should never be allowed to trump USPAP or things end up where the venerable Mr. Shields indicated. One of the largest problems in the real estate appraisal field that involves any sort of lending, and something like ~92% of the appraisers, is the answers from the experts (and that is supposed to be us) instead of being "I will let you know my decision regarding the property, these guidelines, and your request." a long time ago became nothing else other than "Yes, Master!" You know, that ~92%? If it wasn't for the fact they get paid it would be called slavery. But they do get paid, at least most of the time, so it is called something else much less flattering instead. <smile>

I laud the OP for posting and asking, to me it shows the person cares and is trying. But I suspect they also know the client's request to skew the scope like that makes no sense at all, does not aid anything at all regarding obtaining a quality opinion of market value, and makes crafting a USPAP compliant and comprehendible report a total pain the tail feathers. So Here they are and wondering if everyone else would do it (wondering how everyone else would do it is the same thing).

"We have an appraisal order requirement. We need you to separate out the contributory values, in one lump sum, of the doorknobs, windows, gutters, and foundation. That is to be put on a separate row of the sales comparison with it all separated out from any value that reflects the gross living area." Thanks!!!