ADU guidelines updated.

[Fernando]

Actually it is more difficult since they are not common, at least in my markets

Like I said, it's easy to do ADUs in Ohio since there aren't that many homes with ADUs to deal with.
And if assignment has an ADU, skip it and let another sucker appraiser take it.

 

[sputnam]

Appraisers need to stand firm with the theories and principles of appraising. Just because Realtors and the state call then ADUs.. doesn't mean appraisers must and it also doesn't change what the property is. Lenders have allowed appraisals of SFRs with one ADU to be reported on the 1004. That does not change the fact that it is a property with two dwelling units. A property with a main dwelling and 2 or 3 or more "ADUs" is a multiple unit residential property. What you call it... and the hoops you may jump through to make a Client happy... does not change what is on the ground.

 

[DWiley]

No problem with that - I was referencing Fannie approving non-permitted and not legal properties (including ADUs)

Please provide a citation for either GSE stating that they will purchase a loan on a "not legal" property.

 

[J Grant]

Please provide a citation for either GSE stating that they will purchase a loan on a "not legal" property.

Illegal per zoning property (or portion of the property ) is the term .

 

[J Grant]

AI Overview


+5




Fannie Mae allows financing for properties with legal ADUs and can accept certain illegal (unpermitted) ADUs if they are typical for the area, safe, and do not violate zoning to the point of being uninsurable. The illegal unit must be appraised based on current use, and the appraiser must demonstrate market acceptance.
Fannie Mae +2
Key Guidelines for Illegal ADUs/Additions

• Safety & Utility: The unit must be safe, functional, and include a kitchen, bathroom, and sleeping area.
• Appraisal: The appraiser must report the, "illegal" use, and use at least two comparable sales with similar non-compliant (unpermitted) features.
• Marketability: The illegal addition must not negatively impact the marketability of the property.
• Zoning: If the ADU is forbidden by zoning, the lender must confirm it will not affect future insurance claims.
  Fannie Mae +4

Illegal Additions (Not a Separate Unit)
If an illegal addition is not a separate unit (e.g., converted garage, added bedroom), it can often still be financed, provided it was constructed in a "workmanlike manner". The appraiser will base the value on its current condition and market acceptance rather than code compliance.
LinkedIn
Potential Risks

• Lenders may require the seller to obtain retroactive permits.
• If the illegal unit is deemed a safety risk or severely violates local laws, the loan may be denied.
  Fannie Mae +2

 

[Fernando]

Whether ADU legal or not, appraiser needs to know how the utility is set up. Are there separate water and electrical meters? What about the ADU comps? Market gives different values for different ADUs.
Despite being a 2nd dwelling unit, SFR with ADU is not same as a permitted original 2 unit building.

 

[Digger88]

looks good to me

 

[Dublin ohio]

Whether ADU legal or not, appraiser needs to know how the utility is set up. Are there separate water and electrical meters? What about the ADU comps? Market gives different values for different ADUs.
Despite being a 2nd dwelling unit, SFR with ADU is not same as a permitted original 2 unit building.

I will give you credit for one thing. You are king of the obvious

 

[Fernando]

Fernando, keeping appraisers grounded.
Appraisers overthink issues when what matters is how the market perceives the issue in market value.
USPAP could have been simplified and easier to understand.
And UAD 3.6 was unnecessary and made appraising more difficult. Bureaucrats.

 

[alebrewer]

Well, the GSE bribe of opening additional products - if and only if they're reported on the 3.6 - is working out for them. Just got my first 3.6 request. And, of course, it's not a typical appraisal. It's a manufactured home with ADU - which the GSE's have said they will securitize only if reported on 3.6. So now this group is calling every appraiser within a 2 hour radius of the subject. To do their first 3.6 on a product that has - up until now - not been a product that most appraisers would have experienced. Good luck to them!