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ADU included in main dwelling

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J Grant said:
If I respond that lower level is ADU, then I think I have to make a whole new report (taking new 6 comp photos, value, etc.) Also, there are no comps like subject in that market area. 1 comp has an extra kitchen in a guest house, but it's a detached guest house, so I don't think I can use it to support value & marketability as the reviewer requested.

You can absolutely use this home with a detached guest house as a comp With an ADU - as you are learning, it is lack of direct access to main dwelling which makes it an ADU - just explain in the comp it is detached - of course if you make the first floor an ADU the living area of whole will be reduced, so hopefully you have a comp of similar size to the new sf of main dwelling.
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I appreciate your opinion. I just submitted a revised report...
 
J Grant said:
If there is an interior door into the main house, it is not an ADU ! (an ADU has no int access to main dwelling ) who lives there or if it is vacant is not the determination

It might be called a mother in law suite per the set up, if it has an int door.
An area can not simultaneously be an ADU and not an ADU - It is one or the other. If an ADU, we do not count it in living area ( even if tax assesor card or RE agents count it in living area ). Explain that MLS or tax recrods show the ADU as living area but that due to lack of access into main dwelling for appraisal it is considered an ADU.
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I will keep in mind your explanation. Thank you
 
Terrel L. Shields said:
Often they are small separate buildings too.

I don't think that is correct. FNMA doesn't say that. The defining issue is can the ADU be sold separate from the main house. And if it cannot it is an ADU. I think Tom is right, in that it's original utility was likely for a family member. After that family member moves or dies, then they may repurpose the property for an office, or a rental.
View attachment 56002
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I like that picture & want to see more details. Can you please share the link if it's possible?
 
S is for spittman said:
You don't have to answer this but I'm just curious as to why your mentor signed off on this or how did he/she mentor you through this process???

I'd say you don't have to necessarily redo the whole report. It's possible you can just make a few changes. The first time I came across this situation I included the ADU in the total square footage as well as all the comparable sales. When I got the revision request from the AMC, the head appraiser actually walked me through the process of separating. Can you believe that??!! An AMC actually did something to help me with the appraisal! Anyways, by the time we got done, my appraisal was still within 1% of what I originally valued it at. The way he explained it to me was that even though you have to make adjustments for the main GLA, the adu can still have contributory value just for being an adu. Sometimes the adjustments cancel each other out. In my market, even though, homeowner's do not always get permits for adu's, additions, or conversions, the market still perceives value in such things. It becomes evident when looking at other similar properties in the neighborhood.

So I am pulling for you OP, that all you have to do is just make a few changes to the report that have little affect on what your opinion of value originally was. And next time something like this comes up, please ask your mentor for advice first before coming to a forum where members know nothing about your market.
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He's sick. I can't believe AMC did help you lol. I got two new comps, excluded ADU SF, lots of adjustment,(not so simple), changing pics, re sketching etc...it took around 6 hours and just finished. I hope that I don't get a 2nd revision for something else
 
Overimprovement said:
You don't mention a bathroom, I assume this has one, else this thread will take on a new direction as it would not be an ADU.
Yes, you can use a detached ADU. It is the functionality and market acceptance, not the location, which matters.
Local codes may prohibit an attached ADU, so yes, that needs investigated too. Now that said, IF there used to be access to that area from the interior, or it could be easily put back (say by taking down one piece of sheetrock on both ends of a hidden staircase), then that changes things too. Simply having a basement with a kitchen, bathroom, and extra bedroom does not make an ADU. I have seen the stairwells blocked (but easily recovered). Just another piece of the puzzle to solve. It is uncommon (in my market at least) to have a finished area like that with no entry from the main dwelling, unless its intent from the beginning was being a duplex.

Are there separate utilities/driveway? Does it LOOK like a 2 unit dwelling? Would someone walking around the building think it was one or two units?

Are you a trainee? Or do you otherwise have a supervisor/mentor? They could assist in HABU analysis, which typically is done early on in the process. Pretty involved to get much assistance on a forum with that. One cannot value a property without knowing its HABU. Zoning, market needs, surrounding uses all come into play. Because once you determine WHAT to call this space, then it has to be valued, which is where HABU is your good friend. If its an illegal addition for instance, with no chance of variance or grandfathering, that obviously impacts value significantly. Problem with that is you then inadvertently become the zoning police and you may or may not want to do that to the borrower. Because if its illegal, it would have to be removed. But only if zoning knows about it. I usually only give an area or street name when I get answers to those types of questions. I don't get paid by the city to be their enforcement officers.

Good luck.
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I appreciate your detailed explanation. I think you are a good mentor for trainees... (If you are now)
 
andrew81 said:
An ADU can be detached, attached, or created within the main living unit.
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I'm pretty sure many trainees think ADU = detached unit. Or maybe I'm just a fool lol. I learned this time & won't make same mistake next time.
 
Lately when I get a request, I look and try to see if there might be an ADU or other PITA feature of the property, before I accept.
Then I decline. :giggle:
 
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